Court ruling opens avenue for pension reform

Pension reformSACRAMENTO – An Aug. 17 California appeals court ruling rejected a public employee union’s claim that its members had a right to “pension spiking,” which the court described as “various stratagems and ploys to inflate their income and retirement benefits.” Public employees often will pad their final salary total with vacation leave, bonuses and “special pay” categories to inflate the pension benefits they receive for the rest of their lives.

That decision was good news not just for pension-reform activists, but for the Jerry Brown administration and legislators from both parties who had supported a 2012 reform law meant to shave the state’s pension obligations. As Justice James Richman noted in his ruling, spiking “has long drawn public ire and legislative chagrin.”

But pension reformers got even better news, given the nature of the judge’s reasoning. The court ruled that employees have a right to a “reasonable pension – not an immutable entitlement to the most optimal formula of calculating the pension.” That simple logic undermines the core obstacle to far-reaching pension reform in California, and which has been adopted in several other states. It involves something known as the “California Rule.”

It’s not actually a rule, but a precedent derived from a variety of rulings that date back to 1955. Ultimately, it says that once a legislative body (city council, board of supervisors, the state Legislature) grants a pension-benefit increase, that increase is indeed immutable; it can never be rolled back. Employees can never be forced to contribute more to their pension plan unless they get something of equal or greater value in return.

By contrast, the courts allow private-sector employers to roll back pension benefits on a forward-going basis. In other words, an employer can’t reduce pension benefits that have already vested, but it can cut back future benefits that have yet to be earned.

Four years ago, California politicians from both parties acknowledged the depth of the state’s public-employee pension crisis. Unfunded liabilities – i.e., the taxpayer-backed debt to pay for the state’s pension promises – were rising. Localities were struggling to make ends meet as their pension obligations rose, with a handful heading into bankruptcy and others struggling with service cutbacks to afford their pension bills.

The resulting pension-reform law, called the Public Employees’ Pension Reform Act (PEPRA) of 2013, has been criticized for not going far enough in its reforms. Some Republicans even alleged it was more about public relations than reform. Its passage in 2012, for instance, was used by supporters of the Proposition 30 tax increase measure to convince voters the state was serious enough about governmental reform that they should vote yes. But the Brown administration and legislators argue it was a serious step toward reining in pension problems.

Whatever their motives, legislators and the governor have dealt with the same problem faced by other local governments that have tried to reform pensions: the courts use the California Rule to stop most proposals that reduce benefits for current employees. PEPRA mostly made changes for future employees. The pension-spiking restrictions at issue in this ruling, Marin Association of Public Employees v. Marin County Employees’ Retirement Association and the State of California, were found in a trailer bill that was passed after it became clear that PEPRA actually would “increase pension-spiking opportunities,” as the East Bay Times’ Dan Borenstein reported.

Despite the reform, however, massive pension problems remain. The Stanford Institute for Economic Policy Research produces a pension tracker that calculates the size of the pension debt for all of the state’s employee-retirement systems. Depending on assumptions about rates of return, the debt ranges from $281 billion to $946 billion, or a range from $22,000 per California household to $75,000. In the ensuing four years, the debt problems have intensified, especially following the California Public Employees’ Retirement System’s recent returns, which were below 1 percent for the past year.

Unlike a 401(k) system, where the ups and downs of the market raise or lower the returns that an employee will receive, these governmental defined-benefit systems guarantee a payout to employees based on a formula. If the market goes down, then the taxpayer-backed unfunded liability, or debt, goes up. There’s variation in the size of the debt based on how well the pension funds do. The main pension fund assumes their investments will earn an aggressive 7.5 percent. If it’s wrong, agencies will need either to come up with more money or cut back public services.

Hence, the significance of the California Rule. The state and local agencies have cut back pension benefits for new and future employees. That’s allowed. But most of those employees won’t start retiring for 30 years. Many analysts believe the only way to get these debt numbers under control is to reduce benefits of current employees going forward. The courts have so far stopped that approach. A federal court in the Stockton bankruptcy case ruled that benefits can be cut for current employees, but cities have to go belly-up to take advantage of that process.

The latest ruling offers a possible way out of this conundrum. “(T)he Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension,” the judge ruled. “So long as the Legislature’s modifications do not deprive the employee of a ‘reasonable’ pension, there is no constitutional violation. Here the Legislature did not forbid the employer from providing the specified items to an employee as compensation, only the purely prospective inclusion of those items in the computation of the employee’s pension.”

