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How should California state pensions work?

Original post made by Sandy Piderit, Mohr Park, on Feb 26, 2010

I don't know much about how pensions for state employees work. CalPers, CalSTRS.... I don't even know the acronyms. I can tell that there are plenty of posters here who think this is an important part of state government that needs reform, but I wouldn't have any idea where to begin (if I were a state representative or state senator or governor or whatever).

So, this is my honest question... how should the state pension system in California be reformed?

Comments (51)

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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 26, 2010 at 4:21 pm

Stacey is a registered user.

Sandy,

I don't hold the same view as some of the recent posters on state pensions. I think they're a contributing factor to our problems, not necessarily a root cause. One of the issues, I think with CalPERS, is that the pension fund gets to set the rate of contribution to the fund that local governments pay and they keep raising the rate. Naturally, that eats into local budgets. Along with pensions are the retiree medical benefit obligations (and other "OPEB" obligations) that a 2004 governmental accounting change required local government to start paying attention to.

Here's a blog written by a journalist devoted to California government pensions: Web Link

This one is funny: Web Link Competition between CalSTRS and CalPERS...


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 26, 2010 at 4:28 pm

Stacey is a registered user.

The other problem has to do with how benefits are calculated for CalPERS. Gray Davis caved in to the demand for the so-called "3 point" system.

This article gives a bit more history on that: Web Link

"The landmark benefit increase came in 1999, when the CalPERS board sponsored legislation, SB 400, that created new retirement formulas that could be bargained for by state and some local public employees.

Analyses of the bill reported estimates that benefits would be increased 25 to 50 percent. A formula that is now widespread allowed the Highway Patrol, and later firefighters, to retire at age 50 with 3 percent of final pay for each year served."

Looks like there's a new group seeking pension reform: "California Foundation for Fiscal Responsibility" Web Link


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 26, 2010 at 4:28 pm

Stacey is a registered user.

Sandy,

Schwarzenegger got into office originally on a recall of Davis over this kind of increase in government spending!


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Posted by fairness
a resident of Birdland
on Feb 26, 2010 at 6:39 pm

The public employees should have a retirement plan that is comparable with the taxpayers. That would be a 401(k) type of plan. What they have now is a defined-benefit, which is the taxpayer taking ALL the risk in the investments for retirement. A defined-contribution plan (e.g., 401(k) ) puts the risk in the employee. The employee gets to make the decision on how risky they want their investments to be, and they have to live with it.

Also mentioned, but not part of pensions, is retiree-medical. I don't think there are any taxpayers, other than government employees, that can retire at ages 50 through 65, and have their medical insurance premiums paid for by their former employer. Why do our state and local government workers have that benefit?


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Posted by Not a Millionaire
a resident of Foothill Knolls
on Feb 27, 2010 at 9:04 am

Our insurance premiums are NOT paid in full by our former emplyer. We pay into it and draw it after retirement. Anyone can get weblinsks to support thier theories; why don't you ask a public employee to see what these great big bucks they are making? Who knew there were so many millionaire public employees?


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 9:26 am

Stacey is a registered user.

Web Link

Why are retiree health costs an issue now?
Nearly all governments pay for health benefits for their retired employees on a pay-as-you-go basis each year. Generally, no funds have been set aside to address future benefit obligations.


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 27, 2010 at 9:58 am

Sandy and Stacey, I haven't looked at the links yet, so maybe this repeats what is stated. The only reason STRS rates haven't increased is they have been locked by legislation. Neither STRS nor PERS are fully funded (big hits to their investment portfolios like everyone else). STRS is now talking about changing the legislation to up the contribution to 14%. This will be yet another blow to school budgets. PERS will gradually increase to 14% over the next few school years--another budgeting nightmare. As a disclaimer, I am part of PERS. Acronyms are: State Teacher Retirements System and Public Employee Retirement System.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 10:22 am

Stacey is a registered user.

But the real question, Kathleen, is did you have a choice in participating?


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 27, 2010 at 1:13 pm

Nope.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 2:38 pm

"...big hits to their investment portfolios like everyone else)"

Whose root cause lay entirely with Wall Street investment banks, rating agencies, and "insurance companies" like AIG. The improper oversight and regulation of the derivatives market brought the entire financial system to collapse.

Pension systems like CalPERS did due diligence and made prudent investments, given information available to them. Morgan Stanley, Goldman Sachs, and other financial companies were selling what amounted to junk bonds as AAA grade investment bonds, while at the same time placing even bigger bets against them.

