CalSTRS funding gap widens, so does solution

The CalSTRS board last week adopted a lower earnings forecast, making it more likely that a century-old tradition of underfunding at one of the nation’s oldest public pension funds is likely to continue.

Closing a wider funding gap, the result of expecting less money from future investment earning, would require nearly doubling the current annual payments to CalSTRS if the goal is to reach full funding in the usual 30 years.

But a half dozen ways to increase CalSTRS funding shown to the board last week seem to suggest that reaching full funding in three decades is now impractical, if not politically impossible.

Only one of the scenarios would get CalSTRS to 100 percent funding — but not until 2085. The other five scenarios never get the California State Teachers Retirement System to full funding, ranging from 32 to 14 percent funding after 75 years.

“They don’t necessarily result in full funding,” Ed Derman, CalSTRS deputy chief executive, told the board. “But we wanted to sort of test the ability of those approaches to allow us to pay benefits for at least the next 75 years, without having a massive infusion of money from a source because we run out of assets.”

The notion that full funding is not the target differs from the current rules of the Governmental Accounting Standards Board, which expect pension debt or “unfunded liability” to be paid off in 30 years.

The small change in the earnings forecast, from 7.75 to 7.5 percent, adds an estimated $500 million to the additional $4 billion a year already said to be needed for CalSTRS to be fully funded in 30 years.

The new funding gap, $4.5 billion, moves closer to equaling the total $5.3 billion currently being paid into the CalSTRS pension fund from all sources: teachers $2.4 billion, employers $2.3 billion and state $600 million.

As contributions flowing into the CalSTRS pension showed little change last year (the rates are set by legislation), pension payments going out to retirees increased to $10.1 billion, up 7.8 percent.

What makes CalSTRS unusual is not a low funding level, about 70 percent of assets needed for future obligations. Most pension funds, hammered by recession and a market crash, had big losses in investments expected to pay two-thirds of future pensions.

The CalSTRS fund, said to be nearing $150 billion last week, is still well below its peak of about $180 billion in the fall of 2007. The California Public Employees Retirement System was at $234 billion, below its 2007 peak of $260 billion.

Unlike CalPERS and other pension funds, CalSTRS lacks the power to set annual contributions paid by employers, needing legislation instead. The state general fund that provides most school funding continues a decade-long struggle to close huge deficits.

Some of the competing tax initiatives aimed at the November ballot are intended to reverse a decline in per-pupil spending in schools, not cover a gap in assets needed to pay teacher pensions decades from now.

The funding scenarios prepared by CalSTRS staff and actuaries, after talks with legislative staff and teacher unions, would not begin slowly phasing in a funding increase until 2016, when the state budget is presumably healthier.

Derman said the easy-to-change scenarios are a “framework” for discussion. They were requested by a legislative committee considering, among other things, Gov. Brown’s 12-point pension reform plan, which did not include the CalSTRS unfunded liability.

In addition to needing more money from a state budget awash in red ink, CalSTRS also faces limitations from teachers, who currently contribute 8 percent of their pay to the pension fund.

CalSTRS regards the teacher contribution as a vested right, protected under contract law by court decisions, that can only be increased if teachers are given a new benefit of equal value.

The maximum increase for current teachers in the scenarios is 2 percent of pay, bringing the total to 10 percent. The increase would be offset by guaranteeing a 2 percent annual cost-of-living adjustment, now routine but not required under current law.

The scenario projected to reach 100 percent funding in 2085 assumes that new teachers, not vested like current teachers, would eventually contribute 14.2 percent of pay.

Since CalSTRS members do not receive Social Security, the contributions of the new members would be similar to the contributions of most state workers in CalPERS: 8 percent of pay to pensions and 6.2 percent to Social Security.

The powerful California Teachers Association reportedly dislikes “two-tier” pension systems where members, working side by side, would be paying sharply different amounts to receive the same pension benefit.

A little more than a year ago, the CalSTRS board agreed with the go-slow recommendation of the CTA and two other unions, lowering the earnings forecast in December 2010 from 8 to 7.75 percent, not 7.5 percent as recommended by actuaries.

The forecast had last been lowered in 1995, dropping from 8.5 to 8 percent. The unions said a lower forecast could reduce member benefits, apparently referring to the cost of purchasing annuities, service credits and other impacts listed in a staff report.

Last week the only opposition to lowering the forecast to 7.5 percent came from a board member, Pedro Reyes, a representative of the Brown administration’s Department of Finance that must propose balanced state budgets.

The CalPERS board, despite a recommendation of 7.5 percent from actuaries, decided last March to leave its forecast at 7.75 percent. Because of its rate-setting power, a lower CalPERS forecast could increase employer costs.

Some experts think even a 7.5 percent earning forecast is too optimistic. One of two new Brown appointees on the 12-member CalSTRS board, Paul Rosensteil, said the actuary report seems to make the case for a forecast of 5.8 to 7.3 percent.

