Posted on 06/20/2010 2:47:40 PM PDT by SmithL
California's fiscal pickle – state and local budgets that are many billions of dollars out of balance – may have just gotten worse by hundreds of billions of dollars.
The Governmental Accounting Standards Board has dropped a bombshell with preliminary new rules that, if adopted, would force governments to increase projections of pension liabilities by using tighter "discount rates" – effectively, lower assumptions of pension fund earnings.
The huge California Public Employees' Retirement System, the California State Teachers' Retirement System, the University of California Retirement System and dozens of locally managed pension funds would no longer be able to minimize unfunded liabilities by adopting rosy scenarios of future earnings.
Gov. Arnold Schwarzenegger, through his financial aide, David Crane, has waged a war of words with the union-controlled Cal- PERS, alleging that the nation's largest public pension fund has been lowballing its long-term liabilities.
Schwarzenegger has said he won't sign a new state budget without pension reforms of some kind. A few days ago, the administration reached agreement with four state worker unions on some mild pension changes mostly affecting new workers.
But the unions may be just playing for time, hoping that if Democrat Jerry Brown is elected governor, the "two-tier" system will be rolled back, as it was after Democrat Gray Davis succeeded Republican Pete Wilson in 1999.
(Excerpt) Read more at sacbee.com ...
Are we back??
When will CA get serious? All they do about their $ problems is gently nibble around the edges.
$500bil short...and that’s in California alone.
Screw the fence with Mexico, throw one up around California to keep those people from infesting the rest of us.
Unfortunately it is not just Kalifornia.
You might enjoy this vanity:
(Vanity) What we can Learn from Europe, or, When Arnold met deTocqueville
Cheers!
But the unions may be just playing for time, hoping that if Democrat Jerry Brown is elected governor, the “two-tier” system will be rolled back, as it was after Democrat Gray Davis succeeded Republican Pete Wilson in 1999.
You got that right. Here in Michigan our legislature and Governatrix have been playing Kick the Can for over a decade now. They're STILL trying to play using imaginary federal money.
Dat der is kalifornicya’ll, and dey big on socially awaae investin’ and weak on de purpose of investin’(like makin’money), because kaliforicya is too big to fail, and the goobernment representation it have is powerful ‘nuff to make de feds bail dem out anyway.
Pension Plans Go Broke as Public Payrolls Expand
"...Seven states will run out of money to pay public pensions by 2020. That hasn’t stopped them from hiring new employees."
"The seven are Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma, according to Joshua D. Rauh of the Kellogg School of Management at Northwestern University. Combined, they added 9,700 workers to both state and local government payrolls between December 2007 and April of this year, says the U.S. Bureau of Labor Statistics..."
"$1 trillion. That’s the gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises..."
"To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:
• failing to make annual payments for pension systems at the levels recommended by their own actuaries;
• expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
• providing retiree health care without adequately funding it..."
"• ...In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.
• In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand.
• Nine states were deemed solid performers, having enough assets to cover at least 7.1 percent—the 50-state average—of their non-pension liabilities. Only two states—Alaska and Arizona—had 50 percent or more of the assets needed.
• Forty states were classified as needing improvement, having set aside less than 7.1 percent of the funds required. Twenty of these have no assets on hand to cover their obligations..."
The tax paying population of CA is going down. Do they actually think we are going to stick around to pay even more for pensions that we don’t have ourselves?
It's irresponsible to project an 8% growth rate on a pension fund when safe investments are returning around 3%, especially for long term investments, where the markets will go through both ups and downs.
Additionally, many government pensions were used to finance sub-prime mortgages. The politicians saw this as killing two birds with one stone, since tax dollars could be used BOTH to fund pensions and keep campaign promises for affordable housing. Add to that the ridiculously high salaries to people with little financial knowledge and the absurd lavishness of many of the offices of pension fund managers, and it was a system designed to crash and burn. Previously, politicians could keep the funds afloat, but now everyone is running out of money. The final throes are the new red light cameras and other fines and fees, but government has reached the point where they're trying to get two gallons of water out of a one gallon bucket.
The extreme left wants a financial collapse. This includes Obama, Ayers, and his brethren. Most politicians are just small time crooks who fear the day there's no one walking around with money to be stolen.
As I noted in my previous post, actuaries were put under significant pressure to increase portfolio performance projections so the books would balance.
EXCERPT---You may recall that the state was thought to be in dire financial straits under Gray Davis, so Cali held a recall, replacing him with Governator Schwarzenegger.
But Californians have discovered that even a cybernetic killing machine like Arnie could not stop Sacramento liberals from plowing the state into the ground.
During the last budget session, the state was facing a $42 billion shortfall. No, that's not the total state budget for two years. That's the debt........... the biennial deficit in California is almost as large as the combined state budget of both Oregon and Washington......w/ no end in sight.
Who is to blame: the State Employees' Union horror stories of people retiring at age 50 w/ 90% of their pay? Fire chiefs who connive to make $250,000 a year with overtime their last year to pump their pensions? The influx of illegal aliens?
=========================================
Compare your salary w/ California govt employees' salaries (does not include pensions and benefits)
Special Nurse $350,000+
Municipal railway manager:$325,000+
Administrative services department head $280,000+
State college workers salaries:
JEFF TEDFORD UC BERKELEY HEAD COACH-INTERCOLG ATHLETICS $2,831,654
PHILIP E LEBOIT UC SAN FRANCISCO PROF OF CLIN___-MEDCOMP-A $1,979,362
TIMOTHY H MCCALMONT UC SAN FRANCISCO PROF OF CLIN___-MEDCOMP-A $1,945,717
RONALD W BUSUTTIL UC LOS ANGELES PROFESSOR-MEDCOMP-A $1,570,897
RICHARD J SHEMIN UC LOS ANGELES PROFESSOR-MEDCOMP-A $1,195,837
KHALIL M TABSH UC LOS ANGELES HS CLIN PROF-MEDCOMP-A $1,048,891
BEN BRAUN UC BERKELEY HEAD COACH-INTERCOLG ATHLETICS $998,569
http://www.sacbee.com/1098/story/1669273.html
What an ass-wipe (both the piece and the author).
Why California is toast.
Ping
Colleged accounting, thanks.
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