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California pension system playing politics with your money

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The California Public Employees’ Retirement System (CalPERS) is in the news once again. I wish I could report that with a record high bull market that CalPERS was well on its way to becoming solvent. Unfortunately, CalPERS, the largest public pension fund of approximately $345 billion has roughly $138 billion in unfunded state actuarial liabilities. Due to unrealistic actuarial assumptions and poor investments in Environmental, Social, and Governance (ESG) funds; CalPERS is moving closer to collapse than solvency.

In simpler terms, what is going on is that CalPERS is playing politics with retiree and taxpayers’ money. Meaning future, and current retirees will inevitably see a dramatic cut in their pension benefits; which they have been paying into their entire careers. Cuts in local and state government services to redirect funds into CalPERS as well as the inevitable tax increase.

Laundering Money

One of the ways they played politics with our money was the passage of SB 400 in 1999, which gave government employees a retirement security reserved for the wealthy. This meant that many retirees could retire at 55 and in most cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay. So basically, they dramatically increased pension benefits without any way of paying for it.

Why do this? Taking taxpayer dollars and using it for your political campaign is illegal. But union contributions are perfectly legal. Government employees are not to blame; it’s their unions. Government employees have no choice, they must be part of the union and pay union dues. Most unions are like most crony capitalistic corporations. They want to limit competition through government actions and want to make money for their shareholders.

So unions work hard at eliminating any outsourcing of services and jobs to private companies. If it must be done, it must be a government union member. Meaning more employees will be needed and hired and thus more union dues paid. Unions also work hard to increase pension and salaries because yet again more money means more money for the union. The union bosses or in the corporate world known as CEOs, take those taxpayer-funded union dues and then turn around and give millions to political campaigns. Thus you have essentially laundered millions of dollars of taxpayer money and made it legal to donate to politicians that promise you billions in taxpayer-funded benefits. This is no different then crony capitalism. Different shareholders, same corruption.

Crony Capitalism & Ideological Investments

Secondly, they play politics by investing in companies that have no promise of a reasonable rate of return. They invested in failing renewable energy companies because it’s more important to invest utilizing ideological metrics than sound fiscal policy. They divested in successful businesses who engage in legal commerce because their products or projects don’t align with their ideological views. They pressured companies to diversify their board of directors to meet their ideological views of diversity, or they will not invest in their companies. This, in essence, is blackmailing businesses to do what CalPERS wants, or they will pull millions if not billions of dollars from these companies.

The consequences of these actions are that many of the most successful and profitable companies with safer and higher rates of return don’t need CalPERS money. They do fine without them. CalPERS, on the other hand, needs to invest their money and thus are limited to less financially stable and untested companies. Companies in desperate need of liquidity will do as CalPERS wants. But in the end, picking companies based on ideology instead of sound fiscal decisions isn’t a sound investment strategy. Thus, lower rates of return and higher risk for loses will continue to create greater insolvency due to these ideological and politically motivated investments. Overall, they could care less because even though they don’t invest their own money in ESGs. Their ideological investing will drive their base to the polls and keep their political coffers full.

But before you think its all about ideology it is not. Crony capitalism plays a part as well. These companies in desperate need of capital don’t do what CalPERS wants, and that’s all. These same companies turn around and donate back to these same political coalitions which gave them all that money. Why just force the hands of these companies when you can force their hand and expect campaign contributions at the same time? Its a win-win for politicians.

My Solution

For those unaware. I’m a candidate for California State Controller in 2018. When I’m elected, I will be an ex officio member of CalPERS. As Controller, I can independently audit government agencies that spend state funds. With this authority, I will work to eliminate CalPERS. Due to the corrupt nature of politics in Sacramento, this will most likely happen through a voter-approved ballot measure. As Controller, my examination and audits will be used to expose the mismanagement and most likely propose the following changes.

First, the State will no longer invest on behalf of current or retired government employees. Responsibility will be handed over to their unions. Unions told us the pension benefit found in SB 400 were not excessive and could be paid for and managed. If that is the case, they should handle the investment portfolio on behalf of their members. I understand that union members are taxpayers, but the entire population of California taxpayers shouldn’t be on the hook for their union’s decision to push for pension benefits like those found in SB 400. The state and local municipalities that participate in CalPERS will contribute a fixed percentage of current employees salaries and the union, not the taxpayer, will be responsible for the consequences of making ideological investments.

