On 2017-08-18 18:52, sms wrote:
On 8/18/2017 12:52 PM, Joerg wrote:

In essence it is. CalPERS got a blank check. Because of wanton doling
out of increases they are now grossly underfunded. So they send the
government a yearly bill. "This is how many billions we need this year
and this is, therefore, what you owe us".

It's not the "wanton doling out of increases," the increases are
determined by formulas put into place when the employee is hired, no one
increases it "wantonly."


It clearly was. Unions "convinced" the governor back then (Gray Davis)
that a massive increase would easily be covered but the investments.
This was when the stock market was on a roll. Then ... it went bust, as
it cyclically tends to do. And now we have a massive pension problem.
Predictably so.


... Many cities have taken steps to reduce the
pension costs for the long term, but in the short term there will be a
lot of retirees collecting pensions for decades.

The real cause of the CalPERS under-funding is the reduction in the
predicted rate of return on investments. Every time CalPERS reduces the
predicted return, the local and state governments have to ante up the
difference. As an elected official, I now get to worry about this!


Then you should remember that episode.

http://www.latimes.com/projects/la-m...is-davis-deal/


A reduction of 0.5% in the predicted rate of return may not sound like
much, but even for a moderately sized city it can amount to a lot of
money in additional funding. See
https://www.calpers.ca.gov/page/newsroom/calpers-news/2016/calpers-lower-discount-rate.


This is exactly what I told everyone back then would happen and all the
leftists said I was wrong or had their heads in the sand. And now it is
happening.


http://www.latimes.com/projects/la-le-me-richmond-pensions/.


The classic crowding out phenomenon. Also very predictable. This is why
we have horrid streets and Nevada has nice smooth ones.

--
Regards, Joerg

http://www.analogconsultants.com/