Earlier this week we virtually attended a State Senate hearing about SB 868, a bill to provide a retroactive pension increase to some long-retired public employees. This isn't the first time lawmakers have considered a retroactive increase. As I explained in a Wall Street Journal op-ed in 2010, the last retroactive pension increase was the … Continue reading Another Retroactive Pension Increase
Category: Pension Spending
Lies And Leverage In La Habra
Last night the La Habra City Council was scheduled to approve the issuance of debt the proceeds of which would be deposited in the city’s pension fund. But that's not what they disclosed. Instead, they said the city was seeking approval “to exchange higher cost variable rate debt with lower cost fixed rate debt.” But … Continue reading Lies And Leverage In La Habra
CA Donation Conflicts Must End
Under SEC rules, investment advisors who do work for state and local pension funds can be disqualified if they make political contributions at certain levels to elected officials or candidates for those offices who have a say in the public pension decisions to contract with investment advisors. That's a good thing because public pension funds … Continue reading CA Donation Conflicts Must End
22 Years Ago Today
It was 22 years ago today that Senate Bill 400 granted a retroactive pension increase to CA state employees that amounted to the largest non-voter-approved issuance of debt in state history. One result has been a nearly 10-fold increase in pension contributions. Another has been a shift of tax revenues from programs to pensions. Unions … Continue reading 22 Years Ago Today
Service, Please?
The principal job of states in our federalist system is to provide domestic services such as education, health and public safety. California executes some services well (e.g., Covered California) but generally residents are served poorly, students are treated more like captives than customers, insufficient value for money is obtained from healthcare providers, and public safety employees … Continue reading Service, Please?
POBs = Wall Street Snake Oil
Dear Elected Officials,We keep hearing about cities considering a Wall Street proposal to issue debt to fund supplemental pension contributions to city pension funds. They should not do so.When cities make pension promises, they and the employees to whom the promises are made are supposed to contribute enough money to pension funds so that, with … Continue reading POBs = Wall Street Snake Oil
Supplemental Pension Payments
In 1999, California's Legislature and Governor enacted SB 400, a retroactive pension increase pushed by government employee unions. At that time, the state pension fund (CalPERS) based pension contributions from employees and employers upon an expected annual return of 8.25 percent. (The higher the expected return, the lower the required upfront contributions.) Advocates for the … Continue reading Supplemental Pension Payments
Whitewash In San Jose
Few California officials have tried harder than San Jose Mayors Chuck Reed and Sam Liccardo to rein in pension costs. Sadly, a recent report by a San Jose task force undermines those efforts and promises more problems for city residents. In the first decade of the 2000s, San Jose increased maximum pension benefits for Police and Fire … Continue reading Whitewash In San Jose
POBs = Wall Street Deceptions
Dear Legislators, Wall Street specializes in fancy names for old fashioned financial schemes. Eg, as the Archegos scandal demonstrated, “Total Return Swaps” are nothing more than a way to exceed margin limits. In the government world, the most misleading phrase is “Pension Obligation Bond,” which has nothing to do with pension obligations. Here's how they … Continue reading POBs = Wall Street Deceptions
The Wolf At San Jose’s Door
There's a wolf knocking on San Jose's door. San Jose has $9.6 billion of un-prepayable pension obligations that require payments every year. To help fund those payments, the city uses investment earnings from $6.1 billion of stocks and other investments held in a pension fund. Because pension obligations exceed pension assets by $3.5 billion, the city also … Continue reading The Wolf At San Jose’s Door