Secondly, all future state employees can either decide to have their unions invest in a pension on their behalf or they can decide to invest on their own through an IRA or 401k. Current government employees can also decide to pull out a portion of their funds and invest on their own. With CalPERS heading for a fiscal cliff, we should allow government employees to determine what is best for them.

By doing this, we can fix the problems we are currently experiencing with this pension crisis. Taxpayers are protected, and government agencies will have a set percentage based on wages on what they must contribute to their employees’ retirement. If we take sound fiscally responsible actions, we can not only increase the rate of return on CalPERS investments, but we can protect taxpayers, reduce corruption, and give great stability and certainty to government workers.


Sources – CalPERS Pension Reports & Pension Crisis

CalPERS’ green investments underperform, business group says | The Sacramento Bee

http://www.sacbee.com/news/politics-government/the-state-worker/article188047259.html#emlnl=Breaking_NewsletterThe nation’s largest public pension fund is leaving money on the table by favoring environmental and social causes in its portfolio, a business-backed nonprofit argues in a study it’s releasing Tuesday on the California Public Employees Retirement System.

The report by the American Council for Capital Formation criticizes CalPERS’ sustainable investing strategies, which include engaging with companies to encourage them to address climate change, pressuring companies to diversify their boards of directors and investing in certain funds that nurture companies with those priorities.

How a pension deal went wrong and cost California taxpayers billions – Los Angeles Times

http://www.latimes.com/projects/la-me-pension-crisis-davis-deal/More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived.

CalPERS had projected in 1999 that the improved benefits would cause no increase in the state’s annual pension contributions over the next 11 years. In fact, the state had to raise its payments by a total of $18 billion over that period to fill the gap, according to an analysis of CalPERS data.

The pension fund has not been able to catch up, even though financial markets eventually rebounded. That’s because during the lean years, older employees kept retiring and younger ones continued to build up credit toward their own pensions. Pay raises and extended lifespans have magnified the impact of the sweetened benefits.

By far the largest group of state workers — office workers at the Department of Motor Vehicles, the Department of Social Services and dozens of other agencies — contributed between 5% and 11% of their salary in 2015, and the state kicked in an additional 24%. To fund their more costly benefits, Highway Patrol officers contributed 11.5% of pay and the state added 42%.

CalPERS Report – ACCF Corp Gov

The nation’s largest public pension fund, the California Public Employees’ Retirement System (CalPERS), is severely underfunded.  With more than $300 billion in assets, CalPERS future liability exceeds those assets by more than $100 billion. How did things get so bad? A number of factors have contributed to CalPERS’s relatively recent and precipitous decline.

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4 Comments

4 Comments

  1. T B

    December 8, 2017 at 11:51 am

    I will definitely vote for you!

    Here’s my solution to the public pension crisis:

    https://drive.google.com/file/d/0B90sU3A85q46OE9BZHJFSWEzbGM/view?usp=drivesdk

    Thoughts?

    • Konstantinos Roditis

      December 8, 2017 at 12:42 pm

      Thank you for your support and sending me this article. My initial concern with this proposal is that this would take pensions run by the states and local municipalities and merge it with social security and thus move more power to the federal government. I’m a federalist, and I believe that social security is unconstitutional and the power for the federal government to have social security is not found in the constitution, specifically Article I, Section 8 of its enumerated powers. On the federal side, I would prefer to see a plan that would begin to shrink and eventually eliminate social security and devolve and transition those powers to the states as our constitution prescribes.

      The federal government has never shown signs of fiscal responsibility, and thus I doubt any safeguards put in place will actually work because the federal government will rather spend recklessly and just print more money and raise the national debt. I believe we must eliminate power for the federal government and the state government and move to greater local control. That is one reason why I created Trickle-up-Taxation ( http://noqreport.com/2017/11/07/trickle-taxation-plan-bring-local-control-california/ ). I believe moving forward a plan similar but maybe not identical to Prop B that was passed in San Diego is needed for all future government employees ( https://www.sandiego.gov/sites/default/files/legacy/city-clerk/elections/city/pdf/retirementcharteramendment.pdf ).

      Cuts in defined benefits will happen as the courts have ruled that defined benefits can be adjusted, but it must be a reasonable benefit. The issue with this is it is not defined what is reasonable. All pensions are different and have different contribution rates and defined benefits, as well as, various jurisdictions with different laws governing them. So with your plan, some pensions might be defined as reasonable to take maximum social security payout and other it might not be. It is entirely subjective, and it will depend on the judge ultimately, as almost every pension will fight this in court. They want to keep their defined pension benefits.

