California Economy

[sangha]

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

I wonder if the wingnut can explain how these high taxes, burdensome regulations, and growing unions explains why CA is growing faster than TX?

It's clear this moron can't even click on a link and look at data.

The time series is distorts the growth. CA grew like crazy during the dotcom era. Since that time, the areas of growth have been Real Estate, Health & Social Services, and the size of Government. Hi Tech and Professional Services have grown, but I'd like to know how much of the former is due to consolidated revenues from foreign subsidiaries.

Overall, CA's economy has basically flat lined since 2007, and there is out migration from the state as businesses leave the hostile climate. TX is benefitting from this out migration as more high tech is relocating there, and will see stronger growth as the economy recovers.

In contrast, CA is strangling itself with the Green Economy nonsense.

I asked for YOUR explanation, and unsurprisingly, the wingnut HAS NO EXPLANATION.

According to the wingnut (that would be you) CA has high taxes, lots of regulations, strong unions, and lots of govt spending, while TX has none of those impediments to business. In wingnut world, that should make CA a low growth state and TX a high growth state

Yet, CA has a higher growth rate than TX. I ask how the wingnut explains this, and predictably, the wingnut HAS NO EXPLANATION

 

[boedicca]

The Asswipe above cannot read nor does he possess cognitive abilities. Discussion with said Asswipe is pointless.

 

[sangha]

The Asswipe above cannot read nor does he possess cognitive abilities. Discussion with said Asswipe is pointless.

And the wingnut still has NO EXPLANATION for why a state with high taxes, strong business regulations, growing unions, high spending, and a hostile stance towards business is growing faster than TX

All you did was say things like "CA leading industries are..." blah blah blah

I'm still waiting for YOUR explantion

 

[Trajan]

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

That Stanford study on CalPERS is widely seen as flawed in the pension community. It uses a much lower discount rate to discount future liabilities back to the present than is generally accepted. CalPERS is underfunded but nowhere near as greatly as that study implies.

I am sure you realize that the study was found flawed by the very people who benefit from that view. the state didn't want to shovel anymore cash than they had/have to into the funds, that they needed elsewhere and don't have spooking the horses or wakjing the rubes whatever anology you wish to employ. Hey let say tit is flowed every study contains some fudge factor, okay lets give them a die variance , of say an incredible 50%..thats still 250 billion.

Calpers job is to keep the herd calm and make/keep the atmosphere conducive to more of the same, more pension spending i.e. raising benefit allowances , pay etc. there by setting up collection of payments they