Nick Collier, a Milliman consulting actuary, told Rosenstiel it was a “tough call and it‘s one we definitely battled.” He said the actuaries thought about recommending an earning forecast of 7.25 percent.

“If we set it as a conservative assumption and then you go to the Legislature and ask for money,” said Collier, “they say, ‘You’re telling us this number based on an assumption you yourself said is conservative.’”

In the 1970s the CalSTRS funding level was about 30 percent. A decades-long stock market boom and legislation increasing state contributions resulted in CalSTRS briefly reaching 100 percent funding around 2000.

Then CalSTRS joined CalPERS and UC Retirement in what public pensions tend to do when reaching full funding — lower contributions and increase pension benefits, making future funding problems more likely. (See “State pension funds: what went wrong,” Calpensions 10 Jan 11)

When CalSTRS was formed in 1913, teachers were given retirement credit for past years of service. But no contributions were required from employers or employees to pay for the prior service.

“This caused the retirement plan to have an unfunded obligation from the beginning,” said a CalSTRS Overview published last year.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 7 Feb 12

73 Responses to “CalSTRS funding gap widens, so does solution”

  1. Rex The Wonder Dog! Says:

    The teachers are going to be taking a pension haircut-the money is not going to be there and the odds of a tax increase to cover it are zero. Same with CalPERS.

    I predict all pensions over $80K will be given haircuts within the next 5 years. The poor and middle class CA taxpayers are simply not going to vote for tax increases for public employees getting $1 million- $10 million pensions at age 50-55.

    So if you’re a public employee retiring at age 65 or over and not getting millions in a pension you’re not taking a hit, but the ones who are trying to get over on the taxpsayers with million dollar+ pensions at age 50 – 65 are going to take a hit.

  2. Tough Love Says:

    Quoting …..”CalSTRS regards the teacher contribution as a vested right, protected under contract law by court decisions, that can only be increased if teachers are given a new benefit of equal value.”

    Such nonsense….

    TAXPAYERS …. at WHAT point will you get off your duffs and tell ALL the Public Sector workers to GO STUFF IT, and demand an end further funding of Public Sector Pensions (routinely 4+ times more generous than those of Private sector taxpayers … and 80-90% paid for NOT by the workers, but with YOUR $$$). These Plans need to be FROZEN now so we stop digging the hole deeper. What makes Civil Servants so special … at YOUR expense ?

  3. The Gigantic Ted Says:

    lol– I knew the doom poodle couldn’t stay away! LOL– another one of his predictions! Like the cops and ff’s lawsuit!

  4. spension Says:

    Teachers don’t get the most outrageous pensions… see Figure 6C on page 24 of…

    http://www.fixpensionsfirst.com/docs/Full_Report.pdf

    If they had carried that figure out to age 65, the private/teacher difference is even smaller.

    Actually, CalSTRS held its contributions very flat through the boom years of the 1990s and 2000s… they didn’t reduce their contributions like CalPERS and UCRS.

    Nevertheless, all three pension systems guaranteed more benefits than their contribution rates justified. My view is of course the only way out is sovereign default… give all California debt holders, whether muni investors, pensioners, contractors… the same % haircut.

    Everyone should feel the pain of the bad decision making of our political process. Nobody should be spared so that everyone has a stake in good arithmetic in our debt planning.

  5. Rex The Wonder Dog! Says:

    spension Says:
    February 7, 2012 at 6:07 pm
    Teachers don’t get the most outrageous pensions… see Figure 6C on page 24 of…

    If you read my comment I never said teachers did get the most outrageous pensions, I only said they will be taking a hit if they are in the excessive range-which IMO is $80K or above before age 65-and there are tons of CalSTRS employees in that range, mostly administrators. I also said tax increases were not going to happen to cover any short fall and CalPERS would see the same type of cuts.

  6. SkippingDog Says:

    I see Rex, TL, Spension, and the gang are all here with their “end of the world as doom approaches” claims.

    It’s Groundhog Day!

  7. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    I can here “I got you babe” on the clock radio—- doom—we are dooooooomed I tell you! LOL

  8. Tough Love Says:

    I see Skipping Dog is here reassuring that everything is Ok and we’ll be fine.

    Not so Skippy, the Taxpayer’s aren’t “fine” now, and the Civil Servant recipients of this largess will surely be joining us sooner than you think.

  9. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    Yes Love— the end is near! We are doomed!

  10. Captain Says:

    “spension Says: Teachers don’t get the most outrageous pensions… see Figure 6C on page 24 of…

    http://www.fixpensionsfirst.com/docs/Full_Report.pdf

    If they had carried that figure out to age 65, the private/teacher difference is even smaller.

