Kamala Harris Hypocrisy Exposed at 2nd Debate

On night two of the second Democratic debate held in Detroit, U.S. Senator Kamala Harris came under sharp criticism from her opponent for both her policy stances, including “Medicare for All”, and her record as California attorney general.

Rep. Tulsi Gabbard called out Sen. Kamala Harris’ hypocrisy when it comes to criminal justice reform.

Harris has branded herself as a “progressive prosecutor,” but her record as California’s Attorney General and San Francisco’s district attorney raised questions for Gabbard. Namely, Harris “put over 1,500 people in jail for marijuana violations and laughed about it when she was asked if she ever smoked marijuana.”

“Kamala Harris was a failed Attorney General of California, and tonight she was exposed for the fraud she is. As Harris and the 2020 Democrats continue their full embrace of socialist ideas, we wish them luck convincing people to vote for these failed Democrat policies.” – Trump Victory Spokesperson Samantha Zager

The Return to Serfdom in California

I’m not a free-market fundamentalist. To me, the beauty of liberal capitalism lies in its performance: More people live well, and live longer, than ever before. Millions of working-class people have moved from poverty to become homeowners and have seen their offspring rise into the middle class or higher.

Today this egalitarian capitalist progress is showing signs of fading, not only in the United States but also in Europe, Australia, and increasingly East Asia. This marks a drastic reversal from the conditions that prevailed after World War II, when the incomes of those in the lower quintile surged by roughly 40 percent, while the gains in those in the top quintile grew a modest 8 percent, and the top 5 percent saw their incomes drop slightly. Social mobility since the 1990s has declined dramatically, not only in the United States but also throughout Europe, including Sweden. Despite the European Union’s vaunted welfare state, the middle class has shrunk in more than two-thirds of the countries there.

Less recognized in the media have been the fortunes of China’s working class. Overall, 500 million Chinese, close to 40 percent of the population, remain poor, living on less than $5.50 a day; in 2010 the Organisation for Economic Co-operation and Development reported that the Chinese middle class constituted only 12 percent of the population. Rather than replicating the middle-class growth of post–World War II America and Europe, notes researcher Nan Chen, “China appears to have skipped that stage altogether and headed straight for a model of extraordinary productivity but disproportionately distributed wealth like the contemporary United States.”

Read the entire piece in National Review.

Crops-Posted in New Geography 

Joel Kotkin is editor of NewGeography.com and Presidential fellow in urban futures at Chapman University

Proposed UC Tuition Plan Could Fall Apart

University of California President Janet Napolitano and other top UC officials have proposed a new plan to manage tuition increases. But their plan runs the risk of backfiring because it depends heavily on consistent future support from the state Legislature and Gov. Gavin Newsom.

Under what’s known as cohort-based tuition, incoming students would be guaranteed that their tuition wouldn’t change for their first six years at a UC campus. This would help students and their families avoid the big tuition hikes that led to protests a decade ago during the recession. But it would also offer UC leaders the flexibility to increase tuition for incoming classes.

A staff report argued that this policy “could provide greater financial predictability for students, families and UC campuses while also improving UC affordability.” At the regents’ recent meeting in San Francisco, Nathan Brostrom, the UC system’s chief financial officer, called the concept “very, very promising,” according to the Los Angeles Times.

Can Legislature’s support be counted on?

But as some regents pointed out, “cohort tuition” only works if state funding is stable or increasing. And while overall state revenue has increased eight straight years, that is a historical anomaly. Over a normal decade, revenue typically either declines or is flat for at least three years, due largely to the state’s reliance on volatile capital gains.

Unless UC can rely on Newsom and the Legislature to not lower funding under any circumstances, “this all falls apart,” said Cecilia Estolano, the Los Angeles lawyer and urban planner who is vice chair of the Board of Regents, according to the Times. 

While the University of Illinois’ Urbana-Champaign campus has had cohort-based tuition since 2004, public universities in Georgia, Kansas and Oregon decided to end their programs in recent years after state funding cuts.