The judge pointed to a report from California’s watchdog agency, the Little Hoover Commission, noting the size of the pension problem: “The money coming in is nowhere near enough to keep up with the money that will need to go out. The state must exercise its authority – and establish the legal authority – to reset overly generous and unsustainable pension formulas for both current and future workers.” In other words, the promised benefits cannot be considered outside of the overall health of these public retirement systems.

The ruling will almost certainly be reviewed by the state Supreme Court. Pension-reform advocates have made progress in the past in addressing this rule (e.g., the 2012 passage of a San Jose reform that rolls back benefits for current employees) only to be rebuked in court. And even if it stands, the decision will leave no clear roadmap. How much can future pension benefits be cut or how much more can employees be expected to contribute before it becomes “unreasonable”?

It’s unclear, but as a Santa Rosa Press-Democrat editorial from last week opined, the “court ruling opens a path for pension reform.” That’s not a freeway, but it’s a way forward that reformers didn’t have before the 1st District Court of Appeal’s decision.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at [email protected]

50 comments

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  1. Ted. Mentor to the doomed....
    Ted. Mentor to the doomed.... 30 August, 2016, 07:48

    Snoozy doomer rehash from Greenhut. The same guy who gave Orange County Tony Rackauckass.

    Zzzzzzzzzzzzz

    Reply this comment
  2. Tough Love
    Tough Love 31 August, 2016, 05:09

    “reasonable” SHOULD BE interpreted as a pension that together with wages and other benefits (while working and after retired ….. such as retiree healthcare subsidies) that results in “Total Compensation” EQUAL TO … but not greater than…. that of Private Sector workers in jobs with reasonably comparable risks and which require reasonably comparable education, experience, skills, and knowledge.

    The Taxpayers have been the financial “suckers” in this equation for FAR too long.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 31 August, 2016, 08:03

      It’s already there, on average. Fuggedabout that 23% advantage. That was an outlier study based on data four to eight years old. Eight very volatile years that include salary and benefit concessions in every state.

      Reply this comment
      • Tough Love
        Tough Love 31 August, 2016, 10:39

        No it’s not, and very far from it. The VERY small group of employees that (per certain studies) earn less than their Private Sector counterparts … PHD’s and “professionals” (such as CPA,s Lawyers etc..) represent less than 10% of Public Sector workers and less than 5 % of Private Sector workers.

        The financial impact on Taxpayers is the combined impact form ALL employee groups taken together, and THAT shows FAR greater Public Sector “Total Compensation”.

        And anyone who believes that Public Sector CPAs and Lawyers work as many hours/wk as Private Sector CPAs and Lawyers is in a serious state of denial. If you work less hours, you SHOULD BE compensated at a proportionately lower rate.

        Reply this comment
  3. John Moore
    John Moore 31 August, 2016, 07:38

    As I have written, again and again, the right to reduce pensions to protect the integrity of a failing pension system has always been part of the California rule. The Kern v. City of Long Beach and Allen v. City of Long Beach both re=inforced that right. Kern even favorably noted its Casserrly v. City of Oakland case which allowed a reduction of a 2/3 of salary to a 1/2 of salary w/o offset for current workers. The Ca. Supreme court will have no difficulty upholding this decision. The key is that a foundation showing that the pension system is failing is required. But do not underestimate the resources the union gangs and their crooked lawyers will bring to bear to change this decision by new legislation. This is not a pillow fight, reformers must switch from blah, blah, blah to putting forth reform candidates with a reform agenda(for example, a factual foundation that no pension in excess of $90,000 a year is permitted).

    Reply this comment
    • Tough Love
      Tough Love 31 August, 2016, 10:59

      John Moore,

      A COLA-increased $90K annual pension is financially equivalent to a Non-COLA pension (as are virtually all PRIVATE Sector pensions) of about $115K. For a Private Sector Worker to get a $115K pension (under they TYPICAL Private Sector pension formulas/provisions) they would need to have worked 30 years and have a final average salary of about $300K.

      Capping Public Sector pensions at a level equivalent to that of a 30-year Private Sector worker earning $300K is absurdly too high (in the extreme).