    Actually, CalSTRS held its contributions very flat through the boom years of the 1990s and 2000s… they didn’t reduce their contributions like CalPERS and UCRS.”

    Spension, I’m not familiar with these numbers used (figure 6c on page 24 – entry age 27, salary 45K, retirement at 62). The numbers I see (in my city) are double the 45K, or more, for people anywhere near retirement. Last time I looked we had a PE teacher making 108K while working seven hours per day, 175 days out of the year.

    As far as Calstrs contributions remaining the same that isn’t really true either. From 2001 – to present Calstrs has diverted 25% of the employee 8% contribution (2% ) toward supplemental benefits that I believe covers the Medicare payments. A portion of the state contribution goes toward purchasing power protection which guarantees 85% of the employees original purchasing power.

    – Employees with 25 years service receive pension based on highest 12 months

    Longevity Bonus
    – 30 years service = $200 monthly bonus
    – 31 years service = $300 monthly bonus
    – 32 years service + $400 monthly bonus on top of pensions.

    Enhanced pension for late retirement (after 60)
    – the factor increases by 1/3 for every 1/4 year worked beyond age 60. This amounts to a retroactive 2.4@62 pension formula (where it is capped)

    If you add it up employees can receive a retroactive 2.4@62 pension + 85% inflation protection, a longevity bonus of 400 per month, and their Medicare supplements paid for.

    I’m not saying that this is good or bad. It is what it is.

  11. Captain Says:

    The Calstrs funding ratio ( June 30, 2010), is 71% based on the Acturial Value of Asses, but only 63% based on “Fair Market Value” according to the Calstrs actuary. I understand FY2010-11 was a good year, which isn’t yet reflected in these numbers, but 2011-12 is a disaster to this point. And none of these numbers factor in the reduction of the assumed rate of return to 7.5% which increased the unfunded liability.

    Spension, I’m wondering what you, TL, and Rex think about these numbers

  12. Rex The Wonder Dog! Says:

    CalSTRS andf CalPERS are both under 50% funded when applying GASB standards applied tp the private sector

    http://www.gasb.org/home

  13. SkippingDog Says:

    But since it’s the Government Accounting Standards Board, and therefore doesn’t apply to the private sector, your post makes no sense, Rex. Par for the doggie frisbee course.

  14. Rex The Wonder Dog! Says:

    True- I mixed it up, should say Financial Accounting Foundation and the FASB.

    BTW- the http://www.voiceofsandiego.org called, they want you and your comments back over there and to stop posting comments here.

  15. Tough Love Says:

    Responding to Captain …

    A VERY good summary of many Public Sector pension issues is given here:
    http://www.governing.com/columns/public-money/col-pension-puffery.html

    In that write-up, Myth #4 accurately addresses what are really appropriate “funding ratios”

  16. Tough Love Says:

    Skippy, the GASB standards are changing, and once implemented, the unfunded share of CalPERS liabilities will be discounted at 30- year Treasury rates. That’s going to result in a huge increase n the unfunded $$ and ramp up the demand for pension reform.

  17. Betty Kindle Says:

    toughlove— do you get tired of saying the same old sky is falling mantra out here? Same old dull normal accounting reporting spin………no one buys it…

  18. Rex The Wonder Dog! Says:

    toughlove— do you get tired of saying the same old sky is falling mantra out here? Same old dull normal accounting reporting spin………no one buys it…

    Really

    ;Poll: Majority Support Gov. Brown’s Pension Reform

    http://sacramento.cbslocal.com/2011/12/07/poll-majority-support-gov-browns-pension-reform/

  19. Tough Love Says:

    Betty, Nothing I say is “spin”. Sounds like you are a Civil Servant and reluctant to get off the gravy train. You won’t have much say on when and how big the pay/pension/benefit haircuts will be. That train you’re riding is well on the way to it’s final stop.

  20. Betty Kindle Says:

    Mr.Rex sir! Guess what? I support the Gov’s reform plan too! But you and TL spin waaaay more apocolyptic dark scenarios than that 24/7 !! ( it’s dimwitted.)

  21. Captain Says:

    Is this spin, or are these just honest comments from the City Manager of Davis, Ca:

    “Davis’ new city manager is skeptical about CalPERS’ claims and their forecast.

    In early January, he told the Chamber of Commerce that he strongly disagrees with the CalPERS claims “that they have enough money at the moment and that they’re not going to increase our rates over the next two years.”

    He told the chamber in his State of the City address, “We think they’re wrong. We think they’re basically doing that so that they don’t have to give the state an increase in their rate this year so they don’t contribute to the state budget deficit.”

    “But we think they’re in complete denial.” He said that they don’t anticipate any additional cost pressures from CalPERS at this point in time, but the city still plans to set additional money aside in case they change their mind, which he said happens “just about every year.”

