Pensions cannot and will not be paid in full through out the country because the income projections for the assets of these pension funds are works of fiction based on interest rates which do not exist. Furthermore when there is "collective bargaining" with public service unions on one side and politicians courting union votes on the other it should more properly be called "collusion".
1
Local real estate taxes could be raised to a level where current home owners are forced to sell at a discount. New owners, having the benefit of lower housing costs can now keep the public sector pensions funds solvent. Problem solved.
I know of several cases where there is waste in the system - but public employee [especially police and prison guards etc] are the worst. The 20years to full pension at 90% of the last 'few' years compensation [which is rigged by taking accumulated PTO in last year of service] just do not make sense. The UC Berkeley Police chief retired some years ago with 'full' pension, and was on the [same] job as a 'contractor' a few days later. UC system is also a mess.
Public employee pensions should not be 'combinable' - pensions must be coordinated so that the total does not exceed the highest single pension.
Contracts with CURRENT employees may not be changeable - but from now on all hires must be part of a contributory retirement system [like 401k].
3
The WORST is this California "Double dip" ... Work 20 years at one fire Department then another 20 years at another ... 2 pensions for life..
1
"..., many of whom collect just a few thousand dollars a month in benefits..." I have had the misfortune of having worked most of my life in jobs that didn't pay retirement benefits or pensions, and did not make enough to both pay into private retirement and support my family, so I take home a monthly social security benefit of $1350, from which Medicare and Part D premiums are subtracted. It would be nice to take home "just a few thousand dollars a month."
3
Louise, sorry to hear you are stuck in this situation! You should check out Medi-Cal Aged & Disabled program. With Medicare premiums coming at, you may be below or just over the qualifying threshold. If you qualify, the Medicare premiums would stop coming out and the state will cover them. If you are just above the threshold, consider buying an additional insurance plan (e.g., dental and/or vision) to bring you below the threshold. It may seem counter-intuitive, but spending down to qualify for Medi-Cal may end up boosting your check when the Medicare premiums stop coming out (you will still have Medicare, but also be covered by Medi-Cal).
2
Public sector workers are amazingly creative when it comes to scamming taxpayers. Since their unions elect the politicians who approve the scams, there are absolutely no checks and balances.
Here is the latest Southern California first responder scam uncovered in a major piece by the LA Times -- the DROP program.
http://www.latimes.com/local/lanow/la-me-drop-one-day-rule-20180218-stor...
6
David, do you think Santa Monica lifeguards should get paid $200,000 per year?
Answer, it's modest compensation for those exposed to sun burns on a daily basis.
David, should they get the same pensions as police and firefighters?
Answer: You ever watch Baywatch or Sharknado? These lifeguards are fighting Great White Sharks on a daily basis!
2
The NYTimes needs to do some real reporting on actual pensions. It could start with the net present value of a typical public safety pension to show the real cost to taxpayers. Readers will see that it is several million dollars per retiree, before misused disability and double dipping. That way, taxpayers could rationally judge the costs and their equity. This link is a start https://transparentcalifornia.com/pensions/calpers/
7
Californians and almost every town, county and state in the US have 3 choices: They can raise taxes, cut pension benefits, or cut services. This isn't an opinion, this is math. I certainly hope these two journalists will write a follow up article with an interview from the side of fiscal responsibility. Even by my low standards, this article was extremely one-sided. CalPERs is only 64% or so funded and continues to live in cloud-cuckoo-land of expected actuarial returns of 7.25%. For a start they should look at www.transparentcalifornia.com and www.pensiontsunami.com.
