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California’s public pension crisis is a lot worse than anyone suspected and threatens to bankrupt the state if investment rates fail, says a report released today by the California Center for Public Policy. The report says that the state’s tax-paid pensions have made defacto millionaires out of most of California’s employees by the time they reach their late 50s. “Whether the standard is salary, working conditions, benefits or especially pensions, public employees in California receive compensation far in excess of what workers in the private sector do,” says the report. “It is illiberal and unjust.” State public employees are among...

SACRAMENTO, Calif. (AP) -- As its investment portfolio was losing nearly a quarter of its value, the country's largest public pension fund doled out six-figure bonuses and substantial raises to its top employees, an analysis by The Associated Press has found. Board member Tony Olivera said the California Public Employees' Retirement System tried to reduce the bonuses but was under contractual obligations to pay them. CalPERS' plunging value came as stock values tumbled around the world, the state's economy suffered its worst decline in decades and basic state services faced severe budget cuts.

Republican gubernatorial nominee Meg Whitman said Monday that she would place pension cutbacks on the ballot if negotiations with state workers fail and would consider using her personal fortune not only to win office but to advance her agenda if elected. Taking the issue to voters is "not my first choice," she told The Bee's editorial board. "But if we have to … this is an issue we have got to take up." The former eBay CEO and billionaire said she "possibly" would put her own money behind a ballot measure campaign. "My preference would be to raise the money,...

For the past year, Gov. Arnold Schwarzenegger has warned that CalPERS was heading over a cliff and pawning off its financial problems on future generations. Now he wants to borrow $2 billion from the California Public Employees' Retirement System to help fix this year's state budget. The governor's plan represents an apparent about-face – and raises questions about the long-term costs. The last time the state borrowed from CalPERS, it had to pay the pension fund $400 million in interest. More borrowing would surely bring more interest expense, experts said Friday. CalPERS is obliged to "treat the loan as they...

Gov. Arnold Schwarzenegger has privately proposed borrowing $2 billion from the state's giant pension fund to help bridge California's $19 billion budget deficit. The plan would take the money as an advance against future savings from pension cuts, according to sources close to the negotiations who would not be identified because of the sensitive nature of the talks. The Republican governor is demanding that lawmakers reduce pension benefits for newly hired state workers back to pre-1999 levels as part of any budget agreement he signs. The Legislature and Gov. Gray Davis that year authorized larger pension benefits under the assumption...

As momentum builds to curb inflated public employee pensions in Contra Costa and other counties, a Sacramento bill aimed at stopping the practice would make the problem worse, critics say. The bills' authors say the bill would rightfully leave to union negotiations most decisions about how to curb end-of-career increases in pensions. Critics say labor cannot be trusted to correct a problem that could easily be fixed with legislation. Moreover, they say, because it is a problem created by poorly drafted legislation, the Legislature must be the one to fix it. A legal expert says the bill is so convoluted...

Gov. Arnold Schwarzenegger insists he won't sign a new state budget unless the Legislature rolls back a hefty increase in state employee pensions enacted 11 years ago. It's the latest wrinkle in Schwarzenegger's years-long war with the California Public Employees' Retirement System and state worker unions over what he contends is an unsustainable and "inexcusable" pension system that's killing the state budget. CalPERS and the unions respond, in effect, that the system is sound, despite multibillion-dollar investment losses, and that once the economy recovers, the nation's largest pension fund will resume hefty earnings to cover its obligations. As the argument...

The nonpartisan Little Hoover Commission meets today to hear testimony about public pensions, aiming to dispassionately analyze the impact of retirement costs on governments and then, if needed, suggest changes. Heaven knows we need a dose of level-headed analysis, given the wide-open rhetoric that "pension reform" provokes. Unions see such efforts as a call to arms, "an attack on public employees," union lobbyist Dave Low once told The State Worker. Last year when it looked like an initiative might make the ballot to cut benefits for future government hires, Low warned it would provoke a "nuclear response" from labor. Context...

Before clocking a $100 billion loss in early 2009, the California Public Employees' Retirement System, known as Calpers, had the swagger of a hedge fund and the certainty of a saint. Other pension funds followed its lead, loading up on leverage, investing in unrated CDOs, shoving money into high-priced private equity deals and barreling into commodities and real estate. The question now is whether a loss of nearly 40% of its market value -- the worst loss in the system's 77-year history -- has brought Calpers sufficiently back down to earth to avoid another such debacle, and whether other chastened...