    “Long-term, what’s happening with CalPERS is completely unsustainable,” he continued. “There’s no way they can ever meet their obligations and so at some point in the next five years they’re going to come clean and there’s either going to be a ballot initiative or some legislative change and both future employees and existing employees are going to see some reduction in the accounting methods – it’s just not sustainable.”

    He hopes this realization comes before they hit the city with a 30 to 40 percent increase in our contributions rates. “There is some point in time when the fiscal laws of nature are going to catch up with [Cal]PERS,” he said noting that non-PERS cities are having to increase their rates by as much as 70 percent.

    That view is now bolstered by a growing criticism of CalPERS’ decision to leave the ARR untouched at 7.75 percent. Ed Mendel notes, “Even a small drop in the earnings forecast could boost the annual employer payment to the pension fund.”

    In fact, the City of Davis has projected that for each quarter percentage drop in the earning expectation, the city will have to make an additional $1 million in payment from all funds. The good news that Mr. Mendel reports that CalPERS has a chance to revisit their forecasts in March, and they are “not turning a deaf ear to the experts.”

    The news from CalSTRS is likely to be the death blow to CalPERS’ ability to maintain their current earnings projections, as their calculations may be proven to be highly political, and reaction to the governor’s pension plan may help shape their predictions, as well.”

    —David M. Greenwald reporting

    The article is here: http://davisvanguard.org/index.php?option=com_content&view=article&id=5055:calstrs-reduces-earning-forecast-rates-to-75-percent&catid=70:budgetfiscal&Itemid=109

  22. Betty Kindle Says:

    Thanks for the long cutnpaste I will never read. Wow– the city manager of Davis—- well, I guess that settles it!

  23. Tough Love Says:

    Betty, Another report I’m sure you’ll never read is that of the California’s highly respected “Little Hoover Commission”, which recommended a significant reduction in future pension accruals for CURRENT (not just new) workers.

  24. Rex The Wonder Dog! Says:

    Mr.Rex sir! Guess what? I support the Gov’s reform plan too! But you and TL spin waaaay more apocolyptic dark scenarios than that 24/7 !! ( it’s dimwitted.)

    When YOU start paying for and backstopping YOUR pension then I will stop posting the truth about the public pension scams. Deal?😉

    The fact is the jig is up-pensions for all public employees are being cut in BK and outside of BK right now and it is just a matter of time before it happens in CA and everywhere else where there is no money left.

    I don’t think the average public pension will take a hit-say below $60K, but all those above it will. Same with age, no one age 60, 65 or older will take a cut but the younger they are the bigger the cut-just like the PBGC does in the private sector.

    So stick you head in the sand, fine with me, but the cuts are already here, ask Rhode Island, and those cuts will eventually arrive everywhere because the money is simply not there. If you don’t agree fine.

  25. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    poodle and love— sam old tired broken record……zzzzzzzzzzzzzzzzzzzzzzzzzzz— more predictions like the oc cops and fireman’s lawsuit! lol oh my

  26. jukin Says:

    7.75% return??!!!???!!!

    In 2011 the fund got a 0.7% return.

    Facts they a biatch for democrats.

  27. spension Says:

    Captain… the $45K is the starting salary.

    The history of CalSTRS contributions is shown in the chart in Figure 2 of page 3 of:

    http://www.calstrs.com/newsroom/what%27s%20New/promised_benefits.pdf

    flat throughout the 1990’s and 2000’s, *except* that the State of California reduced its contribution from 4% to 2% 98-99 to 00-01.
    Teacher and local employer contributions were very consistently 8% and 8.25% during the 16 years shown in that chart.

    In contrast, CalPERS contributions have gone up and down as the market rose and fell, which is the illusion of `market timing’ where $300,000 consultants tell you when to buy and sell but make less money than their advice costs. The worst offender was UCRS, which stopped all employer contributions between 1990 and 2006.

    There are always scamming pensioners who play the system. Yes I’d like to cut them all back to $80,000.

    However, anyone catch that Mitt Romney has >$21 million in his IRA, which is invested in the Grand Caymans? Pretty great considering the yearly limit on contributions was $1,500 between 1975 and 1981, $2,000 between 1982 and 2001, and has gradually risen to $5,000 since. His contributions to principal can’t have exceeded $150,000. A return >100X on his money, and using the offshore tax strategy, made with companies that paid 0 US tax.

  28. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    jukin— they got 21% the year before— over 20 years they have done very well…..better than your 401k amigo!

  29. Rex The Wonder Dog! Says:

    CalTUTDS= less than 1% Return. Classic

  30. Tough Love Says:

    Ted, Pick the period and you can show anything you want. Tell me what’s the compound annual return from 1960 to today or 1970 to today ?

    With almost zero returns over 1960-1980 pretty lousy I’ll bet.