But regents have more to be nervous over than the chance a recession would cause budget headaches. While the Napolitano-Newsom relationship has no known tension, the UC president has many critics in the Legislature because of harsh audits since she took over in 2013. One issued in 2016 faulted UC for dealing with tight budgets by choosing to sharply increase higher tuition-paying foreign and out-of-students by lowering admission standards – instead of undertaking any belt-tightening. Another published in 2017 detailed how Napolitano’s office had hidden $175 million from the Legislature while requesting tuition hikes and showed that Napolitano’s top aides had interfered with UC campuses’ evaluations of the performance of her office.

State law was rebuke aimed at Napolitano

That audit led to one of the Legislature’s harshest rebukes of a top state official in decades: the unanimous passage in late 2017 of a law that makes it a crime punishable with a fine up to $5,000 for a state agency to interfere with, impede or obstruct an audit formally requested by state lawmakers. The audit also led the Bay Area News Group to call for Napolitano’s firing.

For the coming school year, UC will continue to charge in-state undergraduates $11,502 in annual tuition. Since Napolitano became UC president, undergraduate tuition has only gone up once. In 2017, regents approved a $282 increase, or 2.5 percent.

Regents are expected to have further discussions about cohort tuition at their Sept. 18-19 meeting at UCLA.

This article was originally published by CalWatchdog.com

How Long Will the Great Seal of California Last?

With the movement toward change that some interests and groups are trying to impose upon the country from using different language to tearing down monuments or painting over historical murals that represent a different era, I wondered how long the Great Seal of California would survive as is.

The seal serves much like a notarial seal on civic documents. It is impressed on official California documents dealing with commissions, pardons and papers signed by the governor. California’s Great Seal was originally created and adopted at the 1849 state Constitutional Convention and has had only minor design changes over the years, the last when the Seal was standardized in 1937. In these ideological driven times, that could mean an overhaul of the Seal could be coming. 

The idea for re-considering the depictions on California’s Great Seal came up after reading Peggy Noonan’s weekend column in the Wall Street Journal. She hotly complained about the changes “coming at us from the social and sexual justice warriors who are renaming things and attempting to control the language in America.” One item she pointed to “is the latest speech guide from the academy, the Inclusive Communications Task Force at Colorado State University.”  The guide said people should not be called “American” because “This erases other cultures.”

Many aspire to be Americans. E PLurubus Unum—out of many one. That motto has carried this country to great heights. It was meant to unite people. Too many current efforts at changing language are dividing people. 

But that’s the tenor of the times we live in so let’s take a look at The Great Seal of the State of California.

The most prominent figure on the great Seal is that of Minerva, Roman Goddess of wisdom and war. Given the state’s effort to create gender neutrality, if Minerva is even to remain on the Seal, Minerva’s status might be challenged. She is also carrying a spear. Hardly in line with the California value of reducing access to weapons. It must go. The grizzly bear should probably be kicked off the seal as well. That’s California history. No grizzly bear has been seen in the state since the early 1920s.

The grape vines and sheaf of grain on the seal stand for wine production and agriculture and should remain. But what about other industries that have exploded in the state over the last 150 years?

A number of sailing ships appear on the Seal representing commerce. Remove some of the sailing ships and add an airplane and a space craft.

The movie and entertainment industry has been big for the state. How about putting the Hollywood sign on the mountains depicted on the Seal? There’s a structure on the Seal that is supposed to represent Fort Point in San Francisco. Removing it would eliminate the geographic tilt to the north represented on the Seal to assure that all regions of California belong.

Perhaps we should add a figure representing Silicon Valley. That figure must reflect California’s diversity, of course.

Should the miner working his pick axe even remain on the Seal? That’s history, and history is being banished. But there is a strong reason to keep the miner because of the state’s beginnings. Given the governor’s recent apology to Native Americans for the way they were treated by early Californians, a legitimate addition would be a Native American figure. 

The state motto Eureka, Greek for “I found it!” has a prominent place on the Seal. Californians speak many languages. Look at the number of different languages spoken by students in the Los Angeles schools. Maybe a word or two in other languages would be demanded by some.

Finally, 31 stars appear on the Seal signifying California as the 31st state admitted to the Union. But California sees itself as a leader of other states. You hear that from state officials all the time. The country will follow where California leads. One of the stars of the 31 should be made larger and brighter to reflect this prideful feeling.

