The American Interest
Analysis by Walter Russell Mead & Staff
CalPERS Goes after Compton

California’s pension crisis is metastasizing. Last week we noted that the California public pension fund CalPERS was at loggerheads with the city of San Bernardino, which was using its bankruptcy filing as grounds to default on its obligations. This week, CalPERS sued the city of Compton, which owes $2.6 million to the fund. One detects its desperation here:

[Compton's city manager Harold] Duffey said Compton submitted a payment plan to CalPERS, promising to “catch up in December.” But the pension fund filed the court case anyway.

“Contributions are required by law and if they’re not paid, we do intend to pursue all obligations,” said CalPERS spokeswoman Amy Norris.

On the one hand, CalPERS doesn’t want to set a precedent letting other cash-strapped cities off the hook and accepting worthless IOUs instead of the cold cash it is supposed to receive. On the other hand, it’s also clear that going to court won’t solve these problems for long. If somehow CalPERS wins and courts order the struggling cities to divert their dwindling cash into its coffers, public sector unions will become even more unpopular. Voters all over California are fed up with rising taxes as it is; throw service cuts into the mix and life will get ugly.

Spin it as you like, but math wins in the end. California’s retirement numbers just don’t add up, and clinging grimly to failing policies and dying institutions is not the way forward. CalPERS can sue every city in California, but that won’t fix the pension crisis — and it won’t get the California economy on track for the kind of growth that would make the tradeoff between pensions and services a little less dire.

There could be a silver lining, however. If CalPERS keeps suing more and more cities and towns across the state, the lawyers and executives dashing back and forth to file papers in dozens of courthouses will at least help fill the seats on California’s high speed trains.

Published on October 30, 2012 5:00 pm