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.
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.
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
The 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.
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%.
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.
The Republican Party showed its true stripes and proved David Leach right all along
Over the recent years, the Republican Party told us that they needed control of the House. We gave them the House. Then they said we can’t do enough, we need the Senate. We gave them the Senate. Then they said we can’t do enough, we need the White House. We gave them the White House, even if it’s not the guy they really want. But now I turn on the cable news shows and they now say they just have a thin majority.
Can’t the Republican Party make some kind of stand for little “r” republicanism? Can’t it make a stand for conservatism? Can’t it make a statement for liberty and freedom? Can’t it make a statement for private property rights? Now it needs a greater majority that is basically mission impossible, especially in the Senate.
The Republicans overwhelmingly have decided to pass the omnibus bill which was put together by mostly progressive thinking lobbyists. Granted military spending will be increased but so will the Democrats beloved welfare programs which they have used to buy votes and gain more and more power. It will also fund Planned Parenthood which in spite of shining a light on shady dealings of fetal parts, getting abortions for underage girls under the table, or not really investing in pap smears or mammograms as it will continue to keep its bread and butter of pre-born baby murder going strong. I really believe that many politicians in both parties benefit from abortion due to the fact they seek constant sexual flings with just about any women who work under them as these young ladies try to move ahead in their careers.
The Democrat leaders Nancy Pelosi and Chuck Schumer (his pet projects will be funded) are so happy with this bill cause they know it’s only going to benefit Washington and the Democrat Party.
For all the faults Rand Paul has, including his support of Mitch McConnell’s last election campaign, I have to give him credit for speaking out against this current omnibus spending bill. It seems that if the Democrats want to spend more of the taxpayers’ money it is wrong. If the Republicans want to spend more money, than its OK…but it should not be OK.
Sadly conservatives who have not read Pastor Cary Gordon’s book A Storm A Message A Bottle http://cornerstoneworld.org/a_storm_a_message_a_bottle or watched his series of animated videos Five Steps to Political Epiphany. http://stepstopoliticalepiphany.com/ They will protest the election by sitting out the election, instead of using their write-in blank or third-party options since Duverger’s law forbids this. Meanwhile, President Trump might go down in history as the bigger spender than Barack Obama.
We can’t any longer tolerate any more excuses. Regardless if the Democratic left is in the majority or the minority they seem to have the power in the elected branches of government. They have the power in other areas of government no matter what. We can learn one thing from Bible Believing Christians when they start a new denomination when breaking away from a bigger one. They break away because the establishment in the old denomination they are breaking away from does not repent of their apostasy (while claiming new truths). They try and they try, but like the American Gladiator event Pyramid they just knock you down to the bottom time and again. The only thing you can do is to let them go their way and let the denomination implode as they try to prevent themselves from being corrupted. It proves Jesus that you can’t put new wine into old sheepskins. We must do the same thing and try to build a new political party that can replace the Republican Party. The Grand Old Party is not what it used to be.
Mr. President, you made a choice and that choice was to sign the bill and take what you can get. Conservatives like myself, Steve Deace and Mark Levin, would call this a betrayal of conservatism. Either you are naive and/or a fool about politics, or a true charlatan, or something in between. All I can say to you is only “proved” that Benjamin Wilhelm and David Leach correct, and it will show in this midterm election. You screwed the pooch just as the Republican Party elite has done many times before, and the Democrats wildest dreams are coming true. Your likely impeachment, single-party rule, making America a new Soviet Union or some kind of socialist experiment, and the Democrats desire to become Demi-Gods.
Your own words you said on TV so many times are coming back right at you like a boomerang…”You’re Fired.”
The Money Pit: California’s not-so-high-speed rail
Have you heard this story, a couple finds a million dollar distress sale mansion on the market for a mere $200,000? Some upgrades are needed, but overall it’s a bargain. What ensues is comedic brilliance as the owners find out the house is barely standing. They pour more and more money into the house in the classic Tom Hank’s comedy “The Money Pit.”
Just like this movie, the California High-Speed Rail has become our Money Pit, but unlike the movie, this is no laughing matter.
