Connect with us

News

California pension system playing politics with your money

Published

on

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.

Mr. Roditis a candidate for California State Controller. He is an entrepreneur and owns several companies. He graduated from UCSD with a B.A. in Political Science/International Relations. He's a former City Commissioner with the City of Anaheim, CA. He's a Conservative Constitutional Federalist. Follow him on Twitter @KonRoditis

Continue Reading
Advertisement
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.

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Multiple fatalities as Amtrak train derails in Washington state

Published

on

Derailed Amtrak train in Washington state has injuries and casualties

At least three people are dead and 77 people injured as an Amtrak train has derailed over Interstate 5 about 60 miles southwest of Seattle. Amtrak train 501 heading for Tacoma was part of a new set of trains being launched today. It was a high-speed train capable of going 79 MPH.

There were 78 passengers and five crew members on board when the train derailed.

“Emergency crews are on the scene and the Amtrak Management is responding,” an Amtrak spokesperson said in a statement. “Some injuries are reported. Service between Seattle and Portland is suspended for the time being.”

Terrorism has not been ruled out.

Amtrak Derailment

Amtrak Derailment Location

Mayor Jenny Durkan releases statement.

“This catastrophic derailment is horrific. My thoughts are with the passengers, families and those injured as well as our first responders, firefighters and police who rushed to the scene. “The City of Seattle has offered our assistance and aid to Pierce and Thurston counties, and is ready to work with Amtrak, local, state, and federal officials as they manage the response and deal with the aftermath of this tragic incident.”

This is a developing story. We will be updating it constantly and adding more links that become pertinent below, as well as displaying the live Twitter Moment feed from the event below.

Perspectives

Amtrak derailment: Live coverage of Amtrak train 501 derails in Washington state

https://www.cbsnews.com/news/amtrak-train-derailment-tacoma-washington-traffic-today-live-updates/DUPONT, Wash. — An Amtrak train has derailed on an overpass in Washington state, with at least two train cars falling onto the highway below. Authorities say multiple fatalities and injuries have been reported. At this time, all southbound lanes of traffic remain blocked on Interstate 5.

The Washington State Department of Transportation tweeted a photo of the derailment, urging motorists to avoid the area.

CBS News affiliate KIRO-TV reports first responders are treating the derailment as a mass casualty incident. Authorities have not yet provided details on injuries.

“Emergency crews are on the scene and the Amtrak Management is responding,” an Amtrak spokesperson said in a statement. “Some injuries are reported. Service between Seattle and Portland is suspended for the time being.”

Amtrak derailment in Washington state: Multiple fatalities reported on train, official says

http://www.cnn.com/2017/12/18/us/amtrak-derailment-washington/index.htmlAn Amtrak passenger train derailed Monday morning, spilling multiple cars off an Interstate 5 overpass and killing several people on the train in Pierce County, Washington, according to the spokesman for the Pierce County Sheriff’s Office.

Several motorists in vehicles that were struck by the fallen train cars suffered injuries, but there were no fatalities among people in those vehicles, the sheriff’s office said.

The deaths “are all contained to the train,” said Ed Troyer, the Pierce County Sheriff’s Office spokesman. “It’s pretty horrific.”

Twitter Moment Live

Continue Reading

Guns and Crime

British diplomat Rebecca Dykes raped, murdered in Beirut

Published

on

British diplomat Rebecca Dykes raped murdered in Beirut

Update:

A suspect has been arrested. Authorities say the Lebanese man has confessed to the crimes.

Original story:

Friends said Rebecca Dykes, 30, was preparing to head home for Christmas on Saturday. She’s been in Beirut as the program and policy manager for the Department for International Development since January 2017. After leaving a bad with friends Friday night, Dykes was abducted, raped, and murdered.

Hugo Shorter, the British ambassador to Lebanon, Tweeted: “The whole embassy is deeply shocked, saddened by this news. My thoughts are with Becky’s family, friends and colleagues for their tragic loss.”

Police do not believe the attack was politically motivated. She was sexually assaulted, strangled with a rope, and dumped on the side of a highway east of Beirut.