I'll be happy to provide all kinds of links about credit default swaps and all kinds of opaque investments that led to the collapse of the global financial market. It had nothing at all to do with taxes that were too high, regulations that were too strict, or benefits that were too generous.




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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 2:51 pm

"The employee gets to make the decision on how risky they want their investments to be, and they have to live with it."

Not really. Many 401k plans don't offer an FDIC backed investment option, and those few that do still limit the insured amount to that of a single insured account, currently $250,000, set to return to $100,000 by December 31, 2013. Money market funds have lost money in the recent collapse and can no longer be considered safe. Bond and stock funds are riskier still, and the average investor lacks the tools to make any kind of informed judgement about the risk associated with investing in a particular mutual fund, given the current state of market regulation and oversight.

Here is a good read on the subject:

Web Link


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 2:51 pm

Stacey is a registered user.

Reader,

The part you're not comprehending is that taxpayers assume 100% of the risk to those "big hits". The CalPERS fund has to also take the riskier investments in order to get enough of a return in order to avoid having taxpayers foot the bill for a shortfall (ala increase employer contribution rate that eats into local budgets). It is a vicious cycle.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 2:57 pm

"STRS is now talking about changing the legislation to up the contribution to 14%. This will be yet another blow to school budgets."

Until we go after the root cause, improper regulation of financial corporations, we can not really solve the funding problem long term. Even if the state had paid lower retirement benefits and increased the retirement age for many workers (which I think it should do), we would still be facing a budget shortfall coming from problems outside the state. With the doctrine of too big to fail still operating in Washington, we will all face a tumultuous financial future and a shrinking middle class.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 3:00 pm

Stacey is a registered user.

Web Link

"All Californians have a stake in the fund's performance: If CalPERS' $200-billion portfolio comes up short, and state and local governments refuse to cut workers' benefits, the bill falls to taxpayers -- many of whom have no guaranteed pension benefits of their own.

Already, CalPERS has notified state and local government authorities that their contributions to the fund will have to rise beginning in 2011 or 2012, reflecting the steep drop in the system's assets during the markets' crash."


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 3:01 pm

"also take the riskier investments "

But a large portion of that portfolio that declined was not in "risky" assets. It was in AAA rated bonds. Am I looking at the wrong investment breakdown? The bonds were fraudulently rated, but the sellers were too politically connected in Washington to face any significant consequences.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 3:09 pm

" If CalPERS' $200-billion portfolio comes up short, and state and local governments refuse to cut workers' benefits, the bill falls to taxpayers -- many of whom have no guaranteed pension benefits of their own."

Yes, of course those are the choices, and I'm hoping some of the benefits are reduced, but I think it is a mistake to be advocating for more 401k style retirement packages for workers, given the current state of the financial markets. The average investors do not have the same tools available to them that the investment banks and hedge funds have, and there are not adequate controls in place so that investors can evaluate risk. Remember the proposals to allow workers to put their Social Security savings in privately managed accounts? Can you imagine the consequences of that?


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 3:12 pm

Stacey is a registered user.

And taxpayers don't have a choice.
===

But with the U.S. economy potentially facing slow growth for years to come after the latest recession, and with interest rates on high-quality bonds at relatively low levels, many Wall Street pros believe that even 7.75% is too high a return for a pension fund to count on.

Bill Gross, the bond market guru at investment titan Pimco in Newport Beach, has warned clients that a 4% to 5% annualized return on investments "is about all they can expect" in the next few years.

CalPERS believes it can do better than that by maintaining or increasing its bets on so-called alternative investments such as private-equity deals -- funding corporate buyouts, for example -- and real estate.

"Right now we see some great opportunities" in private equity and real estate deals, Diehr said.

But Ted Siedle, the head of Benchmark Financial Services, an independent pension plan auditing firm in Florida, believes CalPERS is delusional.

Just as most stock fund managers can't beat the average market return over time, the odds that Wall Street private-equity managers will produce returns that justify their rich fees in the long run "is probably 1 in 10," Siedle asserts.

Taxpayers, however, may have little choice but to root for CalPERS: If the fund can't meet its target, the public could get the tab.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 3:13 pm

Stacey is a registered user.

