Pension costs burden CA budget

Pension costs burden CA budget

pension-red-inkGov. Jerry Brown still hasn’t gotten his state’s budget problems beat.

A high-profile new report showed California still faces massive liabilities extending far into the future. The study, released by the nonpartisan Legislative Analyst’s Office, tallied over $340 billion in debts, deferred payment and other budgetary burdens “that will affect the state’s financial health in the future.”

According to the report, “Addressing California’s Key Liabilities,” there was some good news mixed in with the bad. The LAO was relatively sanguine toward a substantial portion of California’s long-brewing public pensions crisis. The report’s Executive Summary lauded “recent actions taken by the California Public Employees’ Retirement System (CalPERS) board … to address the unfunded liability for state employee pension benefits in about 30 years.”

Given the legal controversy surrounding CalPERS’ role in city bankruptcies, however, the LAO’s praise may not go far. Litigation concerning the bankruptcy of Stockton, for instance, has pulled CalPERS back into potential liability. “Even though the city decided not to try to cut its CalPERS payments,” the Sacramento Bee reported, “Judge Christopher Klein said he could rule that the pension fund could be treated like other creditors.”

That’s significant because a ruling along those lines would affect CalPERS statewide. CalPERS is locked in a closely watched mediation process with the city of San Bernardino, which hopes to avoid millions in back payments to CalPERS as a consequence of declaring bankruptcy.

CalPERS, however, isn’t the only pension system at the center of the LAO report. There’s also CalSTRS, the California State Teachers’ Retirement System. There, the LAO fingers “$200 billion in liabilities” that “merit further legislative attention.”

In his revised May budget, Brown has a plan to address the shortfall. It’s already drawing criticism. He aims to make a down payment on CalSTRS’ $74 billion shortfall — followed by $5 billion in increased funds every year for 30 years, once it’s fully phased in after seven years of stepped-up payments. Notably, $3.7 billion a year will be expected to come from school districts themselves — not a popular policy at the local level.

It’s also a disappointment for statewide education activists, who want big state dollars spent on universal preschool and Common Core implementation. They’d counted on the support of legislators like state Sen. Darrell Steinberg, D-Sacramento, who had raised hopes for a universal preschool initiative in his final year in office.

Brown’s bipartisan critics

Brown, however, has been keen to spend state dollars as quickly as he shifts costs downward. Under his watch, California has racked up some $7 billion in tax increases, drawn from income and sales taxes from Proposition 30, which voters passed in 2012.

But they’re only temporary measures. Accounting analysts and budgetary experts expect Brown to show that California can attack what Brown calls its “wall of debt” before the short-term tax increases expire. Hoping to meet expectations, Brown has vowed to pay down half of the debt wall, build a rainy day fund, and tackle CalSTRS’ $74 billion shortfall.

Brown’s efforts have encountered resistance from state Democrats, who want to forge ahead with broad new initiatives on social programs. New Assembly Speaker Toni Atkins, D-San Diego, gave a sense of Democrat lawmakers’ priorities in a statement. “As we finalize the budget over the next few weeks, we will also look to expand opportunity by combating child poverty, improving access to higher education, increasing funding for transportation projects, and taking strides to expand affordable housing,” she said. 

Perhaps even more surprisingly, some Republicans have questioned Brown’s relatively modest version of budgetary thrift. “I was surprised and disappointed that he didn’t address other important priorities,” said Assembly member Kristen Olsen, R-Modesto. From “water storage and drought relief” to higher education and “other investments,” Olsen slammed Brown for failing to “grow our economy” with his focus on increasing California’s cash reserve.

That’s striking evidence that California’s budget battles won’t soon be resolved.

60 comments

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  1. Ulysses Uhaul
    Ulysses Uhaul 19 May, 2014, 21:43

    Here we go again….and again and again….

    Reply this comment
  2. Rex the Wonder Dog!
    Rex the Wonder Dog! 19 May, 2014, 23:50

    The Pension Ponzi is unraveling. Stockton will be cutting the cities CalTURDS liability, the judge is clearly laying the ground work for it and it is coming, especially after Detroit cut its pensions with the same arguments made by the state, that the states’ pensions cannot be impaired, well, it happened in Detroit, it will happen in Stockton, San Bernardino and eventually Vallejo once they re-file for BK due to their stoopidity the first time around.

    Maybe we can get Teddy Steals here t give us some of his Google copy and paste law analysis….

