Sacramento Bee, 3/6/10

Re “CalPERS, CalSTRS, fret over forecasts, 3/3/10″:

Lower earnings expectations by our pension funds are not called for by recent investment losses but rather by decades of inflated expectations. As an example, CalPERS based past contributions on the assumption that the Dow would be over 25,000 by now. Even before the recent market decline the Dow reached only 14,000. Because of insufficient past contributions occasioned by such unreasonable expectations, current and future state budgets must make up the difference.

The use of inflated investment return assumptions by pension funds constitutes nothing less than thievery from innocent future generations. To the CalSTRS board member who asks where the money is supposed to come from if investment return assumptions are lowered, the answer is simple: Just contribute honest amounts as and when the promises are made.

– David Crane, Special Advisor to Gov. Arnold Schwarzenegger