Reader,

The point is that even with access to "the same tools available to them that the investment banks and hedge funds have", whatever those are supposed to be, CalPERS isn't going to be doing much better than a private investor.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 27, 2010 at 3:32 pm

"whatever those are supposed to be"

When was the last time you used Structured Investment Vehicle (SIV), or Credit Default Swap (SIV) in your 401k? Have you ever paid an exchange to get stock quotes a fraction of a second ahead of other investors?

"CalPERS isn't going to be doing much better than a private investor."

The average private investor doesn't come near even matching typical stock and bond indexes. What are you suggesting CalPERS do as an alternative?


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 6:46 pm

Stacey is a registered user.

Reader,

I'm not clear what you're arguing about. The issue is that taxpayers assume 100% of the investment risk. This means that services get cut when the pension fund doesn't get the expected return. The employees need to assume a fair share of the investment risk.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 27, 2010 at 6:51 pm

Stacey is a registered user.

What is the function of government? To provide services to citizens or to pay for retirement?


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 9:03 am

"What is the function of government? To provide services to citizens or to pay for retirement?"

I think the majority of people agree that it should do both. I don't know of many people who want to do away with Medicare of Social Security.


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 9:45 am

Well not now, of course, we paid in all these years, right? We're . . . entitled. "Parliament of Whores," P J O'Rourke is essentially . . . we have seen the enemy, and it is us.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 10:23 am

To Kathleen,

What are you suggesting as an alternative? Turning Social Security into a self directed 401k or IRA?


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 10:26 am

To Kathleen,

Can you imagine what we would be going through now if we had only 401k and IRAs, and no Social Security? And how do you feel about the current state of federal oversight and regulation of securities (especially derivatives) trading?


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 28, 2010 at 10:29 am

Stacey is a registered user.

This is a discussion about publicly funded pensions, the impact they have on government budgets, and if there's a way to reduce that impact. Discussion about 401(k)s, Social Security, Medicare, etc. are a complete distraction from the topic. One of the reasons is because those other things are not funded the same way as public employee pension funds and don't have the same rules applied to them.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 28, 2010 at 10:38 am

Stacey is a registered user.

This was just posted in another thread but I report it because it offers ideas on reform: Web Link

# Eliminate "double dipping." When a public servant retires, the employee has a right to collect earned pension benefits and seek employment elsewhere. It is not appropriate for a retiree to enroll in a new public retirement fund while continuing to collect from an old one.

# Increase the age at which public employees are eligible to collect benefits. Pensions were never intended to provide a second income halfway through a work career. Rather, they were created to provide a modicum of quality of life in old age. If public employees were ineligible to receive pension benefits until at least age 62, there would be less incentive to double dip.

# Public pension systems must index for the increase in life expectancy. When President Franklin Roosevelt signed Social Security into law, benefits started at age 65, at a time when average life expectancy was 62 years. Today, life expectancy is 78. California public pension systems allow retirement for public safety officers as early as age 50 with 90 percent of their highest yearly salary. This is insanity.

Public pensions must be more aligned with their private counterparts, in which employee contributions vary based on the long-term fiscal solvency of the pension plan.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Feb 28, 2010 at 10:46 am

Stacey is a registered user.

One difference to keep in mind between CalPERS and CalSTRS...

A semi-recent law gives the CalPERS Board the ability to set the local government contribution rate. CalSTRS still operates whereby the rate is set by the Legislature. Neither gives local government local control over those costs, but with CalSTRS at least the voters can hold an elected official directly accountable.


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 11:45 am

a reader, Yes, individuals should be planning for their own retirements, be that a mattress or a 401k or a savings account. Today's SS system is not what was originally intended, like so many social safety nets. How do you justify the wealth transfer from our children and grandchildren to us in retirement??

Don't know enough to answer your last question; could ask the resident MBA, but it would be a loooooooong answer.


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 11:55 am

Here's the data on SS: Web Link


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 2:48 pm

To a reader, If the taxpayers are supposed with live with 401(k), IRAs, and social security, why should government workers be different?

You are also completely out of touch (or you are probably a government worker) by the comments on: "What is the function of government? To provide services to citizens or to pay for retirement?" and you replied "I think the majority of people agree that it should do both. "
The function of government is to provide services. It is only the unions that feel it is the function of taxpayers to pay pensions.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 3:01 pm

"Today's SS system is not what was originally intended, like so many social safety nets. "

So you were OK with the original intent of Social Security?

"Don't know enough to answer your last question; could ask the resident MBA, but it would be a loooooooong answer."