      The Taxpayer-funded share of Public Sector pensions should be no greater (for Public Sector workers at ALL income levels) than the pensions bought with their employer’s contribution to their pensions.

      Public Sector workers are NOT “special” and deserving of a better deal ….on the Taxpayers’ dime.

      No offense, but your “suggestion” has near zero financial impact.

      Reply this comment
      • S Moderation Douglas
        S Moderation Douglas 31 August, 2016, 11:48

        “Public Sector workers are NOT “special” and deserving of a better deal ….on the Taxpayers’ dime.”

        I’m not so sure about that, actually. I haven’t seen any empirical evidence, but my personal observation over the last forty years is that public workers seem to be somewhat taller than those in the private sector, which may explain some of the difference in income.
        “….. a person who is 6 feet tall would be predicted to earn nearly $166,000 more over the course of a 30-year career than someone who clocks in at 5 feet 5 inches. (The researchers observed those results even when they controlled for gender.)”
        http://www.businessinsider.com
        And, some say that public workers, on average, are more attractive than those in the private sector.
        http://www.businessinsider.com
        Don’t hate me because I’m beautiful.
        Can’t argue with science.

        Reply this comment
        • Tough Love
          Tough Love 31 August, 2016, 12:09

          Yes SMD, taller did help in YOUR CA Public Sector job, part of the responsibility being the changing of light bulbs.

          Reply this comment
      • John Moore
        John Moore 31 August, 2016, 12:24

        I was simply throwing out a number for a lid(the highest). Every city and county will need to analyze the condition of its pension system and then amend its plan to show that it is not sustainable at a higher rate. I am speaking about a practical reduction of pensions under Kern and Casserrly, not some philosophical principle. We must be serious about helping agencies gain control of their finances.

        Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 31 August, 2016, 13:05

          There’s already a cap for new employees, about $106k-120k. And about thirty percent of present employees are now under the new formulas and caps.

          Once these workers surpass $118,500 a year, no more contributions will be deducted for the remainder of that year.

          If a legacy employee making $150,000 a year retires next year, he has been paying eight to ten percent, or more, on his entire salary. Best case, if you limit his pension to $90,000, you would need to refund several years of his contributions, plus interest. Or there would need to be a phase in period or grandfather clause. Best to leave legacy employees alone. There aren’t that many over $100,000 anyway.

          Reply this comment
          • Tough Love
            Tough Love 31 August, 2016, 16:29

            Quoting SMD ….. “Best to leave legacy employees alone. There aren’t that many over $100,000 anyway.”

            BS………….

            Few newly retiring full career Safety workers get a pension less than $100K ….. as well as loads of agency administrators/supervisors, and many of CA’s vastly overpaid college professors.

          • S Moderation Douglas
            S Moderation Douglas 31 August, 2016, 18:20

            “Few newly retiring full career Safety workers get a pension less than $100K ….. as well as loads of agency administrators/supervisors, and many of CA’s vastly overpaid college professors.”

            Few?

            Don’t you ever get tired of exaggerating and misleading and, you know, lying?

            Transparentcalifornia:

            ” the average pension for full-career miscellaneous retirees, which includes all non-safety employees, and safety retirees was $65,148 and $85,724, respectively.”

            Do you know what “average” means?

          • S Moderation Douglas
            S Moderation Douglas 1 September, 2016, 01:02

            Another pathetic Swaimism.

      • John Moore
        John Moore 1 September, 2016, 06:56

        Totally disagree with your analogy. And you always ignore the fact that $10,000 of a public pension costs almost twice that of a private pension because of uncontrollable deficits. But my point is we need to quit blabbing back and forth and elect real reformers.

        Reply this comment
  4. TB
    TB 31 August, 2016, 10:28

    More and more people are beginning to realize that Defined Benefit plans like public pensions are not sustainable, including the private sector which has more or less done away with them. Here is my solution to this looming crisis that is only going to get worse without any correction of course:

    https://drive.google.com/file/d/0B90sU3A85q46OE9BZHJFSWEzbGM/view?usp=drivesdk

    Please help spread the word…

    Reply this comment
  5. milton
    milton 31 August, 2016, 18:14

    No reform needed, just give them a skin implant that gives them ten years to collect the pension, and then releases a drug to put them to sleep……….don t need a pension check when they’re pulling body parts for the needy. Ideally, the drug works before we start yanking out the organs.