In 2008, California voters approved Proposition 1A, a $9.95 billion bond to partially fund an 800-mile high-speed electric train traveling up to 220 mph. The goal would be that the state would fund a third, one-third by the federal government, and the last third via private investment. Total cost was estimated at $35 billion.
What has transpired since 2008? No more federal funding and no private funding. From 800-miles we went to 520 miles, as a cost savings measure. From 220 mph we are at 110 mph in large sections of the rail, to save money of course, and a possible completion date of 2020, is now estimated to be completed by 2033.
With all these cost-saving measures you would assume the cost would come down. Unfortunately, for California taxpayers, this money pit keeps getting worse.
The price tag for all these cost-saving measures brought to you by the California High-Speed Rail Authority and the California Legislature is currently estimated at $77.3 billion. But wait you want more savings and fiscal responsibility, too bad, because this $77.3 billion estimate may ultimately cost California taxpayers $98.1 billion. My prediction is it will be even higher.
At this point, it might be cheaper and faster to build a Death Star instead. Not to mention more useful.
This is not what the voters were promised. We did not approve a not-so-high-speed train with a price tag most likely ten times the initial projected cost to California taxpayers.
This boondoggle of a money pit must be stopped. Those billions can be used to help repair our roads, highways, bridges, dams, water reservoirs, and critical infrastructure.
If elected to be California’s next State Controller and Chief Financial Officer, I will look at all legal means to cut funding to this project. In my opinion, if we bought one thing and are getting something else, then the authorization to fund this project has not been authorized by the people, and thus the Controller may have the legal authority to stop payment until the project complies with Proposition 1A.
I hope, I won’t have to do this, and the Legislature does its job and kills this project. This shouldn’t be a partisan issue. We made a promise to taxpayers to be good stewards of their trust and money. Let’s restore that trust and do the right thing, and let’s put an end to this money pit.
When gun control failed, SRO saves Maryland school
2 students and a suspect were injured in a shooting that took place in southern Maryland. The shooter has since been announced dead. He used a handgun which are highly regulated due to Maryland’s strict gun control. Following the Parkland shooting, Governor Hogan proposed putting a lockbox on casino revenues to be used to fund security in school. This would be the first serious attempt to use the casino money, which was supposed to be for schools, for their intended purpose. In response to today’s incident, other counties, such as Carroll County, are placing deputies in schools as a direct response to the shooting in St. Mary’s County.
The suspect, a student, is dead after a shooting Tuesday morning at a high school in St. Mary’s County, Maryland, that has left a girl in critical condition and a boy in stable condition, according to authorities.
The St. Mary’s County Sheriff’s Office says it happened at Great Mills High School and that police are on the scene. ABC7’s Brad Bell said sources first told him that the shooter was a student, as were the two victims. Police later confirmed that the shooter was a student. Police also confirmed that a school resource officer took action to end the threat and authorities confirmed the incident has been contained.
MedStar St. Mary’s Hospital identified the victims as a 16-year-old girl and a 14-year-old boy. They say the two were taken to them at around 8:15 a.m. and that the girl was later taken to the University of Maryland Prince George’s Hospital Center.
Being uninformed, deliberately or ignorantly, many on the left will use this as a rallying point for gun control. But as a Marylander, I can attest to Maryland having some of the strictest laws in the country. These laws failed to prevent this incident, as they have failed to curb Baltimore’s crime. Too many on the right, as well are just as uninformed about current laws. We can’t begin to talk about gun control when the population is so desperately malnourished of facts. We can, however, contemplate the issuance of SROs in schools or other means of security such as allowing teachers to voluntarily undergo concealed carry training.
Excellent point re the Maryland school shooting by Jim Cavanaugh on @MSNBC just now: the SRO confronting the student shooter had the advantage in that both he and the shooter had handguns (and he had the training.) He was not facing an AR-15 which is basically just below an M16.
— Joy Reid (@JoyAnnReid) March 20, 2018
Alas, leftists are saying the SRO went in knowing that an AR-15 wasn’t being used. No, the SRO did his job unlike those cowards in the corrupt Broward Sheriff’s Office. They are trained to engage whatever the gun, because confrontation saves lives. This SRO is a hero. I look forward to knowing his name. Thankfully, only the perpetrator is dead, and together let us pray that the two students recover.