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Pension Blues
California’s Pension Woes Set To Deepen In 2017

Local governments in California are preparing for a fight. From the LA Times:

Directors of the nation’s largest pension fund could decide early next year whether to firmly ratchet down long-term investment predictions, an action that would come at a substantial cost to state and local governments.

Board members of the California Public Employees Retirement System discussed the issue at length on Tuesday and could cut the “discount rate,” the official projected rate of return on CalPERS investments, as soon as February.

“There’s a need to look at the funding of the system more closely than ever before, to ensure the sustainability of the fund over the long term,” said Cheryl Eason, chief financial officer of CalPERS, during the hearing.

In 2015, California tried to reform CalPERS to address its shortfalls, but they didn’t do nearly enough. The system currently assumes annual returns of 7.5 percent, which is still far too optimistic. So CalPERS plans to revise its expectations downward, which would force governments to kick in more money to meet liabilities. Local government budgets, of course, are already stretched. It isn’t long before they’ll have to ask the state and, potentially, the federal government for a bailout. And with Republicans in control in Washington, it’s hard to imagine California getting any sympathy.

California’s state government has enjoyed finally being back in the black. But with all these pension liabilities coming due, it’s unclear how long the good times will last.

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  • JR

    Couldn’t happen to a nicer bunch of folks

    • Andrew Allison

      Surely you don’t mean to suggest that those in or retired from government will feel any of the pain? California Assembly Speaker Anthony Rendon and Senate President Pro Tem Kevin De León issued a joint statement following the November 8 election results saying they “woke up feeling like strangers in a foreign land” and that Americans voted in a manner “clearly inconsistent with the values of the people of California.” It doesn’t occur to them and their ilk that this says much more about California values than those of the rest of the county. We can only hope that the pension scam blows up during the next four years while the Federal government is likely to say get lost.

      • JR

        I went to school in CA. At the end of the day, they are living in lala land and need to learn how the real world works. They are overly reliant on wealthy individuals and stock markets returns. When the next recession hits (and it will) and the stock market corrects (and it will) they will have astronomical deficits as well as a pension hole they can’t climb out of. They chose this. Choices have consequences.

      • Fat_Man

        Hillary’s fanatics claim that she won the popular vote by more than 1 million votes. California accounted for more than 3 million of those votes. When California’s pension plans implode, they will be running to Washington with their hands out. I don’t think they will find much sympathy.

        • Jim__L

          I wonder what would have happened if everyone with Conservative leanings in CA had voted, even though we knew our vote wouldn’t tip the balance?

          • Andrew Allison

            A good question, but I fear that it wouldn’t have made a difference to the outcome. The sad fact is that Mitt’s 47% is well North of 50% in California.

        • James

          I had the misfortune to have been born in San Francisco back in 1959. Nobody knew it was a misfortune at the time. The worst social problem back then was the Beatniks bugging us, man, with their annoying poetry. Now, I just plain hate what we have become. I’m thinking that the Soviet KGB defector Yuri Besmenov explains it well by pointing out that America was targeted for de-moralization. And by means of de-moralization, we lost our frigging minds. The people of Kalifornia have lost the ability to think. We are literally bat excrement crazy wacko bird nut cases without any grasp of reality what so ever. I’m thinking we need to be cleaned out and the state needs to be started over from scratch, if you know what I mean. If we go broke and starve and die then that’s just what we have coming to us and it’s what the rest of the world needs, to have us put out of their misery.

    • Jim__L
      • f1b0nacc1

        I always like to remind people who think that CA is all blue that Victor Davis Hanson is a CA resident…

        • Andrew Allison

          One of my favs too.

      • Andrew Allison

        Nope, not far. Crooked Hillary won California by three million votes — could this possibly be because CA has one-third of the entire country’s welfare recipients? You and I share the misfortune of living in what well may prove to be the ultimate expression of the failure of the Blue Model.

        • champ

          How many in CA who voted for !Hillary are illegal immigrants?

          • Andrew Allison

            Probably quite a lot since undocumented individuals can get drivers licences and/or Covered California health insurance (with the premiums paid with funds borrowed by the US government) and receive automatic registration, no questions asked. But not enough to make a difference to the outcome. I think there’s something in the water [grin] I have friends who are intelligent, thoughtful and well-educated who absolutely refuse to believe the Hillary lied about Benghazi, pay-to-play in the Dept of State, her mail server, and lord knows what else.

      • Fifty Ville

        And that’s why we need an Electoral College.