    Reply this comment
  6. Teddy Baby MD
    Teddy Baby MD 1 September, 2016, 15:51

    Tough Love—- Sleepy dim witted rehash of the garbage you’ve posted for EVER Cal Pers rolls on 310 Billion baby— Zzzzzzzz nite nite dear…

    no offense—

    Reply this comment
    • Tough Love
      Tough Love 1 September, 2016, 21:08

      I saw you OTHER comment here (the first above), signing-off with your classic “Zzzzzzzzzzzz”.

      What came to mind was ……… Gee, that moron is STILL around.

      Reply this comment
      • John Moore
        John Moore 2 September, 2016, 14:14

        Teddy MD. According to the recent public pension analysis by professor Joshua Rauh of The Stanford Business school, within just eight years most of the pension plans in the U.S. will be unable to make full annuity payments. He has set forth the evidence and he has done the math.

        Reply this comment
        • Ted. Mentor to the doomed....Builder of the FUTURE!
          Ted. Mentor to the doomed....Builder of the FUTURE! 2 September, 2016, 16:54

          LOL Well John “they’ve done the math” LMAO—- Like the global warming science guys? I bet you don’t buy in to that –do you?

          Cal Pers is healthy— and in 20 years healthier still as PRRA kicks in….

          Reply this comment
        • S Moderation Douglas
          S Moderation Douglas 3 September, 2016, 09:13

          John Moore

          What else did Josh Rauh say?

          In response to the question:

          “Why should other taxpayers carry the burden of having to support the lavish benefit schemes of these governmental institutions that have over promised and intently underfunded? This is not the burden of the society at large.”

          Josh says:

          ” One question we have to answer (i think the jury is still out) is how lavish these benefit schemes really are on average. …”

          ” What makes me a little cautious are statistics I have seen on the average public employee. Here are some figures for Illinois pulled from a document by Charles N. Wheeler, III. …”

          (Inserts various data on Illinois pensions. )

          “… In my view, these figures (assuming they are accurate) do not paint a picture of excess for the average public employee in Illinois, although the concept of “adequacy” is to a large degree in the eye of the beholder.”

          Reply this comment
      • Ted. Mentor to the doomed....
        Ted. Mentor to the doomed.... 3 September, 2016, 08:31

        T LOVEY—- Sounds like a projection girlfriend! YOURE still around??? Amazing!!!

        Reply this comment
  7. S Moderation Douglas
    S Moderation Douglas 2 September, 2016, 21:52

    Says CalPERS:

    “The report of my death was an exaggeration.”

    Reply this comment
    • Tough Love
      Tough Love 3 September, 2016, 00:05

      “Premature” would be far more accurate. If not IF CalPERS will fail (with benefit reductions), but WHEN.

      But being an old curmudgeon, you may well meet your make before that happens.

      Reply this comment
      • S Moderation Douglas
        S Moderation Douglas 3 September, 2016, 02:48

        Perhaps…

        Tell us about those Safety Workers again, Will…

        “Few newly retiring full career Safety workers get a pension less than $100K ….. as well as loads of agency administrators/supervisors, and many of CA’s vastly overpaid college professors.”

        Are you still standing behind that? Can you back it up?

        If not, you could just borrow a phrase from Will Swaim…

        “My mistake. Thanks for pointing it out.”

        Reply this comment
        • Tough Love
          Tough Love 3 September, 2016, 09:13

          Perhaps a reader can direct us to a database where one can drill down to get …… 2015 30 year police* retirees, separately for State and Local (by City) Officers.

          * and paid firefighters separately

          Reply this comment
  8. S Moderation Douglas
    S Moderation Douglas 3 September, 2016, 10:16

    Perhaps…

    Perhaps your fifth grade math teacher could explain that:

    “Few newly retiring full career Safety workers get a pension less than $100K …..”

    And:

    ” the average pension for full-career… safety retirees was $85,724.”

    are incompatible statements. Unless you doubt Robert Fellner and Ed Ring, the second statement is the true one. Which would make the first statement nothing more than exaggerated rhetoric.

    The proper response is “My statement was incorrect. Sorry about that.”

    “Xin loi” or “lo siento” would work, also.

    Will Swaim could do it. You can, too.

    Reply this comment
    • Tough Love
      Tough Love 3 September, 2016, 13:28

      S Moderation Douglas,

      We’re talking about crazy California. I do not believe that 30-yr 2015 CA Police retirees receive (on average) a pension of $85,724.