    Reply this comment
    • S and P 500
      S and P 500 21 May, 2014, 14:26

      I hope Ted likes assault weapons–CalSCAM is 15% invested in private equity. One of those PE investments is the gun maker that made the weapon used at Sandy Hook. CalSCAM wants its Cerberus Fund to divest its interest in the gunmaker, but it’s taking a long time to find a buyer. Now that everybody knows that CalSCAM wants to sell Bushmaster, it’s not going to get a good price. Teachers will be furious if Bushmaster is sold at a loss, but with PE you can’t just point and click on your Ameritrade screen and hit “sell”. Maybe K-12 teachers can call some fellow pirate guy in Somalia and ask him if he’s interested in a gun manufacturer.

      Reply this comment
  3. Bud Led Ted S.
    Bud Led Ted S. 20 May, 2014, 06:47

    No need for the Ted System here little buddy! Everythings going to be ok! But keep paying your taxes so I don’t have to come hook you up—–let’s see—– 44,000 American cities……..and 8 have gone bk………….hmmmmm………..we’re doooooooooooooooooooooooomed!

    The Bud Led Ted S. System ™
    “it’s just that easy” ™

    Reply this comment
    • Donkey
      Donkey 20 May, 2014, 07:13

      Hey my parrot, this is the tip of the iceberg my dimwitted fool. The number of cities will soon be a flood and you will be saying, “what happened .” 🙂

      Reply this comment
    • S and P 500
      S and P 500 21 May, 2014, 14:36

      Even if there’s no pension problem I’m glad 17 states are taking preemptive strikes like eliminating COLAS, as was stated in another pensiontsunami link. And I love the link about how San Bernardino imposed a 15% cut in firemen’s salaries as CalPONZI slows down the bankruptcy process. Some firemen filed for bankruptcy. LOL–no more long Starbucks coffee breaks.

      Reply this comment
  4. Ulysses Uhaul
    Ulysses Uhaul 20 May, 2014, 08:30

    The GED twins were first up waving their gloom wands…..Honorable Jerry Brown is bringing fiscal sanity to all California public entities…..

    May we offer a special move package to you unhappy doomers? Adelanto should be in your rear view mirrors to improve your disposition…you can turn in your little white coats too.

    Let it go….ugh!

    Reply this comment
    • S and P 500
      S and P 500 21 May, 2014, 14:46

      Sallie Mae is offering a special loan package for students who want to go to UCLA and can’t afford $4500 a quarter tuition. The package includes high interest, no bankruptcy protection, and collection tactics that would make Mickey Cohen (“Gangster Squad” movie) run for cover. Parents who think Calif. is on the right track are welcome to co-sign on their kids’ student loans. I’m sure public workers don’t have a problem with the cost of UC since UC has a big pension bill, too. Lots of profs with $100K pensions. Mark Yudof left with a $300K pension.

      Reply this comment
  5. Eye of Horus
    Eye of Horus 20 May, 2014, 09:16

    “The state is that great fiction by which everyone tries to live at the expense of everyone else.”

    Frederic Bastiat

    Reply this comment
  6. SeeSaw
    SeeSaw 20 May, 2014, 10:22

    It is pure propaganda when you continue to place the blame for the State’s financial problems on the public sector workers. The State’s liability for making its payments to CalPERS every year is approximately 3% of its total budget.

    The Wonder Dog has never made one prediction that came true in all the years that I have have been reading his childish gibberish. I predict that his most recent prediction will be a flop as all his others have been. I worry about him either way–he needs to go to the Vet for a brain scan soon.

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 20 May, 2014, 11:09

      The states financial problems are the public troughers. 85% of the budget, and more in education, go to salary and benefits. All public troughers are grossly overcompensated, with mechanics at the LA DWP receiving BASE SALARIES of $109K plus another $100K in benefits. GED cops and firewhiners getting $200K-$350K with OT. It is truly a joke and yes, it is the fault of the trougher employees for basically bribing the politicians in a legal money laundering scheme and sending the entire system into chaos.

      So yes, I blame the greedy employees.

      Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 20 May, 2014, 11:41

      “when you take into consideration the state’s higher cost of living and compare public employee pay to the state’s overall personal income, California’s rank is below average at #35.”

      Below average. And the glass is at least half full.

      Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 20 May, 2014, 11:51

        Are you for real Dougie????

        Please show me ANYWHERE IN AMERICA (outside CA public employment, AKA “Fantasyland”) where a GED employee is comped $350K. ANYWHERE!!!!!!!!!

        BTW, “cost of living” is just a red herring that the public troughers throw out to try to side track and confuse the public. The “market” wages and benefits for a GED job level (like cop for instance) are $10K-$15K, including here in Krazy Kalifornia, it is NOT $350K.

        “Market” wages are determined by what the market will bear, not what the “cost of living” is in any segmented market, like Krazy Kalifonria. If pay and benefits were determined by the “cost of living” Walmart employees would be making $200K per year.