I sincerely recommend that you study it, because it is at the root of all the financial trouble we are experiencing in the current recession. The current recession has nothing at all to do with excessive government borrowing, excessive taxation, or excessive regulation. It was entirely caused by excessive financial speculation, leverage, and the imprudent use of derivatives by companies like Bear Stearns, Lehman Brothers, and AIG. Please don't send a link to Phil Gram's apology for the industry and the bailouts where he says the repeal of Glass-Steagall was a benefit because it allowed Bank of America to swoop and buy out Merrill Lynch, preventing the need for a government bailout. That turned out to be forced by the government. And the rest of that article gets it mostly wrong.

My main point is that the "too big to fail" doctrine embraced by both political parties, along with regulation written to benefit a few financial firms at the expense of the rest of us is at the root of all our financial troubles. If we don't fix that, it doesn't matter what we do with CalPERS and the rest of it. We will still be in huge trouble. I think you've written before that you were opposed to TARP, the Treasury bailout. How do you feel about the Federal Reserve guaranteed loan program and first ever program to buy large quantities of mortgage backed securities in amounts exceeding $2 trillion?

The bottom line for me is that all these issues with California pension programs are small potatoes compared to the problem of properly regulating financial companies so that we are not once again bailing them out and driving unemployment into the teens. The root of the problem is in New York and Washington.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 3:04 pm

To taxpayer,

I am not a government worker. Medicare and Social Security are government retirement programs. The vast majority of Americans support both programs. I don't think anyone disputes that. Just look at what happens to any politician who proposes phasing those programs out.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 3:12 pm

"How do you justify the wealth transfer from our children and grandchildren to us in retirement?? "

Both Social Security and Medicare can be fully funded if we increase retirement age and reduce benefits. There is transfer of wealth inherent in any social program. TARP was a transfer of wealth. All the "social safety nets" you refer to above are transfers of wealth from people who made money to people who didn't. Basic scientific research is transfer of wealth from the current generation of taxpayers to future generations who may benefit from the scientific discoveries.


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 4:34 pm

a reader, you think that government should pay a better system of retirement for government workers than for the taxpayers? It sounds like that is what you are advocating.


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Posted by Kathleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 5:24 pm

WOW. So we can increase the retirement age for teachers, reduce their benefits, and pay them less? And that's okay?

I will take exception to the idea that transfer of wealth, under any circumstances, is okay. If you get the education and/or work hard to reach a higher level of compensation than someone who doesn't get the education or do the work . . . when did we decide that those who accomplish much _owe_ those who did not.


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Posted by Sandy
a resident of Mohr Park
on Feb 28, 2010 at 5:59 pm

The purpose of government is to provide services to citizens.

A key service government provides to the US society is free public education for K-12 students. We the taxpayers decide (collectively) how much we should pay in taxes in order for that service to the next generation to continue to receive it.

Part of the cost of a public education is to pay public school teachers. Most of those costs are covered through taxes collected at the state and local level. It seems like part of the debate is about whether taxes should pay both for teacher salaries and for teachers' pensions.

Separate from the pension issue is the social security issue, but social security is a federal system. I asked about California. I know it's difficult to pry these issues apart, but let's try to stick to California and public pensions for now.

And after those diversions, back to the question:

"How should the state pension system in California be reformed?"


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 6:11 pm

"So we can increase the retirement age for teachers, reduce their benefits, and pay them less? And that's okay?"

I think we have to do increase the retirement age for teachers, don't you? Don't you think their retirement benefits are more generous than we can afford? I can understand what you're objecting to. I thought you wanted to eliminate government retirement benefits altogether. -- "Yes, individuals should be planning for their own retirements, be that a mattress or a 401k or a savings account. " -- Isn't that what you were saying.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 6:14 pm

"you think that government should pay a better system of retirement for government workers than for the taxpayers?"

Yes, I think that has long been part of the bargain. Government workers trade lower wages, benefits, and potential profits for greater stability and retirement benefits. I think California pensions are more generous than we can afford. I don't think federal government pensions are too generous.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 6:16 pm

To Sandy,

"How should the state pension system in California be reformed?"

Raising the retirement age to something in the 60 - 65 range and decreasing the benefit by a small percentage may be all we need.


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Posted by a reader
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 6:19 pm

"I will take exception to the idea that transfer of wealth, under any circumstances, is okay."

What about the examples I gave?