3
It was painful watching my former employer, the City of Vallejo, file for bankruptcy. Yes, it was a perfect storm with the real estate collapsing in 2007 and 2008. But the roots of Vallejo's problems stemmed from binding interest arbitration, which allowed unions to play Vallejo like a fiddle. The contracts guaranteed the best retirement someone else's money can provide, with police and fire fighters who made over a $100,000 a year guaranteed medical coverage for life and 3% retirement benefit PER YEAR for up to 30 years AT AGE 50. How does $90,000 a year at age 50 sound to you? Get one of those jobs with your high school diploma and you've hit the jackpot. At one point in time it was argued that because the public sector doesn't pay as well as the private sector we have to make up for it with generous benefits. Well somewhere along the line the salaries caught and even surpassed some private sector wages... but the sweet benefit package was already in place. And what person running for office will turn down an endorsement from someone dressed in blue wearing a badge. So elected officials approved extravagant retirement packages and kicked the can down the road. Now is time to pay the piper and it doesn't look pretty. Everyone suffers when programs are stripped of funding to pay for retirement promises made long ago. We have to do better than this!
4
I generally agree that public employees deserve an appropriate retirement after X number of years of service. The question which is somewhat left out of the discussion involves those who received "sweetheart deal" as part of political pressures. Consider the California Correctional Peace Officers Association (CCPOA), which represents the vast majority of California prison guards. They received a 5% pay increase every six months for several years. What does this do to other public sector retirements?
5
When the Westside Pavilion was being planned one local business refused to go along and so the whole complex was built around it. Well it turns out that The Apple Pan, whose slogan is "Quality Forever" found on the menu dated April 11, 1947, is still there and going strong, remaining as one of the best, if not the best, counter restaurant in LA. We like to think globally, but it's best to live, and especially eat, locally.
In discussions about public employee pensions (and, full disclosure, I am a beneficiary) there is never a disaggregation of the benefits received by public safety employees, who can retire after 20 years, and other employees who generally must work to age 65 for full benefits. This would help the debate.
8
People are SO SCARED of taking on the public safety people - some years ago I recall reading in a magazine called 'Corrections' an article entitled something like 'How to increase demand for prisons'. And not too long after that 3-strikes came up as a proposition.
2
I believe everyone should have pensions not just public employees. And public employees especially first responders need to put more than 20 years on the job so they can collect 50. Those of us who have contributed a life time to SS and Medicare are about to get axed once again. If public employees want to leave their jobs after twenty years so be it but they should not be able to collect until 62-67 like the rest if us. That is where the anger and disparity comes from. And you should not be able to move from one public job after “retiring” to another.
4
Sure, anti-public union people are still angry that many municipal unions got a measly one percent raise during the stock market bubble of 2000. There was little objection by locals, as they and the elected officials were oblivious to the real cost. That one percent was a 50% increase in the annual increment of a life time pension from 2% per year worked to 3%
That means that one in law enforcement or firefighters can retire after 30years, as young as 50 years old, at 90% of their salary, which would be a 100K per year, for an expected duration of some 35 years. And even this is increased with inflation.
Some can take another similar job, and the pensions are additive. This is far from the competitive rate, and the danger of these positions does not justify this vast over payment for similar employment.
It is only explained by the political clout and the value of the slogan, "law enforcement's choice" in any election. Non government unions are limited in their demands as too greedy could kill the goose that lays the eggs. Public unions do not have this limit, at least for some of them in some locations.
4
the other thing happening is that for state and local governments the number of employees is also dwindling as a result of high pension costs such that soon there may be only elected politicians, police, sherriffs deputies, teachers,and prison guards on any California public payroll, oh wait firefighters also and that will be it almost entirely.
all other government service employment will have to be privately contracted with the avoidance of benefit costs.
It isnt funny that transparency is so easily avoided by the public service unions by their demandind that all contracting be done with transparency, gee what do these public employees know about government contracting that it was their initial bargaining chip to use to avoid transparency in in public union negotiations? Not a HaHaHaha at all.
Here in our city and county, the number of police, firefighters, and sheriff's deputies began dwindling in 2007-08 and has never recovered. Now, it appears because of the lessening of the general funds, they will be dwindling even more, as, if more money isn't found (and the taxpayers have voted down the last two attempts at sales tax increases), firefighter and police officer positions will be cut. And this is in an area where our crime, especially property crime is on a rapid rise and we don't currently have enough officers to respond or take reports; reports are done by the victim online.
