Why Worry? CA Pension Shortfall Just $500 Billion
Apr10
Tom Meyer this week casts his jaundiced eye on the spectacle of California’s three big public pension systems, which were reported in a Stanford study to have a collective shortfall of $500 billion, more than six times the value of California’s bonds and multiple times the amount previously reported.
Given the magnitude of the problem, not to mention the blind eye California officials seem to have on the issue, we think Meyer was remarkably restrained in holding his violent streak in check.
Update: On the other hand, The Oracle of Cruickshank over at Calitics argues that the numbers in the Stanford study are overblown.
There are already thousands of former California state, county and municipal employees who are pulling down six-figure pensions, plus health coverage. Tick, tick, tick…
A law should be written…yes I wrote that…to automatically reduce pension payout formulas when any of the state and local government retirement fund’s obligations exceed a point such as one year’s tax receipts for that respective body. The unions driving these fiscally wild payout rules…such as six figure annual payouts…through compliant legislatures and councils must be somehow fiscally curtailed. Leaving it to the courts only is poor public policy.
The Stanford study, was done by grad students, as part of class assignment. It is largely bogus. CalPERS has posted a rebuttal that pretty much demolishes their arguments. Here’s the URL:
http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2010/april/responds-stanford-policy-brief.xml
Mark, I don’t recall your comments on CARB scrapping every diesel engine in the state based on a report produced by a diploma-mill dropout. Maybe you could recap for us?
Thanks!
To follow up on my previous post, few people are aware of the fact that very little of what is paid out to CalPERS annuitants comes from the taxpayer. For every dollar that a CalPERS pensioner receives, 75 cents comes from INCOME ON INVESTMENTS, of the 25 cents remaining more than half comes from EMPLOYEE CONTRIBUTIONS. Less than 12.5 cents comes from the taxpayer.
I would challenge any taxpayer/employer funded 401K-style pension plan to come anywhere near that level of efficiency.
To Mark S.: Sorry but you obviously haven’t done the math. The article refers to the multitude of pensioners who are receiving triple digit pensions. Say they each receive $100,000 per year, given the numbers/percentages you quote each of them would receive $12,500 per year from the taxpayers. Now, I’m sorry but I do not agree that’s a small amount. Especially when you consider the majority of taxpayers have NO pension plan. Those taxpayers would appreciate keeping, say 12.5% ,of their taxes in their own pockets each year. Or possibly give that amount straight to the classroom instead of paying the high salaries Educational Administrators are being paid. In multiple layers of administration, I might add.
The average monthly pension from CalPERS is $25,212 per year, and 78% receive less than $36,000. (Source: Facts at a Glance, on CalPERS website). Does that sound exorbitant to you? It doesn’t to me.
If the problem is the relatively small number of very large pensions, most of which go to people who were the most highly paid managers and university administrators, then enact a maximum, instead of bashing everyone in the system.
Also, we’d be better off if we spent more time working to expand retirement security to more people in the private sector, instead of working to take it away from those who already have it.