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Edward Ring

A Pension “Pledge” for State Politicians

Earlier this week, noted pension reformer John Moore published “The Mechanics of Pension Reform,” listing specific principles of pension reform. Moore’s article focuses on state policy; he intends to focus on local pension reform policies in a later article. The list he has produced for state legislators is quite detailed; here’s is a partial summary of highlights:

1 – Change control of public employee pension boards to politically neutral private institutions. Currently, government union operatives exert nearly absolute control over California’s 81 state and local government employee pension systems.

2 – Limit the total annual pension contribution by any government entity to a fixed percentage of pension eligible salary.

3 – Differentiate between annual salary and pension eligible salary to lower overall contributions. Stop counting annual wage increases as pension eligible.

4 – Eliminate collective bargaining for government workers.

5 – Prohibit legislative bodies from granting vested contract rights to pensions.

6 – Require agency in-house… Read More

Edward Ring

Why Pacific Grove Matters to Pension Reformers

UnionWatch has just released thefourth and final installmentof“The Fall of Pacific Grove – The Final Chapter,” written by John Moore, who is a retired attorney and resident of Pacific Grove. This four part series constitutes an extended epilogue to a eight part series on Pacific Grove which was published last year on UnionWatch. Links to all twelve installments appear at the conclusion of this post.

Moore’s earlier set of articles describe in detail howPacific Groveslid inexorably towards insolvency by yielding, again and again, year after year, to pressure from local government unions to award unaffordable pension benefits to city employees. Pacific Grove’s challenges area textbook case of how there is simply no interest group, anywhere, currently capable of standing up to the political power of government unions. This small city now faces the possibility of selling off every asset they’ve got, primarily real estate, to private developers to raise cash for the city’s perpetually escalating annual pension contributions. They face the… Read More

Edward Ring

CalPERS “Myths vs. Facts” Propaganda Will Not Change Reality

California’s largest state/local government employee pension system, CalPERS, has posted a page on their website called “Myths vs. Facts.” Included among their many rather debatable “facts” is the following assertion, “Pension costs represent about 3.4 percent of total state spending.”

This depends, of course, on what year you’re considering, and what you consider to be direct cost overhead for the state as opposed to pass-throughs from the state to cities and counties. But CalPERS overlooks the fact that most of California’s government workers who collect pensions do not work for the state, they work for cities and counties and school districts. As can be seen on the “view CalPERS employers” page on Transparent California, there are 3,329 distinct employer retirement pension plans administered by CalPERS, and the vast majority of these are not state agencies paid from the state budget, but local agencies.

In a study earlier this year, “… Read More

Edward Ring

Pension Reform Requires Mutual Empathy, not Enmity

Attending a high school reunion after more than a few decades ought to be a memorable experience for anyone. Hopefully the occasion is filled with warmth and remembrance, rekindled friendships, stories and laughs. But as our lives develop and we build our adult networks based on shared values and common professions, a high school reunion offers something else; a unique opportunity to meet people we knew very well and still care about, whose lives all went in completely different directions.

My high school classmates chosea diverse assortment of careers. Some became engineers, some went into sales, some are entrepreneurs; some work in high-tech, some in aerospace, others in construction. And some are teachers, some are police officers, and some are firefighters. Without any exceptions I could observe, all of them made conscientious choices, all of them worked hard, all of them were responsible with their savings and investments. And now they’ve reached the age where whatever retirement plans they made are unlikely to change much.

How to ensure government pensions are not blown up by the next sustained market downturn is a complex challenge, complicated further… Read More

Edward Ring

San Jose City Council Capitulates to Police Union Power

“He told the class to take advantage of the academy, and then find jobs elsewhere. The police union tries to get us to leave the department.” – Anonymous source to NBC Bay Area, television report “Another San Jose Police Recruit Says Union Tried to Get Cadets to ‘Find Jobs Elsewhere’,” Oct. 28, 2014 (excerpt begins at 1:38 in report).

A precedent setting new development in San Jose last week provides abundant evidence of just how powerful local government unions really are in California.As reported today inSan Jose Insideand elsewhere, an embattled city council has tentatively approved a new contract with San Jose’s police union that awards them“a 5 percent ‘retention’ bonus and an 8 percent raise over the next 16 months. In addition, former officers who return to the force in the next year can claimRead More

Katy Grimes

Real ‘Income Inequality’ Is In UC, CSU Academia

Those on the left who wail incessantly about “income inequality” need look no further than California academia. While the left focuses like a laser beam on private sector CEO salaries, the salaries in government and state run academia are soaring.

There’s no risk being a public official; the real risk belongs to CEO’s who can be tossed out of their jobs on the whim of boards of directors. Private sector employees are subject to performance reviews and standards — it’s called merit. When was the last time anyone in government was terminated for poor performance? The faulty Oakland Bay bridge… no heads have rolled yet on that.

Income Inequality Belongs to California Academia

The UC Regents approved 3 percent raises for 15 of the University of California’s highest-paid executives. The new pay scale for the five UC chancellors are: $772,500 for UC San Francisco’s Samuel Hawgood; $516,446 for UC Berkeley’s Nicholas Dirks; $441,334 for UCLA’s Gene Block; $436,120 for UC San Diego’s Pradeep Khosla; and $424,360 for UC Davis’ Linda… Read More

Katy Grimes

Pension Day of Reckoning: Taxpayers on the Hook For Outlandish Pension Promises

A public pension crisis of epic proportions is brewing in California. The state’s public pension disaster is the greatest financial challenge California has faced since the Great Depression.

A new book by economist Lawrence McQuillen, exposes the true magnitude of the unfunded liability disaster, and focuses on the critical policy actions that drove California’s public pension debt to these heights. In California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, McQuillen, Senior Fellow at The Independent Institute, also examines the perverse political incentives of elected lawmakers and pension officials that reward them for not fixing the problem, rather letting it escalate. McQuillen… 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

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