1
Pensions and retirement plans were created at a time when all employers were expected to share the wealth. The top marginal federal tax rate for most of our country's existence was between 70% - 90%. This helped to lower inequality and brought up everyone's standard of living. Today it is below 40%. Even worse, the capital gains tax rate is 20% and below. When I was growing up, a family was able to live on minimum wage earnings. Now, we live in times of greed in which a person working full-time may not be able to support themselves much less their families thanks to suppressed minimum wages.
Reducing pensions might lessen the budget burden, but it won't fix inequality. Raising taxes will fix inequality, but our collective fear for our individual financial futures stops us from doing the right thing. So until then, we're just a barrel of monkeys reflexively pulling down those who are perched a little higher than us. We can't even see the ones perched at the very top. That's the 1% who own more wealth than the bottom 90% combined.
5
David Low is absolutely lying when he says "pension costs for most school districts has gone down". This is impossible when the State continues to increase the contributions school districts are required to pay to both PERS and STRS. The only way this could be true is if school districts are laying off teachers at a rate that is greater than the increase.
As a school board trustee, Mr. Low is also not telling you is that this March many school boards are approving lay-offs for teachers to cover the increasing deficit as a result of these pension increases. This is a direct cut to educational programs which means class sizes will increase and educational quality will suffer.
What was once a crown jewel of this state is now a bloated, underfunded and rapidly declining service. Unfortunately no legislator has the backbone to really deal with the issue head-on and the results will show down the road as our future generations lack the education to innovate and keep this economy growing.
8
"David Low is absolutely lying when he says "pension costs for most school districts has gone down". As a microexpression player I can see that lie in his eyes and expression.
1
Mr. Low is correct to some extent. Taxes do not necessarily have to rise to meet the pension obligations. But basic government acitivites will be greatly impacted. For example, at the beginning of the century, only 4% of San Jose City revenues were used to meet retiree obligations. Now, IIRC, it's about 25%.
Right now, the economy is doing well. Wait till the cyclical downturn strikes and the government revenues decline.
Meanwhile, here's more history:
https://calpensions.com/2017/01/16/state-pension-costs-doubled-after-rat...
https://www.city-journal.org/html/beholden-state-13274.html
5
I work for a small company at a modest salary. When my wife started working at a big city government in the Bay Area, I was astounded by the generosity of their pension and retirement healthcare plans. I calculated the effective compensation rates and she made more than she would make from a private sector job. This was a red flag right away from a sustainability viewpoint. Then I looked at the benefits of cops and firefighters and then it was clear that California's future was hosed. The retire-at-55-on-90%-pay pension scheme has bankrupted cities and will do much more harm in future. I am one of the benficiaries of this public sector munificence but the future of California is dark.
To understand the gravity of the situation, I recommend reading articles by David Borenstein of East Bay TImes who deserves a Pulitzer for his focus on this problem over the past decade. Here's the archive of recent columns by him.
https://www.eastbaytimes.com/author/dan-borenstein/
9
In addition, first responders have a number of side benefits. Every conceivable ailment they get is considered job related -- from the stress, don't you know. If they bang up a knee on the ski slopes, it is considered job related and they can go out on disability, and some portion of the disability pay is exempt from state tax.
I'm going to post a separate message about LA and its DROP program. This is the latest first responder scam. To its great credit, the LA Times did a substantial investigation of this fraud.
What WILL we do when newspapers are gone?!
2
The myth of public pension busting the budget is still alive. The truth is that State and Local government failed to wisely invest money to fund employee wages and benefits, Instead, almost all of them invested in "get rich quick" schemes in which only the promoters got rich and the the Governmental entities lost their shirts. Instead of admitting that the money crisis is due to their own financial mismanagement, those governments are blaming the workers.