Those are some suggestions. I’m sure you have others. Given the rapid change from the old standards it’s probably wise to get a head start on thinking how to re-do The Great Seal of the State of California.

Here’s one other possible direction to go with the Seal: Leave well enough alone. 

This article was originally published by Fox and Hounds Daily

University of California Imposes Political Litmus Test

If you’ve never heard of the Levering Act, you’re not alone.

Few Californians are old enough to remember that during the years immediately after World War II, a Cold War between the Soviet Union and the United States and its allies generated a wave of popular fear about communist subversion.

Wisconsin Sen. Joseph McCarthy and FBI director J. Edgar Hoover led crusades to root out what they claimed was widespread infiltration by communists.

California had its own version of McCarthyism, as it came to be known. The Legislature created a Committee on Un-American Activities and in 1950 enacted the Levering Act, requiring all state employees to sign “loyalty oaths.”

It was specifically aimed at the University of California’s faculty, and 31 tenured professors were fired for refusing to sign it.

The state was unconstitutionally imposing “a political test for employment,” as the California State Federation of Teachers said at the time. And after much legal wrangling, the state Supreme Court voted 6-1 in 1967 to declare the Levering Act unconstitutional.

Although UC’s Board of Regents officially declares that “No political test shall ever be considered in the appointment and promotion of any faculty member or employee,” a new UC policy seems to be doing exactly that.

As part of its “commitment to diversity and excellence,” UC’s administrators are telling recruiters for faculty positions, as one directive puts it, to take “pro-active steps to seek out candidates committed to diversity, equity and inclusion.”

To enforce that dictum, UC also requires applicants for new faculty employment and promotions to submit “diversity statements” that will be scored “with rubrics provided by Academic Affairs and require applicants to achieve a scoring cutoff to be considered.”

The academic affairs department at UC-Davis says that diversity statements from tenure-track faculty applicants should have “an accomplished track record…of teaching, research or service activities addressing the needs of African-American, Latino, Chicano, Hispanic and Native American students or communities.” Their statements must “indicate awareness” of those communities and “the negative consequences of underutilization” and “provide a clearly articulated vision” of how their work at UC-Davis would advance diversity policies.

Jeffrey Flier, former director of the Harvard Medical School, is among the respected academics who see the inherent contradictions and perils in UC’s one-size-fits-all concept of political correctness.

“As a supporter of the original goals of diversity, equity and inclusion initiatives, my skepticism toward this policy surprised a number of friends and colleagues,” Flier wrote this year in the Chronicle of Higher Education.

“But it is entirely inappropriate to require diversity statements in the process of appointment and promotion. Such requirements risk introducing a political litmus test into faculty hiring and reviews.”

While Flier sees the new policy as “far from the loyalty oaths deployed at the University of California during the McCarthy era,” he adds: “It’s not unreasonable to be concerned that politically influenced attestations might begin to re-emerge in the current hyperpartisan political environment, either in response to politically driven demands for faculty to support populist or nationalist ideas, or from within the increasingly polarized academy itself. Since progressive/left identifications are dominant in the academy, especially in the humanities and social sciences (as well as in administration), politically influenced litmus tests could easily arise in that sphere.”

They’ve already arisen at UC, implicitly denying employment or promotion for anyone who fails to enthusiastically endorse “diversity,” however that might be defined.

In the name of “diversity,” therefore, the new litmus test would make the overwhelmingly liberal UC faculty even less ideologically diverse.

This article was originally published by CalMatters.org

The Opportunity Cost of Shutting Down Diablo Canyon Nuclear Power Plant

For nearly 35 years, Diablo Canyon Power Plant has pumped just over 2.0 gigawatts of electricity onto California’s power grid. Unlike hydroelectric power, which has good years and bad depending on rainfall, or solar and wind power which depends on sunshine and wind, Diablo Canyon’s nuclear reactors generate this electricity 24 hours per day, 365 days a year.

But Diablo Canyon’s days are numbered. In January 2018 California’s Public Utility Commission voted to shut it down. Barring legislation to countermand this decision, by 2025 Diablo Canyon will cease operations, making California a nuclear free state. Is this a good idea?