      How about providing the EXACT Source (with link) so that the readers can see the specifics.

      And as far as my math abilities, they are beyond most with a MS degree in math, and assuredly orders of magnitude above anyone whose job included changing light bulbs (as did yours).

      Reply this comment
      • Tough Love
        Tough Love 3 September, 2016, 13:53

        Follow-up………

        Quoting form the link below (published in 6/2/2011 and based on 2009 data):

        http://www.theatlantic.com/politics/archive/2011/06/in-california-many-police-and-firefighters-get-100-000-pensions/239796/

        “About 18,000 local public safety and California Highway Patrol officers in the Cal-PERS system were 45 or older in 2009, the latest state figures show. Most can retire at age 50 and get 3 percent of their highest pay for every year they worked, usually up to 90 percent. Their average pay: $108,000.”

        If all had 30 years service their starting pension in 2009 would have been 0.9 x $108,000 = $97,200.

        But for ONLY 30 year retirees and for retirement in 2015, that pension would assuredly be greater, likely $10K-$25K higher for the following reasons:

        (1) over six years (from 2009 – 2015) …. wage have gone up
        (2) The group quoted was for those 45 years old (or older) in 2009, many of whom did not yet have 30 years, all of whom will get raises form 2009-2015, and some of whom will get promotions with even higher wages.

        Yea …. MY MATH say that $97,200 starting pension in 2009 would be far greater today.

        Reply this comment
  9. S Moderation Douglas
    S Moderation Douglas 3 September, 2016, 14:45

    Here’s what Mr. Fellner says about pensions:

    “The average pension for full-career miscellaneous and safety CalPERS retirees was $65,148 and $85,724, respectively.”

    Source:

    https://blog.transparentcalifornia.com/2015/10/06/full-career-san-diego-area-city-retirees-earn-59-more-than-residents-average-salary/
    —————————————-
    Here’s a bonus twenty pages of data on pay you can play with. Bottom line takeaway by the Sacramento Bee:

    “Excluding overtime, vacation payouts and bonuses, average pay for police officers in 2014 was $80,800 and for firefighters was $82,500.

    http://www.sacbee.com/site-services/databases/article2573210.html

    Reply this comment
    • Tough Love
      Tough Love 3 September, 2016, 16:03

      SMD,

      It’s always interesting to get to the source……

      The following are the exact works from your link to Robert Fellner’s article:
      ——————————–
      The 2014 report contained 19,728 recipients with a monthly allowance of $8,333.34 or more — representing an annualized benefit of at least $100,000 — a nearly 35% increase from 2012’s report. The average pension for full-career miscellaneous and safety CalPERS retirees was $65,148 and $85,724, respectively.
      —————————————–
      Those statistics are “from a 2014 report” . That does NOT seem to mean that all those included in the stattitic are 2014 retirees ….. and perhaps included ealier year retirees. Also, Mr. Fellner uses the words “full career”. Is that ONLY inclusive of those with 30 years , or perhaps those with 20 or 25 also. If either of the latter, the stated averages are drawn down by far smaller pensions.

      And of course the pensions of 2015 retirees are greater than those retiring in 2014 (even if that is what Mr. Fellner meant).

      Reply this comment
      • S Moderation Douglas
        S Moderation Douglas 3 September, 2016, 19:41

        Fellner:

        “A full-career for miscellaneous retirees is defined as at least 35 years of service, the minimum required to qualify for Social Security benefits without penalty, while a full-career for safety employees is defined as 30 years or more.”
        —————————————-

        Déjà pooh, all over a-gain.

        “Tough Love says:
        December 19, 2012 at 9:05 pm
        No Douglas, ALL full career cops & firemen in CA cities (regardless of rank) retire with $100+K pensions ….. but you already knew that , didn’t you ?”

        Unbiased fact checker* says… Not true

        ” Tough Love says:
        December 19, 2012 at 10:58 pm
        Douglas, Don’t play dumb.
        just about all CURRENTLY retiring cops and firemen retire with $100+K pensions”

        Unbiased fact checker says… Still not true

        “Tough Love says:
        December 20, 2012 at 8:14 am
        Douglas, I was more referring to city/town Police & fire pensions, not not those of State retirees.”