Further Reading

British diplomat found dead in Lebanon

http://www.telegraph.co.uk/news/2017/12/17/british-diplomat-found-dead-beirut/She had been out in the Gemmayzeh area of central Beirut for the leaving party of a colleague at the British embassy and had left just after midnight.

She was abducted some time after and killed. Her body was found dumped on the Metn highway several miles away.

Police sources told the Telegraph the first autopsy revealed the cause of death as strangulation, however a second postmortem examination is to be carried out later.

British Diplomat Found Dead in Suspected Murder

https://townhall.com/tipsheet/timothymeads/2017/12/17/british-diplomat-found-murdered-n2423738A spokeswoman for the Foreign Office confirmed Ms Dykes’ death and said they were providing support to the family.

She said: “Following the death of a British woman in Beirut, we are providing support to the family.  We remain in close contact with local authorities.  Our thoughts are with the family at this difficult time.”

British diplomat found dead in Lebanon

http://www.telegraph.co.uk/news/2017/12/17/british-diplomat-found-dead-beirut/She had worked for the Foreign and Commonwealth Office since 2010, previously on Libya and Iraq.  She is thought to have grown up in Hong Kong, but attended Malvern St James Girls boarding school in Worcestershire before later studying anthropology at Manchester University and International Security and Global Governance from Birkbeck, University of London.

In a statement her family said: “We are devastated by the loss of our beloved Rebecca. We are doing all we can to understand what happened.”

Continue Reading

Immigration

CBO: Legalizing Dreamers would cost taxpayers $26 billion

Published

on

CBO Legalizing Dreamers would cost taxpayers 26 billion

A report by the non-partisan Congressional Budget Office estimated legalizing “Dreamers” as part of DACA legislation would cost taxpayers $25.9 billion. The three million illegal immigrants eligible to take advantage of such legislation would contribute around $900 million during the same 10-year-period.

“In total, CBO and JCT [the Joint Committee on Taxation] estimate that changes in direct spending and revenues from enacting [the bill] would increase budget deficits by $25.9 billion over the 2018-2027 period.” – CBO

President Trump forced the issue with his executive order ending President Obama’s Deferred Action for Childhood Arrivals executive order. This was heralded immediately by many of his supporters as fulfillment of his promise to deport millions of illegal immigrants. That excitement was short-lived when the President declared he wanted a legislative “solution” for DACA rather than an end to it. In fact, he said he would act if Congress didn’t by extending the six-month deadline he imposed:

Trump to extend DACA protections if Congress doesn’t act: report

http://thehill.com/latino/355267-trump-to-extend-daca-protections-if-congress-doesnt-act-report“The president’s comment to me was that, ‘We put a six-month deadline out there. Let’s work it out. If we can’t get it worked out in six months, we’ll give it some more time, but we’ve got to get this worked out legislatively,’” Lankford said.

When Trump rescinded President Obama’s landmark immigration protections in September, he set a six-month deadline for Congress to legalize the protections for so-called “Dreamers,” young undocumented immigrants who were brought to the United States as children.

So much for being tough on illegal immigration.

In essence, the President did not reverse Obama’s executive order. He threw down the gauntlet for Congress to make it permanent. This started off as President Obama’s mess and has turned into something President Trump and the GOP are destined to solidify.

As Joseph Curl notes on DailyWire, “No wonder America is $20 trillion in the red”:

Legalizing ‘Dreamers’ Would Cost Taxpayers $26 Billion (That’s Billion With A ‘B’)

https://www.dailywire.com/news/24777/legalizing-dreamers-would-cost-taxpayers-26-joseph-curlWith a 2012 executive order bypassing Congress, former president Barack Obama decided to give amnesty to as many as 2 million “Dreamers” who live in the United States, primarily brought in as children by their illegal alien parents, mostly from Mexico.

In September, President Trump ordered an end to the program that shields the young illegals from deportation, arguing that the cost for all those to stay would be astronomical.

And he’s right.

My Take

He may be right with his words, but the President’s actions do not match them. He didn’t order an end to the program. He’s pushing Congress to make DACA legislatively permanent, a move that so far hasn’t seemed to anger much of his base for some reason.

Continue Reading

NOQ Report Daily

Advertisement

Facebook

Twitter

Advertisement

Trending

Copyright © 2017 NOQ Report.