Headline: CalPERS’ Bad Faith Didn’t Stop in 1999
Publication: The San Diego Union-Tribune
Article Date: Sep 20, 2016
This editorial follows up a recent feature outlining the history of Senate Bill 400, which boosted state workers’ pensions substantially in 2000. The California Public Employees Retirement System (CalPERS) is roundly castigated by most budget analysts and media sources for selling the huge benefit increase to the Legislature by claiming it would be fully covered by positive investment returns in a bold and bullish stock market. Here the editorial board labels passage of SB400 a “public policy crime”, and goes on to cite actions by CalPERS in subsequent years that indicate the giant pension fund continues to act in bad faith where taxpayers are concerned.
Article Commentary by Chris Heiserman, RESDC Editorial Committee Chair
It’s pretty clear that the fiscal implications of the big bump in pension benefits in 2000 went largely unnoticed initially. Rosy predictions about investment returns led CalPERS and other retirement plans to underestimate or skip annual contributions to their funds. When the market tumbled and the ranks of retirees grew, dark financial clouds loomed on the longer term horizon. CalPERS should be criticized for its misleading public relations ploys (“average annual retiree benefit is just $31,500”); however, the Union-Tribune shouldn’t get a pass when it characterizes data and information from obviously biased anti-public pension sources as “accurate coverage of pension woes.” CalPERS deliberately averages all retiree pay to report a low number; the data source the U-T uses for comparison averages the combination of pay and other benefits for “full career” retirees (30+ years), thus producing the highest possible number.