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Posted by Kathhleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 6:25 pm

I'd probably be in favor of something more drastic than increasing the retirement age, but I could live with starting there. However, I don't think it's enough given the funds are short of their obligations. I don't agree that government employees should have a better retirement system either. Especially legislators.


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Posted by Kathhleen Ruegsegger
a resident of Vintage Hills Elementary School
on Feb 28, 2010 at 6:58 pm

Maybe I should clarify that I have no problem with those who make more than me, invested more wisely, saved more, planned better, etc. By the same token, I don't think my neighbors should pay for my poor choices.


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 8:45 pm

The government had a good pension system and used this because their jobs were not paid the same as the private sector. Now the salaries are equal (and better in some cases) and the pension and retirement benefits went up. The unions have too much control over the politicians.

If we are going to continue with a special pension system for government workers, which I don't think is fair, I would suggest we look at different types of workers and prioritize retirement costs. I see three categories of workers; public safety, teachers, all other workers.

Right now we have people in our own city government who are receiving much more generous retirement benefits than teachers. These employees with generous retirement plans include people in finance, public works, inspections, and while they are important jobs, are they more important than teachers? I don't think so. So maybe we should make the first step in making government workers, except for public safety, to not be able to have a more generous retirement plan than teachers. That includes the retirement pay multiplier (e.g., 2%, 2.7%), the retirement age, and the amount of money they have to contribute towards their pension. In Pleasanton, the employees pay ZERO towards their pension. Typically the employee pays part and the employer pays part. The Pleasanton unions negotiated at one time for the employer, the taxpayer, to pay 100% of the pension costs.

For retiree-medical, this should be completely removed. When you retire at age 65, you have medicare. If you retire at less than 65, you are responsible for your own medical care, just like the private sector.

What the state did under Gray Davis was criminal. The pension increases were retroactive. If somebody worked in their government job for 25 years, the increase allowed by Davis was applied not to just those years forward but to all previous years worked. It seems to me if they can increase a plan retroactively, why can't we decrease a plan retroactively? Seems fair.


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Feb 28, 2010 at 8:52 pm

Perhaps all bills that affect future obligations should have a cap. I would also be in favor of doing projections on the cost of retirement plans. If the cost goes over plan, the money comes out of the budgets of the legislators (their salaries and staff) until it hits a cap at which it cannot go over.


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Posted by mooseturd
a resident of Pleasanton Valley
on Mar 1, 2010 at 9:05 am

mooseturd is a registered user.

I challenge the allegation that the employer takes "all the risk" in a defined benefit retirement plan. I have a friend who retired after 42 years of service under PERS. He died before he collected a single retirement payment. Seems to me he took some of the risk.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Mar 1, 2010 at 10:18 am

Stacey is a registered user.

To be clear, taxpayers take 100% of the fund's investment risk. If the fund comes up short with its investments, taxpayers are obligated to make up the difference.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Mar 1, 2010 at 10:21 am

Stacey is a registered user.

Web Link

"Bad investments means higher taxpayer (or employee) contributions for retirement plans or (less likely) lower benefits."


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Mar 1, 2010 at 10:36 am

Stacey is a registered user.

Web Link

"When the stock market soars, the taxpayer contribution to the pension funds can drop, sometimes all the way to zero."

"But when the stock market falls, an increase in taxpayer contributions is the standard way to fill the hole in the pension fund, providing the money that forecasters say will be needed to pay for future pension obligations."


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Posted by taxpayer
a resident of Another Pleasanton neighborhood
on Mar 1, 2010 at 2:16 pm

There was a time when the contribution to the pension funds dropped but then the government officials spent the different on other things instead of putting it into the plan for the years when the investments were less than necessary. If we ever get out of the hole we are in, it should be a requirement that payments to the funds can never be less than a average amount. I am sure most cities took the money that would have gone to pensions and was not required for a few years and gave it as salary increases; compounding the problem we have today.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Mar 2, 2010 at 7:44 am

Stacey is a registered user.

Web Link

How state pensions should NOT work... There should be a "use it or lose it" cap on vacation time. This kind of abuse doesn't just hurt taxpayers, it hurts those expecting a pension too as the pension fund as to pay for this.

"In the past four years, almost 500 government workers earned six-figure paychecks mostly for unused vacation. In total, the state spent $486 million between 2006 and mid-2009 to pay more than 52,000 employees for time-off benefits - which includes a small percentage of unused comp time and holidays that weren't taken.

That's enough state money to pay the salaries of more than 7,000 public schoolteachers, based on the state average teacher salary."


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