  • CaliforniaStark

    All those Silicon Valley tech oligarchs who are advocating that California form its own country better start considering the fiscal mess the state is in. California has about 25% percent of the nation’s population on welfare. When the money start’s running low in the newly independent California, the dependent masses will quickly realize the tech industry is where to get more.

    • Jim__L

      If those tech oligarchs were serious about a wealth redistribution, they could just start writing checks.

      Charity begins at home.

      • f1b0nacc1

        Oh, when the crunch comes (and it will) this won’t be about charity, it will be about expropriation….FG’s favored approach…

      • Andrew Allison

        That’s why they’re leaving home LOL

    • Dusty Thompson

      These Keynesian dimwits do in fact realize what they are doing. As of now no State can Print its own money but when it is no longer a State they can fire up the printing presses just as 0bama has done for 8 years.

  • Wayne Lusvardi

    California Republicans should be poised when the pension systems meltdown and existing retirees benefits will have to be crammed down, say 40% to 50%. This will create an opportunity for a political sea change and both public employees and retirees and taxpayers will be looking for responsible leaders and government instead of vote buying and clientelism. There may be a wave of public retirees fleeing the state as well.

    • Andrew Allison

      Why would the beneficiaries of a clientist State look for responsible government when all they want is maintenance of their unearned benefits? The California trajectory is clear: hang on as long as possible and hope that the Federal government will bail it out. Hopefully, for the sake of Federal taxpayers, the bailout won’t happen.

      • Wayne Lusvardi

        In 2001 California learned how to manufacture an energy pricing bubble that was supposed to pay off the stranded municipal bond debts on old, mothballed polluting power plants that were shut down by the Clean Air Act of Bill Clinton. It backfired and ended up creating the 2001 California Energy Crisis. Eventually, the $41 billion in old debts had to be rolled into a giant bond issue and was paid off by increased power rates loaded into the pumping costs of water rates that weren’t paid off until 2012.

        So California always has some notion that they can get the Federal Reserve or some regulatory agency to create a bubble that will reap a windfall to close the pension funding gap. The problem with this is that the Federal Reserve had to lower interest rates to effectively zero due to the huge national debt and to pump up stock prices for the globalist economy, but that depressed bond interest rates so low that pension funds can’t make their target rate of return and has driven them into further distress.

        • James

          What are you trying to tell us, Wayne? That there ain’t no free lunch? Kalifornia’s are deeply offended by such talk!!! All we need to do to solve our pension problems is blow some more bubbles, and to keep blowing bubbles until the world is filled with chocolate unicorns and rainbow lollipops. Or are you just one of those haters who believes in arithmetic? /sarcasm off

          • Texas_Accountant

            You have CHOCOLATE unicorns? We don’t have any of those here. Where can we get some? Don’t tell me I must move to California – anything but that.

          • Andrew Allison

            Unfortunately, Unicorns (chocolate or plain vanilla) exist only in the minds of the deranged left.

          • Texas_Accountant

            Bummer. Not surprising, but a bummer anyway.

          • Fifty Ville

            Or print money, although Brown Bucks aren’t going to be real popular when retirees try to use them to pay off California property taxes.

  • Fred Ducque

    Just raise state taxes on the rich! Problem solved!

    • Andrew Allison

      I realize that you are being facetious, but it’s worth pointing out that 90% of California’s income tax revenue already come from the top 20% of earners — who are fleeing the State.

  • Dusty Thompson

    Socialism is the message, Marxism is the strategy and Fascism is the goal…

    Democrats lost America’s first Civil War because they enslaved Black people. Democrats are going to lose America’s second Civil War because they attempted to enslave everyone else…

    Not every Democrat was a KuKluxKlan member, but every KuKluxKlan member was a democrat.

    When peaceful recourse is denied, violent redress becomes justified, it becomes manifold.

  • Skipper50

    Give California to Mexico. Let’s see how that works out.

    • Fifty Ville

      Hell, no. For every American killed by illegal alien criminals or by drugs smuggled from Mexico, one square mile of Mexico reverts to the USA.

      • Andrew Allison

        You’re aware, I trust, that the US took California from Mexico. Please explain why the US would want any more of Mexico than it already has [grin]

        • Fifty Ville

          Toxic waste dump. Just like now.

    • Andrew Allison

      It’s happening already. There are already more Hispanics than Caucasians in California. Once they figure out how to get elected in numbers, it’s game-over.

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