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I saw this great editorial from yesterday's Orange County Register:
Unfunded cost of public employee retirements threatens state, local
governments.
A Register investigation reported Sunday that lucrative public
employee pension benefits approved during the past decade have been "a
toxin spreading through the budget books of cities and counties across
California." These escalating costs ultimately threaten many local
governments' solvency.
Though many states experience similar fiscal threats, "California is
the only one that allows nearly all public safety workers to retire at
age 50 with 90 percent of their salaries," Register reporters Tony
Saavedra and Brian Joseph reported.
The Register story, "Pension System Run Amuck, Dec. 20," painted a
comprehensively gloomy picture of billions in unfunded liabilities
amassed in city and county pension systems throughout California. The
story blamed good intentions, aggressive public employee groups'
lobbying and the "bad luck" of substantial losses in investments
intended to cover pension costs.
We can add one more, perhaps the most responsible factor for this
accelerating fiscal train wreck: irresponsible public officials asleep
at the switch.
"That was the worst mistake we have ever made," reflected Dwight
Stenbakken, deputy executive director of the League of California
Cities, which Register reporters said "stood silent" as the
Legislature increased pension formulas for all state employees and
public safety workers. One critic told the Register: "The attitude
was, 'Hey, we have a ton of money, let's give it away.' There weren't
a lot of deep thinkers there."
Former Buena Park Councilman Steve Berry recalled "no quantifying, no
study, just hearsay that was being handed out" when his city, like
others, was persuaded to hike pensions for fear of losing police
officers to other jurisdictions. But such arguments have nothing to do
with difficulty recruiting qualified police officers, Santa Ana
College criminal justice department head George Wright told the
Register.
In the decade since the Legislature increased pension benefits, the
California Public Employees' Retirement System has more than doubled
payouts, to $10.8 billion a year, while turning a $32-billion surplus
into a $35-billion unfunded liability when calculating future payouts.
We have warned of the looming public pension catastrophe, perhaps the
most serious fiscal issue facing government today. Former Register
columnist and editorial writer Steven Greenhut lays out a persuasive
case for curbing the growing threat in his new book, "Plunder, How
Public Employee Unions Are Raiding Treasuries Controlling Our Lives
and Bankrupting the Nation."
Many cities finally are considering lowering pension benefits for new
hires, and Orange County government is appealing a judge's ruling that
barred it from rolling back the lucrative formula for deputy sheriffs'
pensions. Meanwhile, to reduce costs, the county created a two-tier
pension formula for non-public safety employees. These moves are
better late than never, but it's unclear whether they will be
sufficient to avoid fiscal calamity, as ongoing pension costs eat
ever-growing percentages of local governments' general fund budgets
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