Anti-nuclear environmental groups, as reported at the time in the Los Angeles Times, “hailed the decision, which was expected after 17 months of filings and debate, but also were concerned about what type of energy sources would be used to replace Diablo’s electricity.”

Good question. Especially since environmental groups are the groups one might expect to be most concerned about “greenhouse gas,” and the only way wind and solar power can operate is by having natural gas power plants to spin into action every time the wind falters or the sun goes down.

The alternative to natural gas backup is to overbuild wind and solar farms and store the excess energy with batteries. An interesting comparison would be to see what battery storage capacity would be required to replace the power Diablo generates during off peak hours of 12 hours per day.

The following chart projects a $12 billion price tag, based on a cost of $500 million per gigawatt-hour of battery farm storage. This cost estimate relies on data from several parallel projects at the 2.0 gigawatt-hour Moss Landing energy storage facility currently under development on the Central California coast. 

While battery storage costs are declining rapidly, with some experts projecting prices at one-fifth current levels within 10-20 years, others are not so sanguine. And battery costs aren’t the only consideration. Balance of plant costs – siting, distribution infrastructure – and California’s obstructionist construction climate will also pile on costs.

How Many EVs Could Diablo Canyon Recharge Every Night?

If Diablo isn’t shut down, of course, it isn’t necessary to invest $12 billion (or more) in battery storage to scoop up sun and wind dependent intermittent renewable energy and save it for nighttime charging. But either way, assuming California’s policymakers achieve their goal of filling our roads with battery powered vehicles, how many miles could they travel based on tapping into 12 hours of Diablo Canyon’s 2.0 gigawatt output?

As the next chart shows, the metric we’re going to be getting used to when evaluating mileage efficiency from EVs is not “miles-per-gallon-equivalent,” but the far more descriptive kilowatt-hours per 100 miles. And based on US EPA data, most EVs on the road today require around 25 kilowatt-hours to travel 100 miles. That equates to 4 million miles per gigawatt-hour. Taking into account 12 hours of 2.0 gigawatt output from Diablo Canyon, that’s enough to power a fleet of EVs driving 96 million miles per day. How does that compare to the total mileage driven each day by Californians?

According to US Federal Highway Administration data, the Californians log per capita vehicle mileage of 9,053 miles per year. That means California’s nearly 40 million residents are driving nearly one billion miles per day. Nonetheless, Diablo Canyon alone could power enough EVs to put quite a dent into that total. Nearly 10 percent of all driver mileage could be powered by EVs charged overnight by electricity produced by Diablo Canyon.

To make the opportunity cost of shutting down Diablo Canyon even more stark, one might ask what the cost would be to use solar panels and batteries to replace Diablo Canyon’s off-peak nocturnal output? The next chart shows those estimates, based on a rock bottom price of $1.00 per watt of solar panels. That is a best-case number pretty much forever, since land acquisition, engineering, labor, racking, connectors, utility interties, distribution infrastructure – along with the price of the actual panels – make this a mature industry.

As an aside, the less said about wind power, the better. Wind power is an abomination, slaughtering birdsbats, and insects at a rate which would destroy the planet in a few years if it were ever developed to any meaningful scale, not to mention the visual blight, the hideous quantities of materials, or the physical and psychological illness the inescapable low frequency thrum triggers in humans and animals.

As shown above, it would cost about $18 billion to develop renewable assets using solar and battery technology to replace the overnight EV recharging capacity of Diablo Canyon. If California’s vehicles were electrified, this capacity is sufficient to power 10 percent of California’s automobile mileage. And this is exactly half the story – Diablo Canyon operates 24 hours per day, not just at night to charge EV batteries.

It is interesting – or depressing, depending on one’s ability to confront these scandalous miscarriages of policy with equanimity – to wonder why environmentalists, who think we have barely a decade to “decarbonize” before the planet is lost, are so intent on shutting down Diablo Canyon.

The only sane way to sell renewable energy is to make it cheaper than fossil fuel and nuclear power. But the flawed policies and phony accounting that are used to present renewables as competitive need to be replaced by honest analysis.

It should be obvious that if renewable energy was truly less expensive, every nation in the world would be turning to renewables instead of building, as fast as they possibly can, more coal, natural gas, and nuclear power plants.