      Ultimately, I believe that all new employees should move to a 401k system. I think this is the best solution. Move pension investment from the politicians’ hands to the unions, and they can invest it themselves or better yet hire the right people to do this. Most of the people on CalPERS have not investment or financial experience. Make changes to defined pension benefits with a maximum payout per year. As State Controller I will study this and look for the best solution, not the best political solution and move to fix the problem and thus best protect the taxpayers and the government employees which have done nothing wrong.

      If you would like to help support my campaign, please consider contributing today. https://secure.anedot.com/roditis/donate

      • T B

        December 8, 2017 at 12:53 pm

        Thank you for your quick and thoughtful response, a lot of what you say makes sense. I understand my approach would only be considered after an apocalyptic correction in the stock market, thereby rendering all public pensions around the world insolvent. Not sure how accurate it is, but I have read many expert’s opinion that once a fund dips below 50%, it will never recover to full funding status.

        • Konstantinos Roditis

          December 8, 2017 at 1:02 pm

          Many factors including payouts, number of retirees to current employees, number of future employees (increasing or decreasing), the age of retirement, the rate of return, etc. play into when the point of no return happens if changes are not made. But I wouldn’t be surprised if 50% isn’t a reasonable rough average of future collapse of a pension system.

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News

Jim Renacci pulls from leftist playbook, releases anonymous accusation against Sherrod Brown

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Jim Renacci pulls from leftist playbook releases anonymous accusation against Sherrod Brown

Dear Republicans: Don’t do this. Don’t do what leftists do. We cannot call them out for pushing uncorroborated sexual misconduct allegations when we’re pushing uncorroborated sexual misconduct allegations.

The bad news is, that’s what’s happening with Jim Renacci as he fights an uphill battle against Sherrod Brown:

Jim Renacci issues statement from lawyer describing unsubstantiated allegations from unnamed woman against Sherrod Brown

https://www.cleveland.com/open/index.ssf/2018/10/jim_renacci_issues_anonymous_s.htmlThe release includes a lengthy statement from Laura Mills, a Canton attorney and former Renacci business partner and political donor. In the statement, Mills says the woman told her friend about the encounter as the MeToo movement unfolded. It occurred while the woman was alone with Brown, who was divorced at the time, through her work, Mills said. The friend then contacted the Renacci campaign, which referred the woman to Mills, the statement says.

The statement does not provide a date, a location, supporting evidence or identify the woman, but describes her as “a very credible source and a professional woman.” It comes a day after Renacci told reporters and editors with the Cincinnati Enquirer that he’d heard from “multiple women” with abuse allegations against Brown, while providing no additional details or supporting evidence.

The worse news is that many on the political right are cheering him on. Here’s one from Conservative Review:

Sexual assault claims against Dem Sen. Sherrod Brown put his post-Kavanaugh hypocrisy on display

https://www.conservativereview.com/news/sexual-assault-claims-against-dem-sen-sherrod-brown-put-his-post-kavanaugh-hypocrisy-on-display/It’s amazing how putting a shoe on the other foot can change a man.

Let’s take Sen. Sherrod Brown, D-Ohio, as an example. He’s running for re-election in a state President Trump won in 2016. The campaign of his GOP opponent, Jim Renacci, claims that he’s recently been accused of sexual misconduct by an unnamed woman.

Now let’s take a look at how this has changed Brown’s reactions to uncorroborated allegations of sexual misconduct.

Here’s another from HotAir:

Uh oh: Woman claims “unwanted” sexual advance by Senate Dem in “late 1980s”

https://hotair.com/archives/2018/10/19/uh-oh-woman-claims-unwanted-sexual-advance-senate-dem-late-1980s/Quite frankly, I prefer the old rules. They not only did a better job of getting to the truth, they discouraged last-minute smear attacks rather than incentivizing them. I’m happy to apply the old rules to Sherrod Brown in this case as well — and to argue that Brown has disqualified himself for office by abandoning due process and fair play.

I suspect that Brown won’t be the last Democrat to get torched by the fire they set to those values in attempting to intimidate Kavanaugh into withdrawing. But I will welcome the strange new respect we get for due process out of it and the end to the neo-McCarthyism that they have immeasurably boosted. We warned them about the Kavanaughnsequences.