  31. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    Love– are you high? Yikes– I assume you have seen those figures, the deltas, and the smoothing ratios all on CP’s website??? Riiiiight???? Or do you think it is false info???

    yikes— do your own work man!

    Calpers has done great over time– Even the casual observer must see that……….ps—- how did your 401/457 etc do for the corresponding period?

  32. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    hey Poodle boi—– you are quick to downplay the CP low return…….I remember well last year you were silent when they did over 20%!!! LOL is your bias showing? Have a nice day!

  33. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    news flash— no surprise—- CPR suspends its reform initiative campaigns…………..I saw this was coming and said it out here a time or two—- the obvious reason——– no donors—– the things are both shot through with legal loser no brainers………. I do thin the Gov’s plan may be ok though……..

  34. SeeSaw Says:

    There are four more anti-public sector initiatives that will be biting the dust, in the next two weeks–Ebenstein’s three, and Ted Costa’s, “diet COLA”/private sector DB initiative. Rex, you must be pulling your hair out!

  35. Tough Love Says:

    SeeSaw, Instead of …”anti-public sector initiatives”, don’t you mean “appropriate and desperately need pension reform” ?

  36. Betty Kindle Says:

    the sort of good news for Rex the wonderdog— and alot of our nation is that things are slowly coming back—- assuming we don’t return to the old President Bush policies of unfunded mandates and perpetual war we may dig out of the ditch republicans put us in and the wonder doggy might get a job. The pension funds will benefit and life may go on…..

  37. Rex The Wonder Dog! Says:

    Rex, you must be pulling your hair out!

    No, not anymore. the system is going to cave in, within 3-5 years because you cannot pay more to “retirees” than you do the current workforce.

    I don’t really sweat it anymore. It is going to fail just as Rhode Island failed.

    Did you see the essay/post Captain put up where the Davis CM said Calpers was unsustainable and ti is a house of cards???

  38. Rex The Wonder Dog! Says:

    the sort of good news for Rex the wonderdog— and alot of our nation is that things are slowly coming back

    No they are not – and even when they do we are so far behind the 8-ball there is no coming back for the public pensions. I guess you missed this;

    Half-truth #2: “There is no crisis. Once the stock market recovers, there is no problem.”

    Some of today’s pension Pollyannas claim that when stock-market trends return to their historical averages, everything works out. That is simply ignorance and puffery from people who don’t even bother to understand pension math. The actuarial projections used by most public pension plans are already assuming that 85-year historical returns will continue indefinitely, even though many of the major investment consultants have already dialed down their projections for the next decade. Perpetual stock-market increases of 10 percent annually are already baked into the funding ratios that now hover just above 70 percent on average nationwide. Even if stocks return next year to their previous peak levels (DJIA 14,100), that wouldn’t restore pre-recession funding ratios. That’s because there have been no capital gains from equities for the five intervening years while the underlying liabilities have grown about 50 percent. Stocks may have good and bad growing seasons, but there is never a crop failure on the liabilities farm. As I explained last year, stock indexes would have to double in the next two years to restore most pension funds to their 2007 funding ratios. To return the average pension fund to full funding, stock markets would have to produce 14 percent compounded returns the rest of this decade, with no intervening recession. That would put the Dow Industrials at 30,000 in January 2020. I’ll gladly give even odds against that scenario to anyone who wants to buy into that long-shot.http://www.governing.com/columns/public-money/col-pension-puffery.html

  39. SeeSaw Says:

    These initiatives did nothing for real pension reform, TL. They were chock full of stipulations that would have been rules unconstitutional. Pension reform needs to be done the right way, through legislation or collective bargaining.

  40. Rex The Wonder Dog! Says:

    .These initiatives did nothing for real pension reform, TL. They were chock full of stipulations that would have been rules unconstitutional. .Not true-Rhode Island just cut pensions by as much as 55% for the high end pensions, and that was 100% constitutional under federal law. Since it was in a federal court it can be applied nationwide.

    .Pension reform needs to be done the right way, through legislation or collective bargaining. Pension overhaul will never be accomplished through collective bargaining, and the underfunding never happened through collective bargaining so it need not be stopped through it. That is a favorite line of the public employees b/c they know it will never happen in CB.

  41. SeeSaw Says:

    You don’t know what you are talking about Rex. Log on to, League of California Cities, and take a look at its “2012 Pension Sustainability Survey”–You will be surprised to see that pension reform has been going on at the Table, in cities all across the state.

  42. SeeSaw Says:

    Have you seen any CA officials move to cut pension benefits, in CA, Rex? That would have to happen, before any precedent from the RI Case, could be applied. It won’t happen Rex. You might want to move to Indiana, or some other place.