        Nice try though 🙂

        Reply this comment
    • S and P 500
      S and P 500 20 May, 2014, 11:53

      K-12 teachers placing the blame for the sorry state of education on Bill Gates, Wal-Mart, and Apple is not only propaganda but also a shameless request for more taxpayer money for their pay and pensions. I’m starting to like the Koch brothers more and more when they said they’re spending $125 million on ads against lawmakers who favor state money going to bail out Detroit.

      Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 20 May, 2014, 18:33

        K-12 teachers placing the blame for the sorry state of education on Bill Gates, Wal-Mart, and Apple is not only propaganda but also a shameless request for more taxpayer money for their pay and pensions.

        But it is for the trough feeding public employee leeches children~ 🙂

        Reply this comment
  7. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 May, 2014, 11:13

    The State’s liability for making its payments to CalPERS every year is approximately 3% of its total budget.

    I love shooting down see“sows” whoppers~!

    Actually see“sows”, you leave off the money that the state pays to the schools through Prop 98, which also covers pensions. You also leave off the fact that the state is shorting CalSTRS $5 BILLION per year- now do the math, the $5 BILLION per year is actually the ADDITIONAL amount they need to pay, not counting the $1.5 billion they now pay. That alone is over 10% of the budget, NOT even counting CalTURDS underfunding, which is rising……

    OK see“sows” carry on 🙂

    Reply this comment
    • SeeSaw
      SeeSaw 20 May, 2014, 12:44

      I was talking about CalPERS not CalSTRS. Any which way, poor little dog, you need to face facts. The government is in the business of providing services to the population, and it takes people to do that–therefore, the bulk of any government entity’s budget is going to be for personnel salaries and benefits.

      Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 20 May, 2014, 14:59

        “The government is in the business of providing services to the population …”

        Well, that is what the government is supposed to be.

        In reality what has developed in the last 15 years is a pension system for brilliant government employees mega fraudulent Ponzi scheme, gamed and manipulated against the poor and middle class private sector, with a few government services attached.

        Reply this comment
        • Bud Led Ted S.
          Bud Led Ted S. 20 May, 2014, 19:53

          Ponzi ??? LOL

          No specific intent little buddy!

          But don’t let the law, reality, civility or anything else stop you!

          Reply this comment
          • Donkey
            Donkey 21 May, 2014, 07:01

            TCS, the “law” in the case of the RAGWUS pension scam is nothing but the “tyrants will.” 🙂

          • Tim Pluff
            Tim Pluff 21 May, 2014, 13:03

            Good Luck with that Poodle!

          • Rex the Wonder Dog!
            Rex the Wonder Dog! 21 May, 2014, 16:16

            No specific intent little buddy!
            Oh no, Teddy is Googling the law again.

            OK Clarence Thomas Junior, here you go;

            CalTURDS KNOWINGLY, WILLFULLY AND INTENTIONALLY withheld the different (as in worst case) funding scenarios for SB400, A/K/A “3%@50”, giving the legislature ONLY the VERY BEST scenario. Specific intent just me 🙂

            Like taking candy from a Teddy Steals baby 🙂

            Dum de Dum Dum (Dragnet Intro) :O

          • Bud Led Ted S.
            Bud Led Ted S. 21 May, 2014, 20:29

            Sorry little buddy—–where’s any evidence of the specific intent to perm deprive?

            Evidence, you know
            testimony?
            documentary evidence?
            physical evidence?

            any?

          • Rex the Wonder Dog!
            Rex the Wonder Dog! 22 May, 2014, 00:53

            I just schooled you Teddy, read my comment again or go back to Concord online LS and get a refresher course in Fraud in the Inducement.

            Carry on Trougher 🙂

  8. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 May, 2014, 11:14

    The Wonder Dog has never made one prediction that came true in all the years that I have have been reading his childish gibberish. I predict that his most recent prediction will be a flop as all his others have been. I worry about him either way–he needs to go to the Vet for a brain scan soon.

    🙂

    I am seeing my local Vet today, make sure my K-9’s are healthy for the next BITE I take out of your whopper lies!

    Reply this comment
  9. FollowTheMoney
    FollowTheMoney 20 May, 2014, 11:36

    “$3.7 billion a year will be expected to come from school districts themselves”

    Good luck with that. My high-rated school already asks for cash up front and all year long.

    Reply this comment
  10. BillyBS
    BillyBS 20 May, 2014, 15:01

    I think the pension problem is a symptom of a sick, greedy society. The pension spikers are no different than the Wall Street types, just on a smaller scale. One wrong does not justify another. Put either one in the in a different environment: the Wall street type is a spiker. the spiker would be guy justifying his bonus paid by TARP. The High School athletic director lamenting his modest $100k pension is a greedy hypocrite, just like the Wall Streeter padding his bonus, and talking about the free market. The pension recipient expecting a full pension after a career of skating in “public sevice” is a parasite, just like the jerk in the private sector lying on his/her childs application to get the most free financial aid. Our society needs a scrubbing.

