Sixteen years after it abetted one of the most irresponsible political acts in state history – a massive increase in public pension benefits – the California Public Employees’ Retirement System may finally be reforming.
In 1999, CalPERS told the Legislature that the benefit increase state worker unions were seeking could be financed from investment earnings with no effect on taxpayers.
Much later, it was revealed that CalPERS’ actuaries had provided several scenarios, but its union-dominated board adopted the most optimistic, giving the Legislature and then-Gov. Gray Davis the justification (and political cover) they wanted to boost benefits.
Most local governments followed suit and, for a while, it all seemed to work. But when the Great Recession struck less than a decade later, CalPERS suffered immense losses because of the high-risk investments it had made to meet its optimistic earnings projections.
View Article