  43. Rex The Wonder Dog! Says:

    Have you seen any CA officials move to cut pension benefits, in CA, Rex?
    Seesaw, San Diego has a major initiative to CUT PENSIONS for all employees-including current employees, the same as RI did. So the answer to your question is YES, I have seen CA officials move to cut pensions benefits, in the second largest city in the state of CA

    That would have to happen, before any precedent from the RI Case, could be applied.
    Actually no it would not have to happen, the precedent has already been set, in RI-it does not have to be set in CA b/c once precedent is set, in any UIS District in the nation, it can be applied nationwide, including to other districts under what is known as persuasive precedent.

    You might want to move to Indiana, or some other place.
    Actually I am fine right here, you might want to prepay your rent. Actually seesaw you are not the one who is going to take a pension haircut-it will be those getting $60K, $80K or above who will be taking haircuts-the higher the pension and the lower the age the bigger the haircut.

    You’re wrong seesaw, it is just a matter of time before pensions are cut here.

  44. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    LOL wow Poodle— you continue to be schooled out here!!! Any more predictions of a legal nature like the cops lawsuit?? LOL this is too easy!

  45. spension Says:

    The CalPERS employer contribution rate history is here…

    http://www.calpers.ca.gov/eip-docs/employer/actuarial-gasb/30-year-rate-hist.pdf

    The UCRS employer contribution rate was… 0% from about 1991 to 2006.

    CalSTRS (the main topic of the Calpensions post) has certainly had more regular contributions than either CalPERS or UCRS, and, I think, the least contribution (2-4%) from the State, although local jurisdictions contribute 8.25%.

    As for employee contributions: The 8% in CalSTRS is similar to UCRS, where employees always contributed 6.2% Social Security and 2% to their DC plans. Not sure about CalPERS… a mix of Social Security and non-Social Security I think.

    In any case, I think CalSTRS has been much more responsible than CalPERS or UCRS, both on contributions and lower payouts.

    But even CalSTRS has been overgenerous in many cases. Haircuts for those over $80K or $100K/year make sense.

  46. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    i agree about the lack of contributions– the market driven holidays were a mistake– never again! But the haircuts probably are not coming— they are not lawful absent:

    1. Col Bargaining…or

    2. Sov Default and renegotiation

    #1 could happen— but I doubt it…#2 will not happen for the many reasons I have previously posted.

    Here endeth the lesson.

  47. SeeSaw Says:

    I don’t pay rent, Rex, but I do pay 32% of my pension towards medical insurance premiums for me and my spouse. That is a disaster, more outrageous than pension liabilities. Why aren’t you yelling about the cost of medical insurance?

  48. SeeSaw Says:

    A move by CA officials would be putting forth legislation to affect the State, Rex. SD is not exactly officials, of the State. I won’t be voting in SD, but I hope that the general, voting populace, there, takes some, “smart”, pills before they vote on the ugly initiative that those so-called officials have put on the ballot there–one, for which they went door-to-door, and paid, as much as $8/signature. What desperate fools they must have, for officials in SD!

  49. spension Says:

    The probability of a Calfornia Sovereign Default is roughly the same as the probability of Greece defaulting and leaving the Eurozone, IMO.

    The cost of health care (and the awful healthcare you actually get for the $) in the US is a terrible, horrible problem. And a big one. I think the US should offer all of us the opportunity to join the Canadian system. I bet that would be cheaper, even including the cost of plane tickets to Victoria, Toronto, Edmonton, or Montreal.

  50. Ted Steele, Head Renter, it's cozy up here in Poodle's tiny head! Says:

    spension! I finally agree with you!

  51. Rex The Wonder Dog! Says:

    What desperate fools they must have, for officials in SD!

    It is not the elected officials at all, but the taxpaying citizens. They do not want taxes raised to pay for $1 million-$10 million pensions, and that is why they defeated Prop D a year go-the sales tax increase-which is exactly what Jerry Clown is trying to do right now-and Jerry’s plan is going to fail-mark my words. The jig is up. Like I said, your pension is safe, it will be the $100K and above pensions at age 50 that get major haircuts. The public want pension reform and that is why the SD pension measure it is polling at a rate higher than Prop D was defeated by-which was 3-1. a landslide.

  52. Ted Steele Says:

    spension— at least I agree with you re the health care issue!!

  53. SeeSaw Says:

    Anyone who is getting a vested pension right now, in CA, will not be subjected to a cut, unless their own pension is found to be improperly spiked, and regardless of the amounts. Those pensions are protected by law–so quit dreaming, Rex. They can’t even take away those vested pensions, in SD. The only thing that will be done, is setting up new formulas and rules for the pensions of new hires, and amendments that come as the result of collective bargaining. Many pension reforms have already been enacted in CA municipalities, through the collective bargaining process. You seem to want to skirt over that fact, Rex.

