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FlashReport Weblog on California Politics

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Edward Ring

The Real Reason Behind the Drive to Unionize Charter Schools

Want to know another reason California’s teachers unions are desperate to unionize charter schools? They want the leverage to force these schools to participate in CalSTRS, because CalSTRS charges all its participants the same pension contribution rates.

This is a truly amazing, grotesquely unfair, astonishing scam. It means that new schools have to pay for the every financial mistake that CalSTRS ever made, and they’ve made plenty. CalSTRS is only64 percent funded. CalSTRS is $107 billion in debt – that’s $238,000 peractive member. Better get more active members!

Even CalPERS, the largest public employee pension system in the U.S., and one that has engaged in its own share ofaccounting gimmicks, doesn’t make its financially responsible participants pay for the negligence of its financially irresponsible participants. Every… Read More

Katy Grimes

CA Dems Paint Rosy Picture of Failing California

The future of California is not looking as rosy as the state’s Democrat Party politicians want us to believe. Whenever challenged on the stability of his economy, Gov. Jerry Brown’s knee-jerk retort is, “Californiais the fifth largest economy on the planet,” as if the size of the economy in the most populous statein the nation is relevant. With nearly 40 million people, California now feels and looks like a Banana Republic in the cities, as well as rural areas in the state.

Whether you are forced to check the public defecation map to navigate the streets of San Francisco, are on the 57 freeway in Santa Ana looking at miles of homeless tent cities and camps, or you are dodging heroin-addicted homeless zombies around the State Capitol and on residential streets in Sacramento, the results are the same —Nearly one-third of the nation’s homeless population lives in… Read More

Katy Grimes

Assemblyman Travis Allen: CA Investment Policy Should Not Hurt Israel

A newly introduced bill by California State Assemblyman Travis Allen, R-Huntington Beach, seeks to forbid all state agencies in California from contracting with companies “engaging in boycotts based on race, color, religion, gender or nationality,” in support of California’s long history of trading with Israel.

Anti-Semitism runs deeply in California government, including inside the taxpayer-funded University of California system, and the state retirement systems.

Allen’s bill is aimed directly at the BDS movement (Boycott, Divestment and Sanctions), and the State of Israel. AB 1551, The California-Israel Commerce Protection Act, will require the State of California to divest from companies that boycott Israel.

CalPERS and CalSTRS have boycotted Israeli investments, and University of California campuses openly supported the Palestinian boycott of Israel.

Even student governments at UC Berkeley, UC San Diego and UC Irvine have endorsed divestment and sanctions of Israel.

If adopted, Assemblyman Allen said the billwould update the… Read More

Edward Ring

California’s Pensions Are An Economic Burden, Not Benefit

Last month an article entitled “Pensions as Economic Stimulus” was posted toFox & Hounds Daily. The author,Charles Beckwith, is a former CalPERS senior financial manager. Beckwith’s article, while thoughtful, invites a response. Because California’s pension systems may stimulate the economy in some ways, but equally significant ways, they are killing the economy.

Beckwith’s primary argument is this: California’s pension systems pay out over $3.0 billion per month to retired state and local government workers, who go out and spend this money, “at auto repair shops, home improvement centers, tuition for grandchildren, hair salons, rent, and at a thousand other small and large businesses.”

The problem with this reasoning rests on a fundamental assumption Beckwith makes, which is that all the money taken from taxpayers to fund these pension investments would not have created a similar economic stimulus if they had been free to spend it themselves. Mr. Beckwithgoes on to extol the virtues of professional financial managers placing pension fund… Read More

Edward Ring

Why Pension Reform is Inevitable, and How Reforms Can Benefit the Economy

“The six-year bull market is admittedly long in the tooth.” CalSTRS Chief Investment Officer Chris Ailman,Sacramento Bee, July 17, 2015

If what Mr. Ailman really means is equity investments may not be turning in double digit returns any more, that makes the recent performance of CalSTRS and CalPERS all the more troubling. Because according to their most recent financial statements,CalSTRS only earned 4.8% last year, andCalPERS only earned 2.4%. That leaves CalSTRS 68.5% funded, and CalPERS 77% funded.

Are we at the top of a bull market? Take a look at this chart:

S&P 500, Last Twenty Years Through June 21, 2015

Read More

Edward Ring

LAUSD Offer Worth $122,938 Per Year – Will They Strike Anyway?

“Our demands, they’re not radical. When did it become radical to have class sizes that you could actually teach in? When did it become radical to have staffing and to pay people back after eight years of nothing?” – Alex Caputo Pearl,President, UTLA, February 26, 2015, Los Angeles Times

If the 35,000 members of the United Teachers Los Angeles, the union that represents employees of Los Angeles Unified School District, actually go on strike, in large part it will be because they want an 8.5% salary increase and the district is only offering them 5%. They also want smaller class sizes – tough to do when you’re passing out salary increases. But how much do these teachers actually make?

If you review the most authoritative source of public information on LAUSD salaries, the California state controller’s public pay website you will get the impression they aren’t making much. Thesummary page for LAUSDshows “average wages” of… Read More

Edward Ring

The Glass Jaw of Pension Funds is Asset Bubbles

“Calpers argued that the California constitution’s guarantee of contracts shielded pensions from cuts in bankruptcy. The fund also asserted sovereign immunity and police powers as an ‘arm of the state,’ including a lien on municipal assets.” – Wall Street Journal Editorial, “Calpers Gets Schooled,” February 8, 2015

If you want powerful evidence ofcrony capitalismat its worst, look no further. In the Stockton bankruptcy trial, the pension fund serving that city’s employees threatened to seize municipal assets to pay pension fund contributions. They’ve made similar threats to other cities that protest against the escalating contribution rates. And they’ve made the cost to exit pension plans confiscatory. It is hard to imagine a bigger or more blatant example of collusion between business interests and government employees at the expense of ordinary private citizens.

In the Stockton bankruptcy case, judgeChristopher Klein’s ruling left… Read More

Edward Ring

California’s $12.3 Billion in Proposed School Bonds: Borrowing vs. Reform

“As the result of California Courts refusing to uphold the language of the High Speed Rail bonds, the opponents of any bond proposal, at either the state or local level, need only point to High-Speed Rail to remind voters that promises in a voter approved bond proposal are meaningless and unenforceable.” – Jon Coupal, October 26, 2014,HJTA California Commentary

If that isn’t plain enough – here’s a restatement: California’s politicians can ask voters to approve bonds, announcing the funds will be used for a specific purpose, then they can turn around and do anything they want with the money. And while there’s been a lot of coverage and debate over big statewide bond votes, the real money is in the countlesslocalbond issues that collectively now encumber California’s taxpayers with well over$250 billion in debt.

Over the past few weeks we’ve tried to point out that… Read More

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