Skip to comments.Dan Walters: Pension hike revelations show massive failure
Posted on 07/30/2010 7:38:35 AM PDT by SmithL
Gov. Arnold Schwarzenegger insists he won't sign a new state budget unless the Legislature rolls back a hefty increase in state employee pensions enacted 11 years ago.
It's the latest wrinkle in Schwarzenegger's years-long war with the California Public Employees' Retirement System and state worker unions over what he contends is an unsustainable and "inexcusable" pension system that's killing the state budget.
CalPERS and the unions respond, in effect, that the system is sound, despite multibillion-dollar investment losses, and that once the economy recovers, the nation's largest pension fund will resume hefty earnings to cover its obligations.
As the argument rages in the media and in the Capitol, it has spurred fresh examinations of how the 1999 pension bill, Senate Bill 400, came to be enacted by the Legislature and then-Gov. Gray Davis especially whether CalPERS misled them about its long-term financial effects.
Ed Mendel, a veteran Capitol reporter who writes a blog about public pension issues at Calpensions.com, has found documents from a CalPERS board meeting on June 15, 1999, in which its actuaries provided three scenarios on investment earnings.
The board adopted the most optimistic scenario, told the Legislature that the system could easily absorb the pension benefit boost and did not mention the less rosy alternatives. Davis' own personnel director conveyed the potential fiscal peril in a memo to the governor, but Davis signed the bill anyway.
(Excerpt) Read more at sacbee.com ...
If this were private industry, people would be going to jail, and “you elected us” would not be an excuse. I think it would be healthy to put some of them in jail now in order to deter other politicians and governmentalcriminals from perpetrating similar crimes in the future.
Obama’s tax hikes will kill state sales tax revenue, but they never thought about that.
This revelation is part of the misinformation campaign by public employee pension agencies. The agencies have lied to legislatures for years. Legislators on both sides have rubber stamped increases in pension benefits for years based on misinformation, a free lunch mentality, and heavy lobbying by public employees.
Underlying the misinformation is a fundamental lie by the public employee pension industry. The industry claims that public employee pension agencies can manage assets more efficiently than the private sector. Essentially, the industry claims that by mixing the investment portfolio of current workers and retirees, public employee pension funds can achieve higher returns. In the private sector, there are two porfolios, one for growth during employment years and a second to provide guaranteed retirement income. The second portfolio (managed by insurance companies providing lifetime annuity products) only purchases fixed income investments, primarily high grade corporate bonds.
In Colorado, the pension agency now uses a target investment return of 8 percent. The agency is unlikely to meet this goal for a number of reasons. Foremost, the portfolio must provide both growth for current workers and safety for retirees. Colorado like many states has a growing number of public employees retiring. The portfolio is trying to achieve an unlikely long term return with a growing body of retirees, many retiring in their 50s.
Another fundamental lie by the industry is misinformation about expected and guaranteed returns. An expected return has a host of assumptions. You can argue for almost any level of expected return. The point is not whether 8 percent is reasonable assumption. The point is responsibility if the expected return does not materialize. Any legislator who votes for benefits on the basis of an expected return has sentenced taxpayers as guarantors. The private sector will not guarantee expected returns. It is outrageous that any legislator (even a rat) would consider making taxpayers guarantors.
You are so right. In NJ the biggest bunch of liars are the PBA. Their union reps have claimed for years that the stress of being a cop reduces your life expectancy by at least 10 years. Or perhaps you have heard the yarn that cops commit suicide at much hire rates compared to the general population. The problem is is that there are no scientific studies that have ever been conducted that back up these claims. Cops and their union spew out this BS and the uninformed repeat it so often that it becomes reality regardless.
In the meantime most NJ cops retire in their mid 40’s after 25 years and start collecting 65% of the average of their final 3 years salaries’. Most cops in NJ earn well over 100k a year by that time. In addition to that they get gold plated health care benefits all paid for by the taxpayers. This madness has to end before the entire system implodes.
Governor Christie has indicated that once he gets done battling the education establishment that the police and firefighters unions will be next. Lets hope he follows through.
Infuriating to see the union bosses claiming they wanted ‘conservative low risk’ investments, after FORCING risky mortgages loans on the Banks via ACORN, etc.
100% H Y P O C R I T E S . . .
- How much more of this can we TAKE?...
ANALYSIS Can the pension agency and the retirees produce documents that show how they calculated million dollar pensions? Did the pension agents and pensioneers file all the proper IRS documents? (Stolen money is taxable.)
Oh, never mind the FBI, SEC, IRS, DOJ can find out (/snix).
Filing and accepting false documents and falsified official information for fraudulent purposes incurs felony charges for 1st-degree tampering with public records, 1st-degree offering of a false instrument for filing, 4th-degree grand larceny, and 1st-degree falsifying of official records.
POSSIBLE CHARGES: Official acts prohibited, misuse of govt funds, abuse of public office; misuse of government position; abuse of government power; conflict of interest; influence buying; conspiracy to deceive; misuse of office, collusion, conspiracy to collude; extortion; govt fraud.
Possible federal offenses could include, but are not limited to:
Title 18 U.S.C. §1341, Mail Fraud, Electronic Fraud
18 U.S.C.§1001, Presenting a False Document to an Agent of the US Government,
18 U.S.C.§1027 False statements and concealment of facts in relation to documents required by the 1974 ERISA
Possible ERISA offenses including civiland/or criminal RICO violations,
18 U.S.C. §§1961-68 (RICO Act),
18 U.S.C. §241 (Conspiracy Against Civil Rights).
(1) All of the pension documents need to be scrutinized.
(2) Banks holding monies for the pension agency need to be examined by an outside auditor to determine if the bank was used for fraud.
(3) FEC documents need to be exposed to determine whether pension agents AND pensioneers exchanged campaign contributions in return for pumping pensions.
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