The single most significant variable affecting the economic viability of intermittent renewable energy is storage costs. Maybe batteries will eventually come down in price to, say $50 per kilowatt-hour, i.e., $50 million per gigawatt-hour. And if and when that happens, maybe it will make economic sense to convert to 100 percent renewables. And maybe then, instead of having to sow fear and panic in the media, and weaponize brainwashed elementary school children for photo ops with politicians pushing “green” energy, states and nations will adopt renewables because they really are the cheaper alternative.

If we are entering the electric age, where not only lights, PCs, refrigerators and air conditioners use electricity, but also space heaters, water heaters, cooktops, and vehicles – not to mention cyber currency – then we’re going to need more electricity at a time when “renewables” aren’t ready for prime time. And if the urgent imperative to rush into this decarbonized electric age is to supposedly save the planet, why are we shutting down Diablo Canyon?

In the meantime, Diablo Canyon is a sunk cost. Ratepayers long ago covered the construction bill for Diablo Canyon. But these reactors, instead of continuing to generate 2.0 gigawatts of clean, carbon free electricity for decades to come, are going to be shut down and subject to expensive decommissioning costs. Those who sincerely believe in the need to decarbonize energy need to join with those who support economically sound energy policies, to demand Diablo Canyon stay open.

This article originally appeared in the California Globe.

How Much is California’s Surplus?

During a recent meeting with allied organizations concerned about California’s high taxes, the question on everyone’s mind was: why do our political adversaries continue to push for even more taxes given that the state has a huge budget surplus? Also, how much excess revenue is there?

But like most questions involving public policy – and particularly those related to fiscal issues – the question quickly begot more questions. For example, what’s the difference between a surplus and a reserve? Also, should we look at just the general fund or should we expand the inquiry to special funds as well?

If one includes reserves from special funds and adds them to the generally accepted figure of the surplus, the answer is stunning. General fund reserves exceed $20 billion and special fund reserves exceed $16 billion. In short, California is sitting on over $36 billion. This doesn’t even include the billions kept in reserve by local governments.

So with all this good news, why do the state and local governments continue to press for ever higher taxes? The answer — which they prefer to conceal from the taxpaying public — is that they know that the bill will soon be due for all the accumulated government debt.

To read the entire column, please click here.

Crackdown on Big Tech a Threat to California’s Economy?

The Federal Justice Department announced a broad antitrust review of large tech firms with three of top companies often mentioned headquartered in California. If Facebook, Google and Apple are all found to be restricting competition with monopolistic behavior, they could face disciplinary actions with one option in the extreme case, forced breakup. California’s booming economy and government revenue has come to rely heavily on the tech industry.

Justice Department antitrust chief Makan Delrahim said in a statement, “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands.”

The Justice Department review is just the first step and much has to happen before actions could take a bite out of the state’s economy.

But the step toward trust busting is no surprise. 

I’ve reported in the last couple of years of a growing concern over the power centered in a few tech companies. The old trust busting efforts hailed in the early 20th century could make a comeback. While undoing the monopolies over 100 years ago centered on monopolistic control of commodities, like Standard Oil’s command of oil, tech controls massive amounts of data. And with their economic power, some Silicon Valley companies are moving into other industries. 

The trouble for the tech firms is that their popularity is on the wane. Both Democrats and Republicans have raised concerns about the big companies’ dominance.

In fact, in her list of policy solutions, Democratic presidential candidate Elizabeth Warren, the senator from Massachusetts, has spoken of breaking up Google, Facebook and Amazon. Now the Trump Justice Department is following a path that could lead to breakup.

Investors have indicated their unhappiness with these developments. 

If regulations and breakup come what damage would be done to the state economy and revenue gathering?

The state would feel a pinch. The potential for less pay for tech’s top executives would undoubtedly be reflected in the state’s income tax take. Remember that the top 1% of California income tax payers account for about half of the state’s income tax revenue which is around 70% of the General Fund. A hit on the incomes of rich tech executives could be felt in the state budget.

On the other hand, if a breakup leads to other or new California businesses filling the gap, newly created or increased state revenue could come from taxpayers added to the state’s rolls.

