California faces $325 billion in unfunded pension obligations

April 23, 2010

A top pension consultant warned Thursday that state and local governments currently face $325 billion in unfunded pension liabilities, amounting to $22,000 for every working adult in California. [Los Angeles Times]

Consultant Girard Miller issued the warning before California’s Little Hoover Commission, an independent state oversight agency. Miller’s comments echo growing concerns that the burden for funding government employee pensions will eventually fall to state taxpayers.

Just this week, Gov. Arnold Schwarzenegger said that solving the pension crisis needs to be the state’s top priority.

Many elected officials at both the city and county level are advocating reduced benefits for new hires in lieu of raising taxes, putting them on a collision course with powerful labor unions.

Critics contend that the typical pensions enjoyed by the public sector have become too expensive and have been largely abandoned by the private sector in favor of 401(k)-type plans. A recent Field Poll found that a majority of Californians favor such a strategy.

Meanwhile, the current shortfall at the California State Teachers’ Retirement System has mushroomed up to $42.6 billion.

In Los Angeles, current projections show that the city will soon be spending 1 of every 4 social service dollars for pension obligations to close a $1 billion deficit.

In San Diego, city officials have only 66.5 percent of the money needed to cover its retirement obligations, the lowest level in six years.

In Ventura, a citizens task force has been formed to work with budget officials on studying pension solutions.


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10 Comments

  1. Lukenelson says:

    It’s gonna get worse.Think of all the illegal aliens that will flee Arizona for the West Coast and FREE Food,housing,schooling and health care.Hot damn it’s a beautiful thing.

    (-2) 4 Total Votes - 1 up - 3 down
  2. mkaney says:

    Everyone wants to blame someone.. either the governor, or the legislature, or the unions, or the immigrants.. and there are definitely people that are directly responsible for some of these financial quandries.. but the bottom line is that it is the product of government in general. Governments make big promises but for the most part only hinder progress and voluntary human organization, and ultimately all the promises are false. Even when government serves the role of regulator, it ultimately ends up enforcing its policies on those who cannot afford to “pay to play.”

    I know that people believe that without government, there would be no civil rights. But remember that it was government paved the way for organized slavery and discrimination to begin with. You wouldn’t have had slavery if there was no government to enforce it. When government steals and extorts money from people, it removes money from the community that may otherwise go to charity. When the government gives charity it does so without knowledge of the people or community, and therefore creates disincentives rather than truly helping those in need.

    For years, our government has been pretending to help the masses through redistribution. All the while it has only been able to expand programs by printing pieces of paper that have no inherent value. The Federal Reserve has only served as a means to expand government’s grasp far beyond the reach it would normally have from the consent of the governed alone. Ironically, the redistribution hasn’t even worked like it was claimed. Instead the currency has been inflated, the debt has been expanded and it is the common man that is on the hook for these bills, and whose spending power has been diminished. So on the one hand it is giving, and with the other it is taking even more from the same people to whom it is giving.

    The only leadership coming from government has been to teach the state and local gangsters how to steal more effectively. Learning from example, our state government has used bonds similar to how the Fed has used treasuries to create money out of thin air, and has learned how to use force as if it were the military to subdue anyone who might step out of line and extort even more money from the people. It has also learned how to steal money through lucrative contracts provided to cronies.

    I believe in many of the same ideals that motivate those who want to see more government involvement in everything. I believe in fairness, and taking care of other people, protecting the environment, and quality education. However, I also believe that the Government is not our friend and is not a viable means to pursue the ends we seek. The proof is all around that government is corrupt, cannot fulfill its promises, and cannot even sustain itself. How long will we transfer the blame around and argue about petty differences while the situation gets worse and worse?

    (12) 16 Total Votes - 14 up - 2 down
    • willie says:

      Mkaney
      This is a masterpiece
      My compliments

      (3) 5 Total Votes - 4 up - 1 down
  3. Saveslocounty says:

    Once upon a time in a land far away, all of the modestly paid public servents were rewarded with a livable retirement through their old age. That system was truly self funded with the government making a small contribution and the employee forced to contribute thr remainder. Not a bad system and its sustainability was protected by actuarial studys to ensure the financial obligation could be met. That fund was actually so healthy that then Govornor Wilson took the retirement monies for the general fund. From that point on, salaries drastically increased and benefits rose with the government paying all of the employee contribution. But, then along came the recession which stopped the revenue stream and all of these retired employees expecting to be paid as promised. And the promise should be met. However, without the sustainability of the current retirement system, all contracts must be renegotiated and return to a balance of income verses liability. A multi-tier apprach is the solution with the employee provided with a baseline retirement and able to purchase enhanced plans as they can personally afford. Then ensure accurate actuarials to maintain the system and keep the politicians fingers out of the pot. If we don’t do something, we are headed for total destruction of the California economy and everyone will lose.

    (5) 7 Total Votes - 6 up - 1 down
  4. BeenThereDoneThat says:

    To the California Legislature. When you come looking for me and wanting to tax me this $22,000, you can easily find me. I will be the one standing in the crowd of hundreds of thousands of California residences on the steps outside the state capital, building the hanging platforms to lynch all you a**holes!!!! COME AND GET ME!

    (6) 8 Total Votes - 7 up - 1 down
  5. willie says:

    This report addresses the long-term problem, which would not act retroactive on the existing employees.
    But in the immediate or short term, as existing employees begin to retire, you may still have the 325 billion-dollar gap. I guess this would be the real message they’re throwing at us.
    As a metaphor, when there is a leak in the dam, you stop it before it gets bigger.
    Wasn’t anyone monitoring this before it got so huge (325 billion)?
    It is hard to believe that it could get to that huge a sum without someone knowing it.
    Any major overhaul is gonna be very expensive.
    And we got more coming. (E.g. Wall Street, Social Security, etc.)
    (The energy perspective looks good: e.g. LED household light bulbs, Green Vehicles etc.)

    (3) 3 Total Votes - 3 up - 0 down
  6. EarlRichards says:

    There is a leadership crisis in Sacramento. Why did the governor allow the budget crisis to happen in the first place?

    (-2) 14 Total Votes - 6 up - 8 down
    • ds_gray says:

      @EarlRichards – Do you honestly think the Governor runs the state all by himself? Don’t you understand that the State Legislature draws up the budget and the Governor gets to sign it or veto it. So your question is either grossly naive or sickly cynical. If the latter, I like your sense of ironic humor!

      Fact is, The previous Governor, Gray Davis, with the help of his party’s Legislature, went on a spending spree, awarding HUGE benefits packages to the employees (unions) in the State during a period of strong growth and high revenue levels, figuring that the money will just keep pouring in.

      Well, the flood is now a trickle, and shows no signs of returning to previous levels.

      The Legislature exists for two purposes – spending the taxpayers’ money and taking away our civil liberties – in other words, making budgets and making laws. Send ’em all home! We don’t need to be paying these crooks to act against the public’s best interest 12 months a year.

      (15) 19 Total Votes - 17 up - 2 down
  7. Robert1 says:

    Well there you go union people, the few that already have retired better cash out and run like hell because its only a matter of time before the system collapses.You can not get blood out of a turnip and with property taxes declining and unemployment increasing we will see a struggling economy for years.

    (11) 15 Total Votes - 13 up - 2 down

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