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YouTube has a CalPERS actuarial presentation----on how CalPERS is underfunded and why cities' pension costs will be rising dramatically. CalPERS kept changing its assumption in different years to hide losses. Because of 2008-2009 losses, CalPERS assets are 50% below what the actuarials expected.

With CalPERS, the employee contribution amount is fixed but the employer amount varies so the risk to the plan is borne by the employer (city, county, state). California taxpayers are screwed and about to get more screwed.

1. CalPERS COSTS TO CITIES SKYROCKETING----BONDHOLDERS BEWARE - The current rate of return assumption CalPERS is using is 7.75% compounded annually. However, CalPERS board is working on a new asset allocation policy based on a meeting last week with investment professionals. The new return assumption rate will be lower and announced in February 2011. For every ¼ point CalPERS lowers its investment return assumption, the city or county or state cost will go up 2 % in one of two categories of contributions it must pay into and 4% in the other. In other words, the burden on cities, counties, and the state is about to balloon come Spring. If the rate is lowered to Bill Gross's "new normal" rate of return of 4% that would mean a city or county would have to pay over 22% MORE in contributions. A sum sure to sink many cities and maybe a few counties. If the return assumption gets lowered a tiny amount and the actual returns are close to the "new normal" then CalPERS will just dig a larger hole to be filled down the road.

2. MADOFF WOULD BE PROUD - Compounding the problem is that in 2005 after CalPERS lost 1/3 of its assets in the dotcom bubble it created a "new rate stabilization policy." The new policy changed the Actuarial Value of Assets (AVA), a method of smoothing the asset valuation, from an avg of 3 years to an avg of 15, thus inflating the AVA due to previously strong years. By doing this they masked the downturn in the AVA thinking the following years would allow them to catch up and smooth out the massive dotcom loss. Trouble is, 2008-2009 came along and shot holes in this assumption and not they are more screwed.

3. MADOFF SLEIGHT OF HAND #2 - Then compounding the problem moreso, after the 2008-2009 losses, CalPERS changed their assumptions AGAIN to "smooth" the losses. They then changed the AVA to MVA ratio to 60% to 140% from 70% to 120%. On the video, you can hear the actuarial state "that means we will defer most of the loss to future years. This means the city will realize another increase in future years. I hate to bring bad news but those are the facts."

The "government money machine" to buy votes and campaign contributions was engineered in the 1970s when California's legislature cleared the way for public-employee unions to organize and bargain.

In 1978, then-Gov. Jerry Brown (reelected in 2010) signed a crucial bill that gave public workers, already protected under civil service, collective bargaining rights on top of that. Such legislation created far more than mere bargaining power. It also gave the unions access to dues money that could be deployed to reward friends in the legislature as well as beating back reform efforts at the ballot box.

"Wasn't my fault," 2010 Candidate Brown told cheering Democrats.

California taxpayers are screwed and about to get more screwed.

I hope they go for it...Really. The private sector tax payers have already been robbed and gang raped by government to pay for all these tens of thousands of government payroll parasites, their fat salaries, lucrative pensions and lottery style retirement benefits..

I can only hope they come at the tax payers for more to pay for their tax funded retirements.

This will be fun since most of the tax payers are broke, their wages stagnant for the past 10 years, with millions out of work, and millions that have lost it all.

In the end, those running CalPERS will be jailed or will leave the country, those hundreds of thousands of fat government checks issued each month? Ferrrget it.