Eber: Transparency a foe of Pension reform

CalPERS is working hard to bankrupt your city and other government agencies.  They are taking money from the State, doubling mandated contributions and still that is not enough to keep the doors open.  This is an agency that REFUSED to demand one billion dollars back from an alleged corrupt deal—now a private organization has filed a False Claims Act suit—could be worth up to $3 billion!  Worse the Democrats refuse to do anything legislatively to save the retirement checks!

  • Senate Bill 1031: The bill sponsored by Senator Jim Nielsen (R) Tehama prohibited a public retirement system from making cost-of-living adjustments to new members if the unfunded liabilities of that system are greater than 20%. Such a small gesture would seem to be a case of common sense but the power of public employee labor unions would not allow even this to be enacted.”

At some time in the near future unless a major fix is approved, the system will collapse and the State will be forced to finance retirements.  John Cox has already talked about this issue—Newsom appears not to have heard about it.

John Cox 1

Transparency a foe of Pension reform By Richard Eber

Richard Eber, California Political News and Views 6/14/18

In his own sarcastic  way former San Jose Mayor Chuck Reed turned public employee benefits reformer explained it all when he quipped,” The state legislature never misses an opportunity to miss an opportunity to do pension reform.

In the current legislative session the committees in the State Senate killed 3 bills including;

  • Senate Bill 1031: The bill sponsored by Senator Jim Nielsen (R) Tehama prohibited a public retirement system from making cost-of-living adjustments to new members if the unfunded liabilities of that system are greater than 20%. Such a small gesture would seem to be a case of common sense but the power of public employee labor unions would not allow even this to be enacted.
  • Senate Bill 1032 The bill would have eliminated the existing Terminating Agency Pool (TAP) process for a contracting agency that seeks to end its CalPERS contract. It would have allowed an agency to terminate its contract with the board without having to fully fund the board’s pension liability. This would have been a big help to many cities who can’t afford the price tag of having their employees in the current system. In effect the State Senate wants to maintain the current “Roach Motel” approach to CalPERS that once in their system it is impossible to leave.
  • Senate Bill 1149The bill would have created an optional defined contribution plan for new state employees who are eligible to become members of CalPERS, and who choose not to make contributions into the defined benefit program. The way such a system would work is that the government’s payment would be the same as with defined benefits but their liability for underfunding would be eliminated.

While all of these proposals individually and as a group would not fix the current system, they would be a step in the right direction.  The fact is that CalPERS is over a trillion dollars in the hole in unfunded liabilities that needs to be repaired.  Unfortunately the legislature, being a captive of employee labor unions, lacks the intestinal fortitude to make basic changes to the existing retirement system.

In effect the State Government from Jerry Brown on down, are treating what amounts to a drug addiction (paying for unfunded pension benefits) with another fix solution to get through the next day. A good example of this was Brown giving a so called 6 billion dollar “loan” to CalPERS last year to take care of their immediate need to stay afloat. The State is acting more like a junkie, than a responsible organization, with their fiscal policy in handling pension deficits.

If the present system is not made whole, the only way it can be kept above water is new taxation. This dirty little secret is why opponents of the recently passed 72 cent gas tax hike argued this money is actually a transfer tax from improving transportation to supporting underfunded public employee pensions.

This might also explain the current scheme to create new tax’s for professional services ranging from attorney fees to real estate, to mine additional tax dollars to pay for the failing pension programs and other giveaways in the Progressive agenda.  As the killing of these 3 bills indicates, they would prefer to withhold the truth to the public and keep the status quo.of spiraling debt.

So much for “transparency” in the “Golden State

Gavin Newsom, at least during the political campaign, is totally oblivious to the problems of CalPERS. The likely next Governor of California prefers to discuss Sanctuary Cities, One Payer Health Care, gun control, rest room choice, and free Junior College tuition.  Nowhere does he ever have a way of figuring out a way to pay for all this stuff.

His throw in the towel approach of dealing with the pension deficits by the failed means of collective bargaining, is absurd.  It would appear Newsom and the rest of his allies are hallucinating on some of the dope than have recently legalized.

Not everyone agrees with them.  Chuck Reed wants to put a pension reform initiative on the ballot but has hesitated to do so until the California Supreme Court decides on the validity of the California Rule that says in effect once a benefit is bestowed on a State Worker, it can never be reduced.  This means the tax payers are stuck with the giveaway program what Gray Davis bestowed in the late 90’s. Presently, it can never be changed; or so the courts say.

Chuck Reed for one is not buying “our hands are tied approach” that has guided public policy at to bail out the hemorrhaging public employee pension funds since the turn of the century.  Curiously enough Republicans in the legislature have not been more vociferous in trying to drive this point home to the electorate.

However, not everyone in Sacramento is asleep at the wheel on this subject.  Senator Steve Glazer (d) Orinda has been outspoken in his concern with CalPERS sad state of affairs. Recently he commented, “I’m disappointed that my colleagues have not accepted that our pension system needs more reform – not just to put it on sounder fiscal footing but also to ensure that it provides a good retirement to all state employees.”

Glazer went on to say, “A majority of the committee clearly believes that the reforms adopted several years ago were enough to stabilize the system. I disagree. Recent numbers show that the costs continue to grow by billions of dollars, and those costs are crowding out funding for schools, colleges, health care and public safety. The system we have now is not sustainable.”.

With the current anything goes environment in the State Capital, Steve Glazer seems to be a voice in the wilderness.  The former campaign manager of Jerry Brown has been true to his pledge when elected in 2015 to divest himself from lobbyists and organization that previously employed him in order to better serve constituents.  This in some cases including Glazer’s opposition to public employee labor unions (BART) being able to strike. Such actions have placed him in hot water with Progressive colleagues running the California Senate

At the same time CalPERS with their 133 billion dollar investment portfolio appears to be operating more like the DMV than an agency overseeing the future welfare of public employees. Despite their dismal record in the past 20 years under performing the stock market average of growth, their political correctness often influences their investment decisions.  Much like Cap & Trade form takes priority over substance

Even Progressive Mayor Edi Birsan of Concord saw thru the B.S. when he commented about a League of Cities meeting “CalPERS is trying to form a division of CalPERS investment direct that would not be restricted in its investments so they could get a higher yield. I went Brooklyn on their heads, saying that their proposal sounded like the all in round of Three Card Monty, and ended with I do not reward bad behavior.”

At the same time CalPERS barely blinks an eye when they drop close to a billion dollars in a loan 9 years ago to a developer LandSource/Lennar that is now the center of a false claims lawsuit that is just unfolding.   Their failure to invest properly and not charge enough in the past to their members is resulting in local municipalities having to pony up almost double their present contributions in the next eight years.

In private enterprise, those running CalPERS would be fired. Unfortunately with government it is “just another town along the road” that is remedied by higher taxes.

Judging from the past several election cycles, it would never occur to voters to kick out those in office who have been perpetuating the present failed system of government. As a result the political establishment in Sacramento’s addiction to more foolish spending continues to go unabated.

Talking about a political case of “I’m falling and can’t get up!”


About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.