15
Speaking on myths and investing, why are the pensions underfunded? Because Calpers used a mythically-high 7.5% targeted rate of return. The unions control the Calpers board and when an attempt was made by one board member several years ago to reduce it to a realistic rate, he was unceremoinously replaced. It was eventually reduced slightly only a couple of years ago. Too little too late.
So why was an unealistic rate of return adopted? Because that allowed less money to be put aside for retiree benefits and more that used to give raises to current employees. Why did the elected officials agree to these shenanigans? Well, who do you think helped elect them? This is the how a captured and beholden state acts. The problem is not unique to us, but it's the biggest on in the country.
https://www.marketwatch.com/story/what-calpers-decides-about-its-investm...
The unions and their shills blame the enablers like Wall Street investment firms even though they are the prime movers in these decisions.
5
"The myth of public pension busting the budget is still alive."
It's not a myth, and the most of the rest of your comment explains, in part, why.
4
This is reporting?...or just a complete laydown for state pensioners? At minimum 20% of money (according to this man) is servicing pensions. Most experts feel it's much higher. That means 20% or more of taxes is servicing pensions and not new services. This issue alone is enough to put supposedly solvent California into deep trouble...and no one is office is dealing with it.
6
I'm sure Joan's new album will be about as enjoyable to listen to as her old flame's, Bob Dylan, most recent album was. All they're good for is to make their early stuff sound that much better. They're really awfully sad, but we feel obliged to buy them out of respect, same as going to a funeral.
These contracts are agreed to and signed by the employers as well as the employees. Quite often gains in one area (pensions) are the result of losses in another area (wages/benefits). These existing pensions must be paid to the people that earned and fought for them, no matter what the cost. Going forward, if traditional future pensions are deemed to expensive then maybe reform is necessary and will have to be negotiated like everything else.
4
Employees don't sign contracts. That's the whole point of being an employee. Employees are not contractors. I do agree that existing pensions should be paid. I'm a public employee. Approximately $1300 pre-tax is deducted from my pay every month for pension. That's not an insubstantial amount.
1
The employers, who should be dealing with the unions at arms length and representing the taxpayer, receive enormous political bribes (woops, meant to say donations) from the same unions they're negotiating with.
2
You’re right. Employees vote on contracts that are signed by their union reps. Great point.
This phony lobbyist who uses phony statistics to hide the fact that government pensions and retirement benefits, in general, are overly generous and breaking the back of taxpayers. Government retirement benefits need to be a combination of a capped fixed annuity, a 401k saving plan and Social Security. The workers need to be better educated on how to plan and save for retirement and be provided some resources through a competent financial adviser to make saving and investment decisions for their retirement saving. In addition lifetime medical benefits need to be scaled back so that workers use Medicare at 65 and have access to reasonably priced, not free, supplemental medical insurance.
5
Most local governments in California require retirees to get on Medicaid when they are eligible and retirees still pay a portion of healthcare.
1
You mean Medicare, not Medicaid.
1
As a CA resident who is in line to have a CalPERS pension when I retire someday, I'm certain people like Dave Low are going to ruin it for the rest of us by not conceding the reality of the situation. His use of the "look at the poor teachers" argument is Exhibit A. Look at the membership of his group--unions that represent firefighters, cops, engineers, in addition to teachers. Most of those public safety members can retire with a pension that pays them 90% of their salary for the rest of their life. I have a colleague, mid-level supervisor, who recently retired and is collecting a $12,000-per-month pension because he bought extra compensation time--part of a legislative deal CalPERS made in the year 2000. That's not a pension--it's a luxury. Make no mistake--I am pro-pension--but the greedy unions and current retirees are going to ruin this for the rest of us. Lawmakers will eventually cave to the completely reasonable public anger.
