Saturday, February 15, 2014

Gov. Brown's Pension Crisis.

California here we come , with another problem.
Between the "budget" the "high speed rail" , and the "drought" .  California has a big problem , and Gov. Jerry Brown wants to kick the debate in . It's all about pensions , most focus has been about Teacher pensions , how to pay for them .  We have had pension issues before , like here in San Jose Ca , where it's Mayor Chuck Reed took a chunk out of it by reducing the police force in the city . The states problem is bigger , it all has to do with the fact that in the last decade and three quarters it has been borrowing to keep it floating . The Mercury News recently reported that : 

"wall of debt."That's a term Brown coined when he took office to describe the tens of billions of dollars California owed to public schools and special funds whose coffers were raided to help balance budgets in the past.But look behind that $24.9 billion wall and you'll see a $330 billion skyline of other liabilities threatening the state's financial health. It includes $80 billion needed to cover teachers' pensions and $64 billion to pay for state workers' health care in retirement -- two particularly troublesome liabilities because the state isn't even making the minimum payments on them.

Years later it seems that  CalSTRS debt was mounting  and it practically  now swallows the entire state budget . The CTA ( California Teachers Association) on it's  web site makes some curious little bits of truth regarding it's system , by comparing Wall Street. 

The economic collapse is the result of many factors, including the subprime mortgage crisis, Wall Street banking scandals, the deregulation of financial institutions, high corporate and consumer debt levels, a high unemployment level, and unbridled corporate greed. It is an epic global crisis, and it affects all of us. It was not caused by middle-income teachers and education support professionals who worked hard and contributed part of their pay toward their pension throughout the years so they could live modestly during their retirement. It was caused largely by Wall Street bankers, who, instead of going to prison, continue to receive outrageous pay raises and $100 million bonuses.In California, most educators belong to the California State Teachers’ Retirement System (CalSTRS), the second-largest public retirement fund in the country. The retirement fund is not a taxpayer giveaway, as critics have charged. Over the span of their careers, CalSTRS members contribute 8 percent of their monthly pay to help finance their retirement. Employers kick in an equal 8.25 percent of monthly pay, the state contributes a little more than 2 percent (which previously was 4.7 percent but was reduced a decade ago, saving the state over $3 billion), and the returns garnered by CalSTRS investments do the rest.

The Question of solvency is this pension system big problem , the CTA are in denial of any insolvency but Assembly Speaker John A. Pérez (D-Los Angeles) said that  ***The fund currently faces a $71-billion shortfall, Pérez said, and it's growing every day because contributions aren't keeping up with costs.  Now who are the "contributors"? Take a hint , it's  Local School Districts . Over the "years",  the  not so lean years of past decade most School Districts were "cutting" their pension spending due to budgets issues , ^^while more and more contributions were going into salaries , and growing health care costs,  pension contributions were being cut , there's no explaining this . The Lucky teachers who retired in the last 10 years probably are getting their full contribution while others are getting less , and less . Pension reform signed by Brown in 2011 reduced pension benefits for new workers, meaning most of the savings will be years away. 

 The Bitter truth.
I don't think MY SELF that I am going to get my money  from CAL-PERS when I retire  either , if there is any money left ,  but here is the run down on CAL PERS . The California Public Employees Retirement System (CalPERS) reported that its unfunded actuarial accrued liabilities in its main pension fund for state and local governments was over $49 billion-consisting of about $23 billion for the state and $26 billion for other public agenciesShowing a bigger problem, a report by the bipartisan Little Hoover Commission found that the top 10 public employee pension systems in California - including plans for both state and local government workers - faced a combined $240 billion shortfall as of 2010. A study by the Stanford Institute for Economic Policy Research more recently pegged the combined total unfunded pension liabilities of CalPERS, the California State Teachers Retirement System (CalSTRS) and the University of California retirement plan at $485 billion.  It seems to me that both pension agencies may have been misleading it's members.


***I'm curious why they are going after the teachers.  I'd rather see them go after state employees first. Gov. Jerry Brown, whose administration has pegged the shortfall at $80.4 billion, also wants to address the issue but has been willing to wait until next year to implement potential solutions. ^^  Most Californians would be surprised to learn that 100 percent of education’s share of the tax increase proposed by Governor Jerry Brown will go to pensions instead of classrooms. But that would be no surprise to longtime observers of the California State Teachers’ Retirement System, which administers teacher pensions. Unfortunately, “down the road” is where school districts are now. Because Calstrs has earned only 60 percent of its forecasted investment return since 1999, it needs school districts to boost contributions by more than $100 billion. Worse, Calstrs waited so long to seek more contributions that its request is now for an extra $4.5 billion a year, almost double the $5 billion a year it already receives in contributions. School districts can’t come up with such a large amount of money without harming classrooms. 

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