“The state shall not have any liability for the payment of the retirement savings benefit earned by program participants pursuant to this title.” – California State Senator Kevin De Leon,August 7, 2016, Sacramento Bee

This quote from Senator De Leon, one of the main proponents of California’s new “Secure Choice” retirement program for private sector workers, says it all. Because De Leon’s comment reveals the breathtaking hypocrisy and stupefying innumeracy of California’s legislature.

Let’s start with hypocrisy.

De Leon is careful to protect private sector taxpayers from having to bail out their new state administered “secure choice” retirement plan, but no such safeguardhas ever been seriously contemplated for the state administered pension plans for state and local government workers. These plans, using official numbers, are underfunded by about $250 billion. If you don’t assume California’s 92 state and… Read More

Remember Bell, California? Back in 2010 the Los Angeles Times reported thatBell city officials were receiving unusually large salaries, perhaps the highest in the United States. For example,Robert Rizzo, the City manager, had received $787,637.By September of that year,as reported on CNN, the California Attorney General filed charges againsteight former and current city officials. The public was outraged.

Not generally known however was the process whereby the City of Bell employees managed to pay themselves so much money. Earlier that summer theLos Angeles Times covered this part of the story, reporting “The highly paid members of the Bell City Council were able to exempt themselves from state salary limits by placing a city charter on the ballot in a little-noticed special election that attracted fewer than 400 voters.”

This use of barely legalmaneuvers to extract ridiculously generous salaries and benefits from taxpayers is not restricted to Bell, however. The Bell Syndrome… Read More

“For the first timein the pension fund’s history, we paid out more in retirementbenefits than we took in contributions.” – Anne Stausboll,Chief Executive Officer, CalPERS,2014-2015 Comprehensive Annual Financial Report

There are few examples of a seemingly innocuous statement with more significance than Stausboll’s admission, buried within her “CEO’s Letter of Transmittal,” summarizing the performance of CalPERS, the largest public employee retirement system in the United States. Because what’s happening at CalPERS – they now pay more in benefits than they collect in contributions – is happening everywhere.

For the first time in history, America’s public employee pension funds, managing well over $4.0 trillion in assets, are becoming net sellers, not buyers. And as any attentivestudent of economics will tell you, when there are more sellers than buyers, prices drop. Behind this mega economic trend is a mega demographic trend – across the developed world, certainly including the… Read More

Subtitle: The Fleecing of Sacramento’s Taxpayers

Sacramento’s City Manager John Shirey released the proposed 2015/2016 budget last week. It’s clear that this city manager, the mayor, and the city council members are cavalier with their spending of other people’s money.More is never enough. And the word “austerity” is not in their vocabularies.

The other important issue to note is even with his latest attempt to become a strong mayor squashed (again) by the voters last year, Mayor Kevin Johnson is the driving force anyway behind this… Read More

The city of Eureka on the far north coast of our state is part of a fabled land, far removed from the rest of drought stricken California. The winds that the ridiculously resilient ridge of high pressure push north find welcoming mountains and canyons in and around Eureka, drenching them with rain, nourishing endless grovesof thetallest trees on earth, the magnificent coast redwoods. Gushing rivers run through thick green forests scented with maritime air. Downtown, the mansions of the 19th century lumber barons defy time, marvelous, intricate, stunning. And on postcard perfect shorelines, the rugged Pacific surf surges against the rocks. It’s hard to imagine a more beautiful place.

But when it comes to government unions making sure their compensation crowds out any hope of fiscal sanity, Eureka is as ordinary, and as challenged, as every other city in California.

A few weeks ago the California Policy Center released a study “California City Pension Burdens” thatcompiled key financial indicators for every city in California. When it came to pension… Read More

The Orange County Board of Supervisors has tentatively approved a transparency ordinance, known as COIN (for Civic Openness In Negotiations) that would require negotiations with government employee unions to be open to the public. Boy, do they need it.

The current negotiations between the sheriffs’ union and the Orange County Board of Supervisors are a perfect example of why COIN is needed. On Friday, after two years of secret negotiations with the Sheriffs’ union, the proposed terms of the contract being offered by the union were revealed to the public for the first time. And now the Board proposes to take a final vote this Tuesday!

That’s right, fellow taxpayers. We get one business day to review the complex business deal that will bind our County for years to come, and then our elected officials will vote.

This not nearly enough time for the taxpayers, who are going to be on the hook for these salaries and pensions, to understand the costs of what is being offered or fully weigh in. Which is, of course, the point of keeping the details secret until the last minute. Secret negotiations, followed by sudden and final votes, is how business has always… Read More

During the most recent year for which there is publicly available data, the fiscal-year-ended 6-30-2012, the California State Teachers Retirement System contributed a $1.1 billion paymenttowards paying off an unfunded liability of $71.0 billion. This fact, and much more, came out in a California Public Policy Center study released last week “Are Annual Contributions Into CalSTRS Adequate?”

Now let’s suppose you have borrowed $71,000, and you are paying a 7.5% interest rate on this borrowed money. Do you think you would ever have this debt paid off, if you only paid $1,100 per year? How would that work? Isn’t 7.5% interest on $71,000 equal to $5,300? Wouldn’t a mere $1,100 payment put you further in the hole by $4,200? Wouldn’t you owe $75,200 by the end of the year, more than the $71,000 debt you started with?

Multiply by a billion and you’ve got CalSTRS.

And this same disastrous, wishful thinking is playing out in nearly every “professionally managed” public sector pension fund in California. Every year, the combined unfunded liability… Read More