Government Pension Crisis Exploding in California




symptoms arial,sans-serif;”>By Stephen Frank

How bad is the CalPERS pension crisis? The Marin Independent Journal on November 19 reported this, “Chiang reports the 130 public pension systems in 2013 had an unfunded liability that had grown to $198 billion. In 2003, that liability was only $6.3 billion.

Taxpayers are paying for that legacy of debt with cuts in public services and increased taxes, tuition, fees and fares.”

Actually, using Federal accounting criteria, the State of California has an unfunded liability for CalPERS equaling $640 billion. Numerous cities had sales tax increases on the ballot—with the money going to the General Fund instead of specific projects. This is because the pension system has mandated a 50% increase in the contributions—just to keep the doors open. CalPERS is unsustainable.

You may have noticed that the University of California system is raising tuition over a period of five years by 28%. The need and use of this money has been hidden. It is NOT for the classroom, improving facilities or equipment. The money is to be used to prop up its unsustainable unfunded liability.

James Poulos in CalWatchdog on November 20 reported this:

“and the school’s overwhelmingly Democratic faculty, who seek the tuition hikes to fill their pension plan that is $25 billion underfunded and would benefit from the extra money taken from students.”

A few years ago it was under funded by $11 billion. CalPERS eleven years ago was under funded by $6.3 billion—now it is reported at $198 billion.”

Finally, you have CalSTRS, the government school teachers’ pension plan. That one, using Federal criteria, is $166 billion unfunded—but they claim only $69 billion. But even at the lower number admits the plan is unsustainable.

Tax hikes, service cuts, increased participant contributions, none of this will stop the collapse of government pension systems in California. In 2012 we passed Prop.30, to give more money to “education”. Indeed, at least a majority of the $6 billion a year goes not to the classroom, but to CalSTRS to keep their doors open and checks flowing to retirees.

On a local level we need look no further than the Los Angeles Department of Water and Power. They have their own pension system—which a couple of years ago admitted to having an $11 billion unfunded liability. One of the key reasons rates have gone up is not the added cost of water, but the payments needed for the pension system. Yet, they refuse to tell the public how much it is costing the rate payers for the union negotiated pension system?

Can any of this be fixed?

A couple of years ago the people of San Diego and San Jose—one a conservative town and the other a liberal city—voted on pension reform. In both cases, the voters gave a 70% approval to reforming the pension systems. Yet the unions went to court and stopped or killed the reforms. Bottom line is no pension reform; harming the economy of both cities—but making the unions look like “King of the Hill”.

Guv Brown created pension reform, got it passed by the Democrat legislature. Almost immediately the Democrats, after getting credit for pension reform, started to pick away at the savings and two years later it is as if we never tried to save the pensions.

In 2016 we will get another chance. It looks like pension reformers are going to submit another Statewide ballot measure. This time it will take only 325,000 good signatures instead of 504,000—almost one third fewer. By 2016 the cost of the new taxes and the affects of cut services should make Californians pay attention.

Once passed the unions will take it to the courts. At that point expect higher taxes and more cut services instead of reform for the pension system. Sadly, only the collapse of the system and harming hundreds of thousands financially will force the unions to step aside. Or, maybe California could end the union monopoly over the State, the legislature and the Governor.

California is in a Depression. Balanced budget? We have $340 billion in debt. Add to that the government pension system and you can see the hole we are in—and we continue digging. Speak up, pay up or save yourself and go to Texas. Go Cowboys!


Stephen Frank

Stephen Frank

Stephen Frank: Is the the publisher and editor of the California Political News and Views.  Mr. Frank 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 and is a full time political consultant.

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