The Latest Casualty of Liberalism: California’s Pension Funds

Thanks to former Liberal Democrat Governor Jerry Brown, who signed the Dill Act in 1978 which gave public unions collective bargaining rights, California’s pensions are grossly underfunded.  In the case of the teachers’ pension fund, California has resorted to firing current teachers in order to pay for those who have long retired.  While state residents will again be forced to pay for the pension differences, its current and future students who will pay the most by way of larger classrooms and less funding.

Governor Brown – who is currently the Attorney General and running for Governor again – is like the Jimmy Carter of California in that his short-sighted, detrimental policies continue to negatively affect the Golden State long after his exit.

From Jane Jamison in the American Thinker:

California is the nation’s shameful example of what happens when Democrats influenced by big-government labor rule the statehouse for forty years.With 12.5% unemployment (up from 4.5% a mere three years ago) and a “recognized” budget deficit of $21 billion, California has just found that out it is in much, much more financial trouble than anyone, especially a Democrat, really wants to admit.

California’s governor Schwarzenegger commissioned a study by Stanford University, which has found that California’s three public employee pension funds (The California Public Employees’ Retirement System [CalPERS], California State Teachers’ Retirement System [CalSTRS], and University of California Retirement System [UCRS]) lost $109.7 billion in portfolio value in one year (June ’08 to June ’09) and are currently in shortfall of “more than half a trillion dollars.”

By law, California taxpayers are required to pay the public employees’ pensions shortfalls that may occur. Local governments cannot “print money” as the federal government does to cover budget deficits.

What should have been considered a huge scandal in the state pension fund system in the past year got little attention but is more pertinent now: The two largest plans, CalPERS and CalSTRS, were reportedly near bankruptcy in 2009 after it was learned the funds had lost from 25%-41% of their value due to risky investments in real estate and the stock market. Former employees of the state plans were accused in January of getting huge fees to direct pension investments to certain banks or ventures.

There are outrageous examples of abuse in the California public pension system.

PensionTsunami.com, which has been tracking the pension fund liability issue for five years, has found that 9, 233 retired members of CalPERS or CalSTRS receive more than $100,000 per year in retirement benefits, amounting to more than a billion dollars a year. 

The retired city administrator of Vernon, California, Bruce Malkenhorst, receives an annual pension of $449,675 from CalPERS. Vernon, a Los Angeles suburb, has 92 residents.

California’s state employee pension fund liabilities have ballooned for years with increased numbers of state employees, many of whom can retire at age 50, can “spike” their last years’ income with overtime to increase their retirement, and can then move on to other government or private jobs without losing their pensions.

Continued:

Approximately 22,000 California teachers have just received “pink slips” indicating that they may be laid off due to budget cuts next fall. An additional 20,000 were laid off last year. California is cutting “live” teachers out of classrooms in order to pay for retired teachers.

California schools have gone from number one in the country in the 1970s to at or near the bottom in performance and funding.

Who is to blame for this ticking-time bomb of unfunded public pension liability?

“Thank” Jerry Brown. As Governor “Moonbeam” of California in 1978, he signed the “Dill Act,” which gave California public employees the right to collective bargaining. 

Brown, who has been governor, Oakland mayor, and attorney general, now wants to be California governor…again. Four big, grateful government labor unions are backing him…again.

Speaking recently to the Service Employees International Union, Jerry Brown “the populist” said he was proud to have given state employees “the choice” to belong to unions in the ’70s, and he will “take a look” at the pension funds to make sure that they are actuarially sound. Big applause line.

Speaking to another union group in Sacramento, Brown was caught on videotape asking the labor leaders to “do the dirty work” and “attack” Republican candidates who oppose him in the governor’s race. (Hear it here.)

Who else is to blame?

Since Brown gave them a green light in the 1970s, public employee unions have become a muscular, dominating force in California politics. State employee unions spent a whopping $31.7 million on state races just from 2001-2006, according to the California Fair Political Practices commission — higher than any other group, including corporations. The majority-Democrat California legislature has voted accordingly.

What can be done?

Jerry Brown the rerun, who is running technically unopposed by any other candidate in the Democratic primary, has been oddly silent on his state’s dire budgetary woes. His campaign site news releases do not mention budget problems.

At the same time, it has been noted by the tabloid media that Jerry Brown has been weirdly over-involved as California’s attorney general, his current job, in the celebrity death investigations of Anna Nicole Smith, Michael Jackson, and Corey Haim. His office spent several months investigating ACORN employees who were caught in a videotape sting organizing houses of prostitution in government housing. Brown has just determined that there will be no prosecution of ACORN in his state.

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One Response to “The Latest Casualty of Liberalism: California’s Pension Funds”

  1. gg Says:

    All I read was the beginning and, since lies were already being told, I didn’t even bother with the rest. California’s pensions are not “grossly underfunded”. As a matter of fact until quite recently, they were superfunded, meaning that for decades, agencies did not have to pay into them AT ALL. Just because they now have to pay for the first time in years, does not make it underfunded. CalPERS is not, nor has it ever been, “close to bankruptcy”. It lost money in the market, as did all businesses, but has rebounded and can meet its obligations without subsidies. Unlike the State Government which has tried to get its hands on CalPERS money for as long as I can remember.

    Maybe you should try doing a little research before posting hateful tirades such as this. Too bad you won’t post this because it goes against your hateful point of view.

    http://www.globalresearch.ca/index.php?context=va&aid=12419

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