Further, while Apple and Google’s parent company Alphabet are in the top 5 publically traded companies in California, the state’s economy relies on other sectors of the economy to flourish. Finance, real estate, agriculture and manufacturing are all bulwarks of the state’s economy.

Still, the tech industry has been a strong sector partly responsible for the state’s rise to the fifth largest economy in the world. Damage to that sector would be felt.

This article was originally published by Fox and Hounds Daily

Bill requiring Trump to release taxes to make CA ballot reaches Newsom’s desk

When Gov. Gavin Newsom got back from his vacation last week, awaiting him was a bill that some see as a principled attempt to force President Donald Trump to be transparent about his personal finances and that others – including California’s last governor – see as partisan meddling that could haunt elections across the nation going forward.

Senate Bill 27 was enrolled and sent to the governor’s office on July 15 after passing the Assembly 29-10 and the Senate 57-17 along party lines. Newsom has until July 30 to act on it. Introduced by Sen. Mike McGuire, D-Healdsburg, and Sen. Scott Wiener, D-San Francisco, it would require presidential and gubernatorial candidates to release their most recent five years of tax returns as a prerequisite for appearing on the California ballot.

McGuire and Wiener reject the characterization that it is an attempt to punish Trump, who has famously feuded with California officials via the media and in court since he began his presidential campaign in 2015. Instead, they say it is an attempt to preserve democratic norms by ensuring that voters know about candidates’ financial entanglements before they become U.S. president or governor of the nation’s richest, most populous state.

It’s unclear, however, whether the measure is constitutional. Some attorneys say the Constitution has long enshrined states’ rights, including partial sovereignty, on many fronts. But the U.S. Supreme Court has held that a state cannot add additional qualifications for candidates for federal office. California’s legislative counsel cited this history in a 2017 opinion raising doubts about whether Trump could be compelled to release his taxes as a precondition of getting on the Golden State’s ballot.

Brown vetoed similar bill, cited bad precedent

In vetoing similar legislation in 2017, Brown not only questioned its constitutionality, he worried about the precedent it would set in his veto message.

“Today we require tax returns, but what would be next? Five years of health records? A certified birth certificate? High school report cards? And will these requirements vary depending on which political party is in power?” he wrote. California’s enactment would start the U.S. “down a road that well might lead to an ever escalating set of differing state requirements for presidential candidates.”

There is a recent precedent for a state seeking to limit a sitting president’s access to the ballot. In 2011, the Republican-controlled Arizona Legislature responded to unsupported, much-ridiculed claims that President Barack Obama was born in Kenya or Indonesia by passing a measure requiring that presidential candidates provide birth certificates before they could be placed on subsequent presidential ballots. The validity of the birth certificates would have been determined by the Arizona secretary of state.

But GOP Gov. Jan Brewer, a former Arizona secretary of state, vetoed the bill. “I do not support designating one person as the gatekeeper to the ballot for a candidate, which could lead to arbitrary or politically motivated decisions,” she said.

Axios reported last month that lawmakers in 25 states have introduced bills linking ballot eligibility to presidential candidates releasing their tax returns. The Nexis news database shows California to be the only state that has sent such a measure to the governor. The most progress elsewhere appears to be in Rhode Island and Maryland, where the state Senates have given their approval to such legislation.

This article was originally published by CalWatchdog.com

Will Unions Promote Defined Contribution Plans the Way They Promote Pensions?

The virtue of a defined contribution plan is that once the employer has made their contribution, the employer’s obligation is fulfilled. The employee’s retirement benefit is based on a “defined” contribution – typically some fixed percentage of their base pay – that money is invested, and the retiree lives on the accumulated savings and interest. Often, with the same amount invested, these plans can offer participants a more lucrative retirement than a pension.

Given the potential of defined contribution plans to sometimes outperform pensions, why are public employee unions seemingly focused almost exclusively on the alternative, the so-called “defined benefit” pension? Far more common in the public sector, these defined benefit plans offer the retiree a guaranteed “defined” amount in the form of fixed payments for as long as they live, usually adjusted upwards each year for inflation. What the employer has to contribute to the fund is undefined and fluctuates as needed to maintain those promised payments.