So last week it was Attorney General/Candidate for Governor Jerry Brown weighing in on the county’s lawsuit trying to rescind generous pensions for deputies (county suit, bad). This week, it’s the ring-the-bells-for-freedom Pacific Legal Foundation and friends weighing in on same (county suit, good). You may have heard that the County of Orange sued the Association of Orange County Deputy Sheriffs in 2008, trying to yank back the so-called “three percent at 50″ benefit, which allows deputies who have served for 30 years to retire at age 50 with 90 percent of their salaries. (Said benefit was magnanimously granted by...

The nonpartisan Little Hoover Commission meets today to hear testimony about public pensions, aiming to dispassionately analyze the impact of retirement costs on governments and then, if needed, suggest changes. Heaven knows we need a dose of level-headed analysis, given the wide-open rhetoric that "pension reform" provokes. Unions see such efforts as a call to arms, "an attack on public employees," union lobbyist Dave Low once told The State Worker. Last year when it looked like an initiative might make the ballot to cut benefits for future government hires, Low warned it would provoke a "nuclear response" from labor. Context...

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...

The California Highway Patrol officers' union and three other state labor groups have agreed to contract terms with Gov. Arnold Schwarzenegger that roll back pension benefits for new state hires and increase all employees' retirement contributions. The deals would also protect the unions' members from the threat of minimum wage when lawmakers don't enact a state budget on time and eventually add a top step pay increase. "We're not blind or deaf to the unique times in California. We want to get the necessary discussion of (pension) reform behind us," said Jon Hamm of the California Association of Highway Patrolmen....

California lawmakers' constitutional deadline to pass a state budget by June 15 will be ignored today – again. Only once in the past two decades has the deadline been met, last year, but that spending plan was quickly unraveled by the economy and needed more than $20 billion in fixes. California finds itself sinking again in red ink, a projected $19.1 billion, and no compromise is in sight between Democrats intent on raising billions in revenue and Republicans adamantly opposed. Gov. Arnold Schwarzenegger, through a spokesman, expressed a sense of urgency about today's missed deadline. "Our deficit grows every day...

Gov. Arnold Schwarzenegger's full-court press on overhauling the public employee pension system reform got a mention in POLITICO over the weekend. Schwarzenegger, interviewed for a piece on the power of public employee unions in this year's cycle, reaffirmed the pledge he made in unveiling his revised budget in May to "not sign a budget if we don't have pension reform and budget reform."

California is the nation's shameful example of what happens when Democrats influenced by big-government labor rule the statehouse for forty years. With 12.5% unemployment (up from 4.5% a mere three years ago) and a "recognized" budget deficit of $21 billion, California has just found that out it is in much, much more financial trouble than anyone, especially a Democrat, really wants to admit. California's governor Schwarzenegger commissioned a study by Stanford University, which has found that California's three public employee pension funds (The California Public Employees' Retirement System [CalPERS], California State Teachers' Retirement System [CalSTRS], and University of California...

An appointee of Los Angeles Mayor Antonio Villaraigosa voted two years ago to direct millions in public pension dollars to a company that invested in his own private equity fund, according to documents obtained by The Times. Elliott Broidy, chairman of Markstone Capital Partners, served until May on the Fire and Police Pensions board, which provides benefits to the city's retired police officers and firefighters. Real estate company CIM Group invested $500,000 in Markstone's private equity fund in 2004, according to an e-mail to the city's pension agency. Three years later, Broidy voted with his colleagues on the pension board...

A milestone on California's meandering journey toward fiscal insolvency occurred exactly a decade ago when the Legislature enacted a massive increase in state employee pensions on the expedient assumption that it would cost taxpayers nothing. Although the new pensions would generate almost countless billions of dollars in extra income for retirees in the years ahead, the CalPERS board, dominated by union representatives, told legislators that taxpayers wouldn't have to bear the load because investment income, which was flowing into the pension trust fund from high-tech stocks, would continue indefinitely. "They (CalPERS) anticipate that the state's contribution to CalPERS will remain...

Ten years ago today, California's march toward its present fiscal chaos began. On June 16, 1999, the board of the California Public Employees Retirement System (CalPERS) – its investment portfolio bulging after several years of large gains – voted to ask Gov. Gray Davis and the Legislature to broadly increase benefits for more than 800,000 government employees and retirees. There was some skepticism. An aide to Davis, who was then cultivating an image as a pragmatic, can-do centrist, said the governor worried about the prudence of such a broad benefit boost. Assemblyman Tom McClintock, R-Thousand Oaks, questioned how CalPERS could...

A lawsuit would limit the information on the website of a pension reform group, preventing the listing of names such as Bruce Malkenhorst, a city of Vernon retiree with a $499,675 annual pension. The suit filed by a retired Contra Costa Deputy Sheriff, Donna Irwin, would allow the disclosure of the amounts of individual public employee pensions. But the recipient could not be named.