To be fair, both Ed Morrissey and Nate Madden posted their stories to highlight the hypocrisy of this new sensibility towards sexual misconduct accusation. If it weren’t for the treatment Brett Kavanaugh received, neither respected conservative writer would have touched this story. They did so more to speak out against the mess the left has created and not to add credibility to the accusation.

Nevertheless, we’re stuck in a societal state that feels obligated to go after the opposing side regardless of how credible an allegation is. It’s a partisan, divided world we live in now and the sexual misconduct game has made the situation even worse.

Sherrod Brown is an awful Senator. He deserves to lose, but chances of that are slim. If he were to lose because of these anonymous allegations, then our arguments for confirming Kavanaugh are moot.

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Foreign Affairs

First charge filed against Russian for interfering with elections

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First charge filed against Russian for interfering with elections

Elena Alekseevna Khusyaynova is allegedly part of Project Lakhta, a Russian operation intended to sow political division ahead of the midterm elections as well as other elections around the world. She has been charged by the Justice Department for interfering with the United States political system.

Here is the press release from the DOJ:

Russian National Charged with Interfering in U.S. Political System

https://www.justice.gov/usao-edva/pr/russian-national-charged-interfering-us-political-system“The strategic goal of this alleged conspiracy, which continues to this day, is to sow discord in the U.S. political system and to undermine faith in our democratic institutions,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “This case demonstrates that federal law enforcement authorities will work aggressively to investigate and prosecute the perpetrators of unlawful foreign influence activities whenever feasible, and that we will not stand by idly while foreign actors obstruct the lawful functions of our government. I want to thank the agents and prosecutors for their determined work on this case.”

According to allegations in the criminal complaint, Elena Alekseevna Khusyaynova, 44, of St. Petersburg, Russia, served as the chief accountant of “Project Lakhta,” a Russian umbrella effort funded by Russian oligarch Yevgeniy Viktorovich Prigozhin and two companies he controls, Concord Management and Consulting LLC, and Concord Catering. Project Lakhta includes multiple components, some involving domestic audiences within the Russian Federation and others targeting foreign audiences in the United States, members of the European Union, and Ukraine, among others.

My Take

This story will be spun from its surface assertion of Russian interference helping President Trump and other Republicans win in 2016. That assertion is inaccurate as the DOJ release indicates, but it won’t stop mainstream and leftist media from calling this the smoking gun against Trump’s presidency.

What this project allegedly did was push forth divisive messaging that was intended to affect people on both sides of the political aisle. This is important to understand because it wasn’t intended to drive one candidate or another. It was designed to take whatever political position any given person has and amplify their anger towards the opposing side.

Russia knows if they push the far right further to the right and the far left further to the left, our own anger will fuel the division. They are taken advantage of our freedom.

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Culture and Religion

The NPC meme triggers leftists so much because it’s too close to the truth

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The NPC meme triggers leftists so much because its too close to the truth

Leftists have been called cucks, snowflakes, libtards, and a multitude of other names assigned to them by conservatives and internet trolls for years. These labels often annoyed them, but the latest popular insult has triggered them like no other. It’s the NPC meme and it’s spreading like wildfire across the internet.

Twitter has even started banning people using the meme because it is “dehumanizing.”

But here’s the thing: previous labels may have been funny or even harsh, but the NPC meme strikes so close to home that it’s actually becoming a threat. It is being called dehumanizing, but it’s the closest a label has come to hitting the nail on the head when it comes to the unhinged left of today.

A non-player character, or NPC, is a character in a video game that is controlled by the computer. Some are influential to the outcome of the game but most will wander around the video game’s world doing random things and generally taking up space.

The use of the NPC meme in reference to leftists is tantamount to calling them unthinking automatons that echo each other without understanding beyond the collectivist, Marxist vision they claim to share. This label is quickly becoming the ultimate insult because it is, for all intents and purposes, true.

Thoughtful conservatives have known for years that mainstream media and social media are echo chambers for popular leftist mantras and incessant anger towards the boogeyman of the day. For over two years, that boogeyman has been President Trump, who has made the left so enraged they cannot see anything other than the hatred they feel towards him and those who support him.

Anything positive he does is dismissed while anything bad he does is blown out of proportions. This destructive cycle is so rampant, the echo chamber is experience a feedback loop. They no longer hear or know anything outside of their collective.

They have become NPCs controlled by the leftist puppet masters.

If it didn’t strike so close to home, it wouldn’t be getting such a vicious response.

Image via Kotaku.

NPC Meme

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