13
Mr. Low doesn't expect taxes to increase to cover increasing pension costs?They're already going up. Just about every every school district in our county is seeking increased parcel taxes to cover the increased pension contributions that they are required to make, now that their retirement fund decreased the expected rate of return on the money they invest on behalf of retirees, even though that presumed rate is still high by recent historical standards. These school districts have made it clear that the alternative is teacher layoffs. It is just one particularly visible example of how politicians gained political advantage by promising generous retirement packages that wouldn't come due until they themselves were retired, rather than paying fair salaries and keeping retirement packages at levels more comparable to the private sector.
7
The reality is though that some smaller governmental entities (local districts, small towns) have stopped paying their CalPERS contributions and those retirees have had their retirements slashed by CalPERS as a result. In addition, courts overseeing local government bankruptcies have said or suggested that pensioners must get in line with all other creditors. So there's a potential double whammy in the future of entities just refusing to make their contributions, and/or declaring bankruptcy and seeking that as a way out.
I don't think it would be terrible for the state to explore other models including something similar to what the federal government does (hybrid defined benefit pension plus pre-tax investment accounts with a match). It is wrong to alter benefits already earned, but I am not so bothered by changes to benefits not yet earned (such changes are not allowed under state law known as the California rule... whether the California rule is going to survive is up in the air).
I am a government employee in California and I want to have good retirement benefits. If the government is able to make changes to its pension system/structure for future benefits and I don't like those changes, I am also able to seek employment elsewhere. I think government entities in the state can expect a significant brain drain if they effectively cut employee compensation though. That's just a natural consequence of such an action, just as it would be anywhere else.
3
The very fact that the NYT would conduct such a "soft" interview in such a big issue shows the spin & bias this paper has exhibited for quite some time. When, and not if, the Pension crisis puts the big Cities in California on the path to bankruptcy, this article will be held up as a shining example of a Larry King interview by a "news" organization. I strongly suspect some conflict of interest or personal bias in this interview.
12
It often seems that people are critical of pensions, in general. But when asked if firefighters, police, or teachers deserve a good pension the answer is usually an enthusiastic yes. When asked whether retirees should be forced to live in poverty with substandard housing, nutrition and medical care, the answer would usually be no. Contrary to popular opinion, most government workers (many of whom are your friends, neighbors, or close relatives) perform important tasks, required by their bosses, the citizens. Look at any the details of any specific government job, and most will agree that a decent pension is appropriate.
10
So how big is a "decent pension."
In California, there are over 13,500 teachers receiving a six-figure pension. There are tens of thousands of retired police, fire and other public workers receiving over a $100,000 pension.
At what point does a "decent pension" become a windfall paid for by the taxpayer?
4
"But when asked if firefighters, police, or teachers deserve a good pension the answer is usually an enthusiastic yes. When asked whether retirees should be forced to live in poverty with substandard housing, nutrition and medical care, the answer would usually be no."
When the question is 'good pension' without ANY context it falls in the same category as 'have you stopped chatting on your spouse'.
"We talked with Mr. Low about pensions and city workers, many of whom collect just a few thousand dollars a month in benefits and can’t collect Social Security."
Unions trot out this statistic whenever this subject comes up. It is an average of people who retired recently with those who retired 10 years ago, 20 years ago, 30 years ago, when pensions were much lower than today. This figure is blatantly misleading and purposely so.
Secondly, they don't get Social Security because they didn't pay in.
Third, their pension is much better than Social Security because they can retire early, collect it, and go on to work another job. Do that with Social Security and your SS payout will be cut.
Fourth, to all those public sector retirees who whine about their "paltry" payout from their pension, here is the maximum 2018 Social Security payout for someone who retires at 66 after working a full career, earning at much higher levels all along than most public sector workers: $2788 a month. School teachers, cops, utility workers, city hall clerks are often collecting pensions of this or larger size.
Fifth, public sector workers often have 403(b) plans in addition. These are public sector of the private sector 401(k) plans.
Public sector workers are bankrupting cities all over the country and there is no happy face that can be put on this. It is a slow motion train wreck.
11
Investment risk of pensions should never be borne by municipalities. EVER! If public employees want to create a pension system for themselves, that is their choice, but if they do not set aside enough, they should not be able to go back to the public trough to have them topped up. It creates perverse incentives for elected officials to hide pension shortfalls and shortchange contributions in exchange for union support at election time.
5
Many civil service jobs, including teachers, have pensions that amount to 80% of base pay plus a stipend to purchase health insurance. Some jobs, such as fire department, allow collecting a pension (at a lower rate) after 20 years of service. Executive level civil servants (e.g. mayors) receive 100%of their salary. All of these persons also have opportunity to tax sheltered plans such as IRA.
This has never been sustainable. Those participating in such programs must be apprised of reality and told that IF they refuse reasonable reductions in benefits their fund will destroy the system that currently supports them.
When times were good and the economy was growing by leaps & bounds all shared; now with aging population, growing debt, and increased tax payer paid services, we all must tighten our belts and consider the common good.
7
If school districts are so concerned about pensions impacting budgets then I suggest they look at administrator costs. Many school districts are top heavy. And all you have to do is look at the parking lot to see where money is going.
2
I worked for municipalities for most of my adult career, and I have a reasonable pension. I have almost zero Social Security because of my pension. I was asked to pay for more and more into my pension account as the economy tanked and cities started figuring out the true cost of those pensions. I didn't object to paying more as I saw the big picture. That said, any attempt to lower my monthly income makes my skin crawl. Would you all be ok if we talk about cutting your SS benefits because they are too expensive? Let's talk...
8
" I have almost zero Social Security because of my pension."
No. You have almost zero Social Security because you paid almost zero Social Security taxes.
3
Our social security income does get cut when SS recipients do not receive cost of living increases, which we didn't for some years, yet the cost of living (food, gas, rent, utilities, etc.) increase in those years. So, yes, let's talk...
1
If you want to attract talent to the public sector you have to provide an appropriate compensation plan. The question should not be are my taxes rising or falling, but what value are we getting for our money and is it an appropriate investment.
4
"If you want to attract talent to the public sector you have to provide an appropriate compensation plan" -- yes you EITHER get competitive 'compensation' salary-bonus-benefits OR you get BETTER retirement benefits. You can't have one be competitive and the other be better. [public employee pensions are MUCH better than private]
Mr. Low doesn not have good financial data. The State has unfunded pension liability of $63 billion for Calpers and $74 billion for Calstrs.
http://www.ppic.org/publication/public-pension-liabilities-in-california/
So how to pay if not to raise taxes?
Also not mentioned: pension spiking. Gov. Gray Davis made a deal with the unions that unused sick leave and vacation could be cashed out in the final year of employment and have that amount count towards final pay calculation for retirement benefits. In short, contribute to the fund at a low salary and get benefits based on a high salary. Insane.
2
The big lie! This guy claims pensions are not crushing California cities and counties. The numbers don't lie, Dave. Pension costs consume so much of state, county and city budgets that there is not enough money left for fixing roads and critical infrastructure, providing essential public services, or even keeping up with the daily flow of business. Unions extracted unreasonable and unfair pension benefits (including unreasonable early retirement and the ability to "double dip") which were not paid for when they were being incurred. Anyone who is honest and who knows the facts realizes that this is not sustainable. Google "unfunded pension liabilities" and see for yourself how terrible the situation has become.
7
Shocking! That the head of an organization for public sector pensions would suggest they not be addressed. Sarcasm emoji needed here.
Questions: 1)The total % of budgets that are for salaries, and the total that are for retirement? 2) Are these retirement plans typical in the rest of the economy, Or is this just something that public sector employees enjoy?
1
Ludicrous for Low to think that taxes won't have to be raised to maintain the trillions in unfunded liabilities across the country's state and local governments..not to mention the tens of trillions at the federal level. With completely unrealistic return assumptions on pension assets and big shortfalls in current funding amounts, there is 'crowding out' going on all over the place. Illinois is but one good example of what is going to happen much more broadly. Either we be honest about this and work towards some forms of cuts to these mandates, or our kids will face much higher taxes and a lot less economic opportunity more generally.
3
The problem with malls is the sameness of stores across the board. The usual American Eagle, Forever 21, and others won't draw people in. The idea of the mall as entertainment center is why the open-air malls (i.e., Century City) is en vogue now. People don't go for the stores per se but they go for the restaurants, movie theaters, and gathering spaces that have been designed as outdoor living areas. With limited and costly housing, most people live in apartments that aren't big enough to entertain, so people meet at the mall. Shopping might happen but it's usually not the goal since you can find and buy whatever you want online anyway. Even the name mall is outdated.
Pretty weak case against cuts to public pensions...the way they have been irresponsibly structured in a lot of jurisdictions is untenable.
1
Public sector jobs, which generally have lower salaries and more secure benefits than private sector jobs, are an efficient use of taxpayer funds because that pay structure fits the funding source which is steady (I did not say large) and not as volatile as private enterprise returns. They pay differently but they do not pay more.
Public sector jobs that have this comparatively stable pay structure are a big benefit to the overall economy. They help balance out cyclical downturns of the private sector.
Public sector workers live the values of public service and the common good, which also balances the private sector model of competition and materialism.
Harsh criticism of public pension funds in recent years is of a piece with the anti-government, privatization, let the rich get richer and everyone else get less powerful push from the right.
Some, perhaps a majority of, pension funds are well funded trusts. San Francisco is one. It is not a burden to taxpayers, it is a benefit.
10
"which generally have lower salaries and more secure benefits than private sector jobs " they no longer have 'lower salaries' >
Then the onus should be on private sector workers to negotiate better pay and more secure benefits.
Not a shred of quantifiable evidence from this clown. Nice smile though. The facts are that the people of California will not tolerate public employee union strikes. Instead, they gave away the future to hold down current costs and keep taxes under control. Just look at the investment return assumptions built into the pension schemes to justify low payments into the funds. You will immediately see that municipalities are going to go bankrupt in a few years because returns are simply not going to be big enough.
7
Yes, let's all start going down together, at least as long as the retirees are alive. After that, they they just don't care. What the Progressives have done to long-term fiscal health of the captured state of California is nothing short of criminal. And we, who voted these criminals into office, are the enablers.
10
Ajit: Your politics are showing but your comment is not based on fact. The facts are that in the 80's California local governments allowed themselves to be conned into investing the money for wages and benefits into very risky "get rich quick schemes". Of course those schemes failed. These schemes where touted but the Conservative Right." The fault is entirely financial mismanagement by the local governments.
5
You may indulge in ad-hominem attacks on my politics, but based on my 15 years of studying this problem in great detail and your statement above, I am confident that you know nothing about this issue.
1
Here is the real story. Public sector pension payouts (and annual payments from government entities) have been based on unrealistically high earning expectations. This was done for exactly the reason Ajit has pointed out on this thread: politicians wanted to preserve the illusion that the pensions would be fine while minimizing the politically unpalatable cost.
Now, here's the problem: there is no way to earn 7.5% without taking on considerable risk. The reason pension plans got into hedge funds, real estate, all sorts of dodgy investments is they are desperate to try to earn enough to pay the looming pension cost.
1
"Do you think cities and states will eventually need to raise taxes to cover rising retirement costs?"
"No."
Obviously Dave Low believes money grows on trees .. and until he finds out where the particular tree is located- we will simply have to raise taxes in order to cover the shortfall.
25
He was only answering the first three words of the question.
2
Here in California, for political reasons, local governments purposely underfunded their employee benefits or engaged in very risky financial sceams. Prop 13, which benefits government much more than homeowners, also did serious damage to local government's ability to fund the services demanded my the public.
5