        Unbiased fact checker says… Sorry, still not true. Not true in 2012. Not true in 2016

        Unbiased fact checker says… Duh!!! Maybe all left handed red haired cops have $100,000 pensions. Let me check that and get back to you. LOL

        To be fair, it might be that Bergen County parallax effect. Not all police and firefighters work in the high rent district…

        “$70,627… Average 2015 annual pension benefit for Fresno police/fire retirees with at least 30 years of service”

        http://www.fresnobee.com/news/local/article65349437.html

        *Unbiased fact checker… S Moderation Douglas

        Moderation, it’s not just a name, it’s a way of life.

        Reply this comment
        • Tough Love
          Tough Love 3 September, 2016, 22:02

          SMD, Since you threw in the kitchen sink, but DIDN’T DISAGREE that the $85,724 you presented as the average pension of newly retired CA Police Officers is WRONG, the calculation of that figure including those who retired in earlier years …….. I accept your apology.

          Reply this comment
  10. SeeSaw
    SeeSaw 3 September, 2016, 14:48

    IMO this judge got carried away with the rhetoric in his decision. A public-sector group covered by the “37” Act objected to giving up the spiking provisions allowed by its pre-PEPRA plan. (CalPERS abolished such spiking in 1993). Reform has to start somewhere though, and I think that abolishing spiking is a good start–I just question whether or not it should have been done outside the bargaining process, It is a question that must be decided in an appeal of this verdict. In the meantime, the reasonable pensions of currently covered public-sector employees are safe. There is nothing in PEPRA that allows for deductions to those pensions in the future unless new legislation is passed; such as that would not get very far unless bargaining is part of the process.

    Reply this comment
    • Tough Love
      Tough Love 3 September, 2016, 16:16

      SeeSaw. To be blunt, “Fxxx” the “bargaining process” ……….. there is little more greedy than Public Sector Unions/workers, and little more compliant (in granting grossly excessive pensions, and benefits) than an Elected Official whose re-election depends on Public Sector Union campaign contributions.

      And as for “reasonable” pensions, as I stated above …..

      “reasonable” SHOULD BE interpreted as a pension that together with wages and other benefits (while working and after retired ….. such as retiree healthcare subsidies) that results in “Total Compensation” EQUAL TO … but not greater than…. that of Private Sector workers in jobs with reasonably comparable risks and which require reasonably comparable education, experience, skills, and knowledge.

      Reply this comment
  11. SeeSaw
    SeeSaw 3 September, 2016, 20:11

    Doesn’t matter what you think should be done TL. If you want change, perhaps you should start with the private sector to see if you can help get those pensions on a par with the public sector–then be fair to the public employees by repealing the WEP and the GPO.

    Reply this comment
    • Tough Love
      Tough Love 3 September, 2016, 22:05

      Quoying SeeSaw ….. “perhaps you should start with the private sector to see if you can help get those pensions on a par with the public sector”.

      And where would perhaps $100 Trillion to do so come from ?

      As for the WEP and GPO, those provisions are part of Social Security to PREVENT unjust windfalls.

      Reply this comment
  12. Teddy
    Teddy 4 September, 2016, 09:10

    TL 100 million!!! LMAO you live in a doomers dreamworld…….lol

    on another note—- what other contracts do you republican doomers think we should void after perfprmance by one party? Donald Trump likes to do this after contractors do the work for his hotel company! lmao

    Reply this comment
    • Tough Love
      Tough Love 4 September, 2016, 10:10

      So Ted, you thinking it’s only $100 million, not $100 Trillion to give all Private Sector workers pensions equivalent to those now granted Public Sector workers ?

      Really ? On what planet ?

      Lets do the math. Recent scholarly research shows that (if valued on the same basis as the US Gov’t now REQUIRES of Private Sector Plans), State & Local Plans are UNDERFUNDED by $5.2 Trillion, with a funded ratio of $39%.

      Source …. http://www.forbes.com/sites/andrewbiggs/2016/07/01/are-state-and-local-government-pensions-underfunded-by-5-trillion/#1b21831a7c8f

      At 39% funded on this basis, that means that the TOTAL LIABILITIES of State & Local Public Sector Pension Plans are … $5.2 Trillion / (1-39%) = $8.5 Trillion.