The problem, however, with defined benefits is they were sold as costing taxpayers very little, when in fact the employer contributions over the past twenty years have soared. To say those undefined employer payments to the pension funds have “fluctuated,” in order to keep those defined benefits flowing, is to indulge in the understatement of the century.

Back in 1999, during the internet bubble, when California’s public employers consented to an increase to the value of their promised defined benefits of well over 50 percent, the pension funds claimed it wouldn’t cost anything. The stock market was roaring, and apparently would roar forever.

Today, despite years of relentless increases to the required pension contributions by employers, most of California’s major public employee pension funds are only about 70 percent funded, with steep annual hikes in required contributions scheduled for the next several years. There is no end in sight.

So while a defined benefit may protect a retiree from mortality risk, where they outlive their savings, or market risk, where they happen to retire during a prolonged bear market and their savings evaporate, under the defined benefit plan all that risk is shifted to the taxpayer.

The cold fact that confronts California’s public employee pension systems is this: Their plans, which today are only around 70 percent funded despite the longest bull market in U.S. history, will not be able to financially withstand several years of poor returns on investment. The longer it is before defined benefits are right-sized to the capacity of state and local government to make contributions, the larger those benefit cuts will be.

Meanwhile, many government employers offer defined contribution plans to supplement defined benefit pensions. Given the precarious financial state of pensions, these defined contribution plans should not be attended to as an afterthought.

Some Defined Contribution Plans Are Better Than Others

Wading successfully through the arcana of retirement finance is a tedious exercise, but too much is at stake to avoid making the attempt. And it seems that California’s government unions, which have been universally consistent in making employee pensions run on autopilot, have not been nearly so proactive to ensure their members find the right defined contribution plan.

Since 1958, government employees have had the opportunity to make tax deferred contributions to retirement savings accounts as authorized by IRS Section 403(b). But these early 403(b) plans were marketed to public employees by insurance companies that had already been selling similar plans as tax sheltered annuities.

So far so good. But these plans, which are still aggressively marketed by insurance agents to public employees, carry much higher costs. Most of them have an entry fee – paid back to the salesperson as a commission – as high as 11 percent. Many of them have earnings that capped at rates as low as 3 percent. It isn’t uncommon for them to have a surrender charge as high as 15 percent. All of them charge annual maintenance fees – usually hidden from the plan participant – typically far in excess of more competitive mutual fund based plans that have emerged more recently.

An example of a good plan is the 403(b) option known as Pension2, offered by the California State Teacher’s Retirement System (CalSTRS). Pension2 offers a variety of low-cost index fund options and only charges annual administrative fees equal to 0.25% of the participant’s account balance. But Pension2 does not have an aggressive sales force pushing its product – which of course is one of the primary reasons the product is such a good deal. Other low cost 403(b) options are offered by Fidelity and Vanguard.

Why aren’t the unions encouraging their members to invest in these products? Maybe because the California Teacher’s Association offers its own 403(b) plan, which has an annual administration fee of $95 per participant – regardless of fund balance. By selling its own retirement product, the union loses its ability to act as a credible advisor to its members.

Another excellent option for public employees who want supplemental defined contribution benefits is an IRS 457(b) plan created by their employer in conjunction with a financial firm. Los Angeles Unified School District’s 457(b) plan administered by Voya won an award from the National Association of Government Defined Contribution Administrators (NAGDCA) for excellence and innovation. This excellent 457(b) plan is a good alternative to the 27 403(b) plans being sold to LAUSD educators, mostly by insurance companies.

Why isn’t the United Teachers of Los Angeles (UTLA) recommending this plan to its members? Recent history would suggest that UTLA thinks its members are undercompensated, and one easy way to improve teacher compensation is to reduce the overheads they pay on retirement savings.

While other unions have agreed to LAUSD automatically enrolling employees in their award-winning 457(b) plan UTLA has steadfastly refused. So instead of protecting member savings, salespeople pushing obsolete, needlessly expensive versions of a defined contribution plan continue to ply the halls of California’s schools.

Edward Ring is a co-founder of the California Policy Center and served as its first president. This article first appeared on the website of the California Policy Center.