  54. Rex The Wonder Dog! Says:

    Anyone who is getting a vested pension right now, in CA, will not be subjected to a cut, unless their own pension is found to be improperly spiked, and regardless of the amounts.
    That’s the exact same thing the cops and firewhienrs in Central Falls RI said! Tell us seesaw, how did that work out for them?? Did they get a haircut to their pensions or didn’t they????

    You are crazy if you think haircuts are NOT coming. Once again, the ones who will take haircuts are the ones who are in their 50’s and getting more than $60K pr year. Should not affect you so you’re safe. If you’re a 50 year old GED educated cop with a $400K per year pension then it will. Simple math seesaw.

    Pensions are gettign cut here in CA, just as they were in RI. That is a fact. You can play your silly little dumb game of claiming it won’t happen, but you know- I know, everyone knows- they will.

  55. Ted Steele Says:

    Seesaw– you are 100% correct—- the poodle’s allusions to RI are without analogue. Apples and Oranges———–vastly dif. cash negative systems there. All of this rant, now years old, just drones on like a broken record………and you keep getting the check, you were promised and that you earned. I hope the sleepy poodle troll gets a job this year– truly.

  56. SeeSaw Says:

    A 50-year old, GD-educated cop, getting a yearly pension of $400, Rex? You should be able to get a large advance on that book. Please introduce him/her to me, because I have never known anyone, in that category.

  57. SeeSaw Says:

    Start over………..
    A 50-year old GED-educated cop, getting a yearly pension, of $400K.

    This pension stuff, is serious, in my opinion, Rex. When you throw out this exaggerated rhetoric, no good purpose is served. I am just one Californian, who wants to see my state, and its people, in a sustainable, financial condition. Nothing can be solved, when so many gullible people, are served up, all these opinions, like your’s, that have absolutely no facts, to back them up, and then, they actually believe, what they are being told.

  58. Rex The Wonder Dog! Says:

    seesaw, there are GED cops getting over $400K per year. That guy from Bell, Randy Adams is receiving $22K per month, which is $264K per year, and there are several more on local muni pension plans getting over $300K per year, like the firewhiners from the San Ramon Valley and the Moraga/Orinda fire districts who are receiving over $300K per year, and those will be over $400K within 20 years, so I am right-just might take a few years until they hit the $400K per year mark,but it will happen.

    You know I am right, and not exagerating. $400K pensiosn for cops and firewhiners are just around the corner. Randay Adams WOULD have had a $400K pensio but they shut him down.

  59. Ted Steele Says:

    Poodle boi you are a complete whacked out blow hard! Seriously man— go to a doctor. There is still time to get help and enjoy what little life is left before the sky falls!

  60. SeeSaw Says:

    And, I’m sure that all those examples, you post, were rank and file, with educations no higher than GED’s. Right, Rex? Come to think of it, Randy Adams was a Police Chief–I doubt he went through his career, at multiple, municipalities with only a GED, on his educational resume–even if he was a crook. The examples you mention, are not typical, and you know it, Rex.

  61. Rex The Wonder Dog! Says:

    Cop is a GED job, that is the ONLY educational requirement and that is what 80% have when hired, a GED or HS diploma. And that is all Randy Adams has, and that is all that Joanne Galinky had who was the OC Sheriff before the current sheriff.

    But hey, I forgot, government jobs pay less than the private sector. I know that there are billions of private sector jobs that pay more than $300K per year for GED level jobs. Right seesaw.

    Once again seesaw you get caught in your falsehoods and I am the one to point out the truth. Please feel free to post up ANY private sector job where a GED is the educational requirement and you can get $100K in salary and another $100K in benefits. And ANOTHER $100K in overtime.

  62. SeeSaw Says:

    I’m not job hunting, Rex, so I don’t look at the help-wanted ads. A GED is the equivalent of a high school diploma–therefore, it is reasonable, to me that there are many jobs in the private sector that require only a high school diploma. The public safety people, that you are always citing, do not climb the ladder to the point, you describe, unless they increase their educational equivalents, upward, along the way. Your caterwallowing, about that issue, has run its course. Find another issue. Nobody is paying any attention, to what you say.

  63. Rex The Wonder Dog! Says:

    A GED is the equivalent of a high school diploma–therefore, it is reasonable, to me that there are many jobs in the private sector that require only a high school diploma.

    Yes there are many, but they do not compensate $200K per year with bullet proof job security-which was the point, the compensation does not go with what the market establishes for compensation. They are making more than medical doctors, where the average doctor at Kaiser with a general practicioner practice is paid $140K in salary and has 2 weeks of vacation and medical, less than the GED cop does-and the doctor has 10 years of the BEST and HARDEST college under their belt and $750K in student loans.

    The public safety people, that you are always citing, do not climb the ladder to the point, you describe, unless they increase their educational equivalents, upward, along the way

    Are you BLIND? Can you not READ? Or are you intenionally lying???? Read my post “Ms I Cant Read”-the OCSD last Sheriff, Joann Galinski, had a GED and she was the SHERIFF. So once again, I have caught you in a whopper factual lie.