      And, with Public Sector workers representing only about 1/7 of all US workers, the Liability Total to give all Private Sector workers pensions equivalent to those now Granted Public Sector workers would be about 7 times greater …or 7 x $8.5 Trillion = $60 Trillion.

      My bad………. $60 Trillion would have been a better estimate than my original (back of the envelope) $100 Trillion guesstimate.

      Reply this comment
      • Your Mentor--T. Tedly Steele
        Your Mentor--T. Tedly Steele 5 September, 2016, 19:08

        T Love? 100 million? 100 Trillion? 60 Trillion? — WHAT are you rambling about? Are you drinkin again?

        lmao—- a– clown

        Reply this comment
        • Tough Love
          Tough Love 8 September, 2016, 12:32

          Yeah, my thinking that the insatiable greed and oversized entitlement mentality of Public Sector workers/retirees (such as yourself) is sooooooooooo wrong, makes me a “clown”.

          Reply this comment
  13. S Moderation Douglas
    S Moderation Douglas 4 September, 2016, 13:54

    Hmmm… math.

    And assumptions.

    What could go wrong?

    My favorite… when you do the math, and use assumptions ( even when actual data is available)..

    And compute the incorrect answer to two decimal places.

    Math. The only place where people buy 60 watermelons and no one wonders why.

    Reply this comment
    • john m. moore
      john m. moore 4 September, 2016, 14:50

      See David Cranes piece today(Sept 4th) Regardless of the Calpers numbers, the liability to pay benefits grows and grows and grows. When PERS earned its 7.5% deficits grew out of control. My point: all of the comparing this with that is silly if the deficit continues to grow as it has. Hence Prof Rauh predicts that in just eight years most pension systems will not be able to pay full pensions

      Reply this comment
      • Tough Love
        Tough Love 4 September, 2016, 16:13

        It’s doesn’t take much grey matter to understand that it’s 100% of the Plan LIABILITIES (not Plan ASSETS) that must earn the Plan interest rate (e.g., 7.5%) for the Plan not to LOSE ground (as to it’s funding level).

        If a Plan is say 60% funded, it’s assets must earn 7.5%/0.6 = 12.5% just to maintain the current funding level. Is that even remotely possible ?

        Light-bulb changers don’t seem to get it …. or perhaps choose to ignore it because it conflicts with their agenda to have Taxpayers keep shoveling more and more of their hard-earned money to support these unnecessary, unjust, unfair, unsustainable, and grossly excessive pension (AND benefit) “promises.

        ALL of these Plan should be frozen (zero future growth) for the future service of all CURRENT workers. And that’ s JUST to stop digging the financial hole we are in deeper every day.

        Reply this comment
  14. Dr. Nork
    Dr. Nork 6 September, 2016, 09:18

    All pensions above $40000 per year should be taxed at 85% and given to African Americans. Anyone opposed to this is racist. Period .
    Black Lives Matter.

    Reply this comment
  15. T Ted CWD Hero
    T Ted CWD Hero 6 September, 2016, 16:25

    OMG CWD We need ore pension doomer rehash pieces— notice all of us trolls come out for these!!!

    Reply this comment
  16. Russell Jure
    Russell Jure 9 May, 2017, 06:16

    *There are certainly a lot of details like that to take into consideration. That is a great point to bring up. I offer the thoughts above as general inspiration but clearly there are questions like the one you bring up where the most important thing will be working in honest good faith. I don?t know if best practices have emerged around things like that, but I am sure that your job is clearly identified as a fair game. Both boys and girls feel the impact of just a moment?s pleasure, for the rest of their lives.

    http://www.evictionlaw.org

    Reply this comment
  17. O
    O"Moore 9 May, 2017, 09:22

    Articles like this that fail to recognize that the current salary/pension disaster in Ca. was created by crooked due process and is maintained by crooked due process and crooked government administrators and lawyers. That omission implies that the system can be corrected by due process, but that has failed. The reason for this approach is because it is politically effortless, let a bunch of politicians float an initiative and then cry when the crooks take it apart. writers should fight for reforms that are clearly available now: reduce salaries and freeze them until the costs and deficits are eliminated. It is simple: find reformers with the guts to take on the crooks, then get them elected.

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Steven Greenhut

Steven Greenhut

Steven Greenhut is CalWatchdog’s contributing editor. Greenhut was deputy editor and columnist for The Orange County Register for 11 years. He is author of the new book, “Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation.”

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