Posted on 12/17/2014 2:13:06 PM PST by SeekAndFind
California public employees now enjoy the highest benefits of any state in the nation. To pretend to fund this largess, California State Teachers’ Retirement System (CalSTRS) is an “outlier” among public pension plans in using creative accounting to blur its grossly underfunded status. This has allowed its school district clients and unionized employees to short-check their annual payment for the nation’s most lucrative teachers' pension benefits. But pressure from Moody’s credit rating agency is causing CalSTRS clients and unionized teachers to make big increases in pension and benefit funding.
The latest “hokey-pokey” drama is the California State Teachers’ Retirement System deciding if 7% or 7.5% is a good estimate of future investment performance.
Private pension plans that are subject to federal oversight buy a mix of stocks and bonds, with a conservative expectation of earning about 5% annual returns. But public pension plans that are not subject to federal law use accounting tricks and a speculatively high expected investment return so they can minimize the amount state and local government and union employees must contribute each year to keep the pensions from running out of money.
The credit rating service, Moody’s, has never accepted CalSTRS or any of California’s public pension and healthcare liability calculations. They calculate pension underfunding by using a 5% earning expectation. The lower Moody’s rate would mean that CalSTRS current underfunding would skyrocket to $300 billion.
(Excerpt) Read more at breitbart.com ...
Cal state pensions are insane.
There were payoffs on this RE deal. Big time payoffs.
Boo-hoo. Socialism works until you run out of other people’s money. The time is coming when no one will lend CA money, and there will be nothing but hot checks.
Bkmrk
If it is properly funded by both sides and properly invested pension funds work well. The problem is when one side or the other or both do not make contributions. Jusr saying.
Wait till they find out it was all given away to fund freebies for illegals. Karma’s a bitch.
Don’t worry, today’s youth are so smart, just ask them. I’m sure they will find a way to pay for all this debt we have enslaved them in, to pay for our wants today.
NJ teacher pensions are outrageous as well; expect no new businesses to open up here as long as they’re immediately handed a bill for people who retired decades ago...
in Cal both sides do invest, but the retirement formulas are way out of waco and the longer people I’ve the worse it gets.
Jerry Brown ran this year on fiscal responsibility and turning the state budget around. He said the budget is balanced. Of course he forgot to include bond debt and pensions which are in the few hundred billions. Of course he was re-elected by a wide margin.
“Boo-hoo. Socialism works until you run out of other people’s money. The time is coming when no one will lend CA money, and there will be nothing but hot checks.”
Sadly, the only way out of situations like these has historically been very, very high inflation - so that a $70,000/year pension in 2024 won’t even heat the house.
I’m sure we could find something objectionable in every industry, so the teacher’s retirement fund would have nowhere to invest.
That needs to get fixed asap. The one I am in is set up to have a dollar put in by me and a dollar put in by the employer. It is fully funded and in the clear. It is also really run well.
Have they tried magic beans, a genie in a lamp, or a goose that lays golden eggs?
The public doesn’t understand. The unions bribe the pols and nothing changes.
Depends on the politician. I do not think they bribed Walker.
Walker in California?
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