    Reply this comment
    • Tough Love
      Tough Love 20 May, 2014, 19:06

      All true, but still, there is NOTHING more greedy than a Public Sector Union/worker.

      Reply this comment
      • Bud Led Ted S.
        Bud Led Ted S. 20 May, 2014, 19:49

        LOL well maybe a Wall Street hedge exec…..

        Reply this comment
        • Tough Love
          Tough Love 20 May, 2014, 20:20

          At least those who CHOOSE to invest with hedge funds do so voluntarily and know the fees upfront.

          Taxpayers can’t choose who collects their garbage and provides other state and municipal services. And Public Sector workers are UNIVERSALLY overcompensated by elected officials (or their minions) who trade campaign contributions and election support for favorable vote on pay, pensions, and benefits.

          Reply this comment
          • S and P 500
            S and P 500 21 May, 2014, 14:57

            Most public pension funds invest in hedge funds and private equity. The fees on PE are huge–it’s called the 2/20 rule. 2% management fee on the amount you have invested and 20% of any investment gains. In that PBS Frontline about Steve Cohen “To Catch a Trader” (see it on pbs.org) his fees were even higher. As another pensiontsunami link pointed out, there is an alliance between public unions and Wall Street–the unions invest their pension money in hedge funds and PE. In addition, as cities have to borrow money to pay pension bills, WS profits by underwriting those muni bonds that get cities into more and more debt.

        • Rex the Wonder Dog!
          Rex the Wonder Dog! 21 May, 2014, 16:18

          “All true, but still, there is NOTHING more greedy than a Public Sector Union/worker”………”LOL well maybe a Wall Street hedge exec…..”

          I say it is a toss up!

          Reply this comment
    • Donkey
      Donkey 20 May, 2014, 19:26

      BillyBS, shining the light of truth on a topic that needs immediate action from honest people. 🙂

      Reply this comment
    • Bud Led Ted S.
      Bud Led Ted S. 20 May, 2014, 19:51

      Phew– glad the law changed so none may spike. Let’s all be grateful!

      Reply this comment
      • Donkey
        Donkey 21 May, 2014, 07:11

        TCS, you have to read the whole post, not just the first two sentences.

        BillyBS was writing that the entire RAGWUS pension system is a crooked scam, as is wall street, spiking is only a little part of the scheme. I do however like the way many cities, and counties are looking over their pension records looking for thieving creeps that took advantage of the taxpayers when spiking was seen as okay by the typical feeder parasite. 🙂

        Reply this comment
  11. Bud Led Ted S.
    Bud Led Ted S. 20 May, 2014, 19:56

    Such a great post I had to do it again!

    No need for the Ted System here little buddy! Everythings going to be ok! But keep paying your taxes so I don’t have to come hook you up—–let’s see—– 44,000 American cities……..and 8 have gone bk………….hmmmmm………..we’re doooooooooooooooooooooooomed!
    The Bud Led Ted S. System ™
    “it’s just that easy” ™

    Reply this comment
  12. Leotis Ahmad Jones
    Leotis Ahmad Jones 20 May, 2014, 20:09

    Sow, The blood moved to the vitals wen you is mad. Where yu is? I needz relifz.
    Forever yuz.
    LA Jones

    Reply this comment
  13. Ulysses Uhaul
    Ulysses Uhaul 20 May, 2014, 20:13

    Will the GED twins ever cease their falsehoods, smears and blatant distortions…..

    Reply this comment
  14. Ulysses Uhaul
    Ulysses Uhaul 20 May, 2014, 20:14

    Will the GED twins ever cease their falsehoods, smears and blatant distortions…..

    Reply this comment
  15. Bud Led Ted S.
    Bud Led Ted S. 21 May, 2014, 20:24

    He’s not me little buddy—— you are having more of your infamous delusions….sorry

    Reply this comment
  16. Donkey
    Donkey 22 May, 2014, 06:59

    JFK knew the RAGWUS feeders would ruin the nation with their greed. The myth of serving the private sector citizens has been a lie for the last thirty years.

    “The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic.” – JFK
    🙂

    Reply this comment
  17. Ulysses Uhaul
    Ulysses Uhaul 22 May, 2014, 07:39

    Teddy……I can’t take this philosophy stuff from the Feeder Hunters anymore!

    How could GED educated doomers become tin pan oracles?

    Reply this comment

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