    BTW-no one is paying attention to your whoppers, you keep spouting the same old talking points that every GED gov employee spouts and has been spouting for the last 5 years.

  64. Rex The Wonder Dog! Says:

    BTW seasaw, the GED cop is STILL comped around $200K before OT is added in, so it does not matter what rank they are at, the 10 times above market compensation is still 10 times above market for a GED. Probably 15-20 times above market. All Sheriffs do is baby sit people. There is no skill to the job, they baby sit, walk around once an hour, do a head count and make sure no one is dead-why the hell are they comping them $200K a year for that???

  65. spension Says:

    Sovereign Default is a perfectly legal way to reduce pension benefits… both those that are vested to current employees and also to current retirees. I’m not entirely sure whether or not collective bargaining can touch either of those benefits… I think the only way short of Sovereign Default is voluntary return of benefits by individuals. A dream, I know, but I guess retirees and existing vested employees would rather see our State submerge into chaos than give back pensions >$80K/year. Oh… I suppose there is another option… the tax code could be adapted to tax state pension income that exceeds $80K/year. I suppose the absence of tax on pensioners with disabilities provides a precedent for that sort of thing.

    Wade Pfau has been saying for quite some time that retirees who depend on securities markets (stocks, bonds, etc) face the worst situation since 1926… his estimate (for those who have DC accounts) is <3% for a safe withdrawal rate. Here is one of his recent papers:

    http://mpra.ub.uni-muenchen.de/27107/1/MPRA_paper_27107.pdf

    Pfau's work merely backs up what serious actuaries have known (and commented upon) for years… that the California assumptions of investment returns in the public pension funds were overly optimistic.

  66. Rex The Wonder Dog! Says:

    Sovereign Default is a perfectly legal way to reduce pension benefits… both those that are vested to current employees and also to current retirees. I’m not entirely sure whether or not collective bargaining can touch either of those benefits… I think the only way short of Sovereign Default is voluntary return of benefits by individuals. A dream, I know,

    Collective bargaining will never come close to fixing the problem. It is like putting a band aid on patient that needs a heart (more like brain) transplant.

    Sovereign Default, or simply repudiating a states debt, is something I told everyone about 5 years ago. States are immune from being sued on debts in both state and federal courts. So if the state just refused to honor the pensions the trough feeders would have no recourse on getting their pensions, b/c they could not haul the state into court and force them to pay.

    I think what happened in Rhode Isalnd will happen here sooner or later, the state will be FORCED to play hardball, and by thta I mean FORCE the trough feeders to take cuts on the penions that are clearly excessive nad were clearly not worker for nor earned nor funded, those over $60K, $80K or higher, there is not going to be enough money to cover them-it is that simple.

  67. Rex The Wonder Dog! Says:

    Pfau’s work merely backs up what serious actuaries have known (and commented upon) for years… that the California assumptions of investment returns in the public pension funds were overly optimistic.</ I v ery strongly disagree that the assumptions were "overly optimistic".

    They were fraud, straight up fraudulent claims that induced the legoislators to vote for them, a criminal act.

  68. Rex The Wonder Dog! Says:

    Pfau’s work merely backs up what serious actuaries have known (and commented upon) for years… that the California assumptions of investment returns in the public pension funds were overly optimistic.

    I very strongly disagree that the assumptions were “overly optimistic”.

    They were fraud, straight up fraudulent claims that induced the legoislators to vote for them, a criminal act.

  69. Ted Steele Says:

    lol—- blowhard! In the entire course of recorded history one can count sov devaults on 2 hands…..and clean ones on one! LOL poor poodle blowhard!

  70. spension Says:

    Uh… read `This Time is Different’ by Reinhart and Rogoff. It documents hundreds of sovereign defaults…. Germany did it, France did it… I think even the UK did it. But not the US as a country (yet).

    Now maybe, Ted Steele, you are referring to sovereign defaults by US States. I think you are right about that. On the other hand, the debt crises we have now might truly induce a bunch of new sovereign defaults.

  71. Ted Steele, Boss Says:

    of course I am talking about the US or UK– because as you know, nations historically connected with Roman Civil law as opposed to our history of Common Law are wildly different…. your continued drum pounding of SD is fun I’m sure, but you’ll notice not seriously entertained by the most serious commentators… you can count them on 2 hands and on one hand the ones that didn’t end in calamity. As Mitt (the moron) famously said….I’ll bet yo 10k it aint gonna happen!

  72. spension Says:

    The UK has defaulted 3 times in recorded history.

    Serious commentators didn’t predict 2008 or 1929 either.

  73. Ted Steele, Dean of Students Says:

    LOL spensions— and then Henry the 8th had Cromwell sack the churches…….get real……..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: