California Today: Is the Long-Looming Pension Crisis Already Here?

Ugh. Let's go through this again, because apparently Mr. Crane has had his head in the sand for the past ten years. The pension problem lies squarely with the ratings agencies who gave AAA ratings to garbage. Since pension funds rely upon these ratings and can only buy AAA products, they were adversely affected by the 08 crash. If there were anything approaching true justice, ratings agencies and the issuers of these financial garbage would be on the hook 100% for any pension shortfalls. Instead, people like Crane want to blame workers. His use of the phrase "at the trough" is very telling. He is apparently anti- worker and anti-union. THAT is why the pension board dumped him.

Thanks to the most powerful teachers' unions in the country, California's 243,000 teachers earn a median salary of $72,910/year, only 30% less than a California State Assemblymember. A sergeant on active duty in the U.S. Army, with 4 years of experience, earns $32,029. If the most entitled and pampered California public employees feel they're being cheated now that their pension might go away, they can cry me a river.

would have been helpful to hear more about his proposed solution and why the fix was easier 13 years ago.

CalPERS and CalSTERS are not in trouble because of the (by Crane's admission) "not so high" pensions promised to our teachers and first responders. They're in trouble because the boards of these two pension plans chose to funnel (it can't really be called "investing") the money into private equity funds that provided less-than-mediocre returns (read: billions of dollars in losses) while extracting usurious fees! Even an investment in T-bills paying 1% interest would have left our public pension funds in a healthier state. If you want to learn the whole, sad story, check out the excellent coverage of this issue provided over the past several years by Yves Smith at nakedcapitalism.com while our mainstream newspapers were asleep at the wheel. New Yorkers may be particularly interested in CalPERS (ahem) "questionalble" relationship with Blackrock. And shame on the NYT for giving David Crane an unfiltered megaphone here, with not a single non-softball question posed!

My Blue Shield premium (Bay Area) already went up 53% this year.

The problem is not with adequate pensions. The problem is with people like David Crane. He thinks that Teachers, police, fire and highway patrol officers do not deserve a retirement. The problem is that that California has a good pension program. The problem is that so many others do not. I will work tirelessly to defeat any politician who destroys pensions.

Sixty-one percent of CalPERS' pension outlays come from their investment income. Another 13% comes from members' paycheck deductions, and 26% is employer contributions. As for CalPERS cheating the employers, when ROI has exceeded expectations, employer contributions have been reduced. Mr. Crane clearly wants to fund other governmental issues by stealing money set aside for civil servants' pensions. Shame on him.

As important as it is to highlight the public budget problems that exist in California and elsewhere, this squib of an article says almost nothing specific about the problem or the solution. Yes, there is a budget problem; yes, public pensions significantly contribute to it, and thus will need to be part of any solution. That part was old news ten years ago. Mr. Crane's confidence in the legislature is belied by their lack of action (as well as the lack of action in hundreds of towns and cities throughout the state). For those who reflexively defend the "meager" pensions of California public workers, here is the reality: The average full career (30 years work) pension for a retired public employee in California was $68,673 in 2015, not including benefits. This is in comparison to the average pay (not including benefits) for an active full-time worker in the private sector in California, which in 2015 was $54,326, and to the maximum Social Security Benefit for a high wage earner retiring at age 66, which in 2015 was $32,244. Thus, the average public employee retiree with 30 years of service collects a pension (not including benefits) that is 26% greater than the average pay for a non-retired full time private sector worker, and more than twice the maximum Social Security benefit. Yes, the highest pensions go to police and firefighters, and teachers are not at the top of the list. But a career teacher in LAUSD can reach the average, which is hardly meager.

Apparently David Crane is a brave advocate of "painful" policies in which the pain is entirely felt by other people with less money. Another way to provide more money for governmental priorities he cites, such as education, would be to increase taxes on the wealthy -- but that would probably involve pain to Mr. Crane, which presumably we'd want to avoid.

"Now the state is going to have to cut benefits for people who did nothing wrong, and don’t even have pensions that are that high". OK, please tell me what have the teachers who taught school for 25 or 30 years at low pay done wrong, and why should they not expect their hard-earned, meager pension? Why should a PhD from the best school who decided to work in the government laboratory 25 years ago with a promise of low pay but good health benefit and defined pension be deprived of the promise benefit? Had either one of these people would have been told that that they will not get what they were promised, they would have made different career choices. An immediate impact of reneging on the compact with teachers and government employees would be the drop in people going to these avocations. Good luck in getting any teachers ever to take up jobs in California with its high housing costs and daggers out every time the state, city or county faces budget shortfalls.

Here we go again. Mr. Crane talks about teacher's pensions but I am unclear if he means all government employee pensions for city, county, and state employees as well. The one fact that the doomsayers like Mr. Crane never mention is that the first 10 years of my pension is the money that I was required to invest through payroll deductions into CAlPers. So before ANY money from taxpayers is needed I am paid the money I invested first. In addition he does not mention the interest that is made on what is already invested and that government employees who are working are still having money for their pension deducted from their paychecks. Is Mr. Crane part of the Hoover Institute at Stanford? This conservative think tank has been at the forefront of wanting to take away government employee pensions for at least 10 years. Perhaps he and the other One Percenters donate their huge tax reductions via the Republican't tax "reform" to the pension fund. I doubt that will happen.

The pension problem is going to plague especially the blue states. Reason? Private sector jobs have been off-shored, thus decimating /reducing private sector jobs/salary. Since 75% of jobs in the US are in the private sector, the total tax base has shrunk. Both Republicans and Democrats as backers of free trade have been complicit in this travesty. However public sector salary/pension have not been adjusted accordingly. Public sector pension is defined benefit not defined contribution. So inflation will not fix the problem. State legislators have been very resistant to change. Public sector employees vote democrat and blue states don't want to ruffle their feathers. CA will keep kicking the can as long as the interest rates remain low. Once rates start to rise, CA will try to raise taxes, cut services. People will start to leave the state,, house prices will start trending down, further shrinking the tax base.. So on and on in downward spiral....Just look at CT, IL etc.

So another investment banker and his wealthy friends shrieking about the cost of pensions for all the working stiffs in government, including the underpaid teachers. Maybe he and his friends could send some extra dollars to the Franchise Tax Board and the local cities. Reform proposition 13 so business like Exxon/Mobile, Union 76 and other large businesses are not exempt. Doing so would allow mom and pop with their single home to remain exempt. us army 1969-1971/california jd

The California pension crisis is real. My local government currently spends about half as much on pension payment as it does on salary, and the two combined represent the overwhelming majority of all spending. Three years from now the pension spend is forecast to double, matching salaries. Pension costs will then continue to grow exponentially until the law changes or the local government goes bankrupt.

The author is absolutely correct in his assumption that the pension crisis has arrived. Many cities are now hiring large numbers of part time workers and keeping their hours below the benefit minimum. Two tier employees are now common in some cities. It's a start. The sad truth is that Calpirg and Calpers have utterly betrayed the people of California, and the legislature has led the betrayal with nodding heads and clapping hands.

Reform Prop 13 to allow taxes to rise on 2nd, 3rd, and higher order homes, on investment property, and on corporate-owned property; raise taxes on those properties in a progressive manner. This move would solve multiple problems at once. It will be easier to sell a new house, hence more new houses, and there will be more money in state coffers to pay for all the amenities that a civil society expects and should expect to pay for.

Re: the pension crisis. Now is the time for California Democrats to stop acting like California Republicans and institute a resource extraction tax. We’re The only state that doesn’t have such a tax - the revenue it generates would be considerable. If they like they can earmark it specifically for the pensions.

My problem starts with this man's use of the word trough, making teachers, etc, into animals, with the usual tag here being pigs. Second, he professes this deep feeling for young teachers who cannot get a job, but the problem is more the reverse, that teachers cannot be found, due to a decline in enrollment in teaching programs, which itself is a reflection of the low esteem and relatively low pay. So if you think you have problems in education now, just throw current employees and their pensions overboard, and like he said, you ain't seen anything yet. Take me, for example: I have been teaching 30 years, planning 7-8 more, but I will quit as soon as they move to grab my pension.

I recently did a little internet research on states' pension funding status. As I recall, California came in somewhere in the middle or low middle of all U.S. states, so this is not just a California issue. If the Republicans' promises of a great swell in our economy, bolstered by their tax give-away to corporate America, prove right, everything will be fine. And in any event, runaway inflation may help pension funding too. It's right to look for ways to bolster this funding, but never ask the Republicans to do it, their solution will be to kill Medicare and Social Security and leave retirees to be "free" of all government support.

“Is the long-looming pension crisis already here?” Sounds like the long-looming pension crisis arrived 13 years ago. But now, after prematurely celebrating Jerry Brown’s solution of our 2011 deficit crisis, turns out he was only kicking California’s debt-can down the road so someone else would have to deal with it. California’s two largest sources of carbon-free electricity, San Onofre Nuclear Generating Station and Diablo Canyon Power Plant, were closed on Brown’s watch. They’ve been replaced by fossil-fuel gas plants, which will still be emitting millions of tonnes of CO2 when 30 square miles of token solar panels and wind turbines lie rusting in the desert. So Brown can take credit for kicking California’s environmental-can down the road, too, and we could expect his toxic legacy to continue should protegé Gavin Newsom follow in his footsteps. But the surprise candidacy of Michael Shellenberger offers hope both fiscal and environmental sanity might prevail.

The pension crisis is a demographic problem presenting itself as a fiscal crisis. We have not yet figured out how to run a society where population does not increase, expanding the working base to pay for pensions. And yet a population bulge is the inevitable result of lower population growth. Wait until the baby boomers start needing serious geriatric services; then you'll see a supply crisis which will require billions of dollars from working people to fix. The alternative will be a cadre of desperately poor retirees who need to spend more and more of their scarce money paying for increasingly scarce services. Birth control already brought us the early half of population control Geriatric services for the boom babies will determine how we manage the last half, and will give us a model for future population reductions.

It appears that Mr. Crane's idea about how to solve all of California's problems is to cut public pensions. Incredibly painful, he says, but we're going to do it. I take it that because he is a former investment banker and current politico, this won't be incredibly painful for him personally. Here's a different suggestion: Reform Prop. 13. I would guess that if regular salaried teachers can't afford to live in Oakland, California's bizarre property tax system -- courtesy of Prop. 13 -- might be at least as much to blame as pensions for those teachers.

Part of the problem is Prop 13.

In 2008, Deborah Edgerly, an Oakland city manager who had ties to some gangs was let go after it was disclosed that she had alerted the gang members that the police would be trying to arrest them. A week ago the Oakland mayor did the same thing with respect to illegal alien felons, but hundreds of people were alerted. Obstructing justice and keeping federal officers from arresting illegal aliens with criminal records is nothing to brag about. The mayor of Oakland should joint Ms. Edgerly in unemployment.