Instead of calling for the governor and the Legislature to sharply increase its annual payments to the funds responsible for these liabilities, Taylor called for relatively slight increases phased in for years — increases that are far short of what an actuary would recommend.

It’s as if a family declared its finances to be in great shape so long as one ignored the $500,000 in credit-card debts.

What makes the LAO’s current insanity so tough to figure out? The fact that at other times, the LAO makes powerful arguments that completely counter the budget assertions Taylor offered last month.

LAO: CalSTRS’ debt much worse than Brown’s ‘wall of debt’

For one example, this is from Ed Mendel’s piece on Calpensions.com in March of this year:

“The nonpartisan Legislative Analyst’s Office yesterday recommended that the Legislature adopt a plan to fully fund CalSTRS in 30 years — an estimated cost of $4.5 billion a year, a hefty addition to current annual contributions totaling $5.7 billion. …

“… after years of ignoring a growing CalSTRS debt … the Assembly and Senate public employee retirement committees held a joint hearing yesterday on proposed solutions requested by a Senate resolution last year.

“Ryan Miller of the Legislative Analyst’s Office told the committee that the unfunded liability of the California StateTeachers Retirement System, a century old this year, ‘may be the state’s most difficult fiscal challenge.’

“The analyst said the CalSTRS unfunded liability is twice the size of what Gov. Brown calls ‘the wall of debt’ from years of budgetary borrowing. The governor’s proposed budget spends $56 billion on K-12 funding under the Proposition 98 guarantee.”

Let’s contrast that with what Mac Taylor said three weeks ago in Sacramento at a legislative hearing.

“’The state’s budgetary condition is stronger than at any point in the past decade. … The state’s structural deficit – in which ongoing spending commitments were greater than projected revenues – is no more.’”

Does LAO staffer have a bloody lip?

Huh? So paying the actuarial minimum for retirement benefits that are contractually guaranteed and protected by a welter of state laws isn’t a “spending commitment”?

What’s going on in Sacramento? Is there something in the Capitol water supply? Psilocybin, perhaps?

I wonder how the LAO staffer who correctly warned the Legislature about CalSTRS’ horrible finances in March deals with his boss’s denial and declining math skills. Does he have to bite his lip to keep quiet when Mac talks of budget surpluses as far as the eye can see? Does he chant “om” to maintain his mental equilibrium? Does he furtively scan the jobs.ca.gov site so he can get away from the Lunatic Analyst’s Office?

I’m not being completely facetious here at all. This was the official position of the LAO when the staff was doing the talking, not the boss:

“If the state’s current $1.4 billion annual contribution to CalSTRS were combined with the $4.5 billion additional contribution that may be necessary to achieve full funding in 30 years, the sum would exceed state spending on the University of California and California State University systems combined. The additional CalSTRS contribution alone would represent about one-half of state corrections spending.”

Now the LAO’s position has become “the state’s structural deficit … is no more.”

Wow. And a whole bunch of other less-family-friendly exclamations.

By Chris Reed

California’s dual, incompatible narratives keep rolling along.

On the one hand, we’re supposed to believe the passage of Proposition 30 and Gov. Jerry Brown’s able stewardship have lifted the Golden State out of the doldrums.

On the other hand, there are the actual hard facts.

California’s longest sustained stretch of high unemployment since the Depression continues. We’ve been over than 8 percent for four years in a row. The most recent figures have California at 9.4 percent, among the nation’s worst.

And the state’s finances that Jerry supposedly repaired remain a vast, intractable mess, as two headlines this morning remind us.

Oh, yeah, that budget crisis is no more

First there was this from the L.A. Times:

“SACRAMENTO — Arnold Schwarzenegger persuaded voters nine years ago that if they let him borrow money to cover the budget deficit, California’s financial woes would end for good. A key part of his plan was a new rainy-day fund to insulate the state from further crisis.

“‘It will be a whole new ball game,’ Schwarzenegger said. ‘Trust me.’

“But California was roiled by financial turmoil for years afterward, and today the reserve is empty. With more than $5 billion in bonds left to repay, Gov. Jerry Brown apparently plans to leave it that way.

“The reserve was created without a firm requirement to fill it, and Brown’s proposed budget contains no allocation for the fund. Without a financial cushion, some experts say, California is more vulnerable than many other states to drops in revenue that can lead to social-services cuts or pink slips for teachers.”

Oh, yeah, that state pension fix ended the benefits crisis

Then there was this reminder from Ed Mendel that the state government has a retirement benefits crisis, not just a pension problem, and on a key front the state can’t do anything about it because unions won’t let them — meaning the problem will keep getting worse and worse:

“With pensions presumably shored up by Gov. Brown’s reform and a CalPERS rate hike, will the problem-solving trend spread to what is, by some measures, an even bigger retirement debt: health care promised state workers?

“It was no surprise last week when a Democratic-controlled Senate committee rejected a Republican’s proposal to begin setting aside money to pay for retiree health care promised new state workers, putting a small dent in a $64 billion 30-year debt.

“Labor lobbyists told the committee they do not oppose ‘prefunding’ retiree health care that is now ‘pay as you go.’ This year $1.8 billion is budgeted for annual costs with no money added to invest and yield earnings to reduce long-term costs.

“The labor unions said the funding of retiree health care is a pay issue, possibly affecting the total amount available for salaries, and therefore should be addressed through collective bargaining.”

You follow? The unions won’t let the state act responsibly in dealing with a huge long-term problem involving benefits going to union workers, because anything involving money affects salaries, which must be collectively bargained. This is consistent with the insane view of Jerry Brown’s appointees to the Public Employment Relations Board, which has argued that collective bargaining requirements mean that Los Angeles Unified can’t enforce a 1971 state law mandating that student performance be part of teacher evaluations. Collective bargaining: It’s California’s new Constitution!

Governor’s greatest triumph: Selling a fake narrative

Jerry Brown hasn’t fixed anything. He’s been better than Arnold at getting Dems in the Legislature to acknowledge reality, which is a triumph. But the state government remains a poorly run mess. And the fundamental arc of the California economy remains rotten for poor people and much of the middle class.

The governor’s greatest triumph? It’s somehow persuading much of the media that this factually driven narrative of incompetence and despair is no longer true.