The bankruptcies of three cities and high-profile financial scandals in a couple of others demonstrated the operational vulnerabilities of California’s municipalities.
A coincidental series of events just this month underscore that vulnerability, to wit:
▪ The California Public Employees’ Retirement System board is shifting to lower assumed investment earnings.
It will force state and local governments to cough up more money on top of the hefty increases in “contributions” that CalPERS has already imposed to cover investment losses.
Cities are particularly at risk because they have, proportionately, the highest pension burdens, having bowed to pressure from powerful police and fire unions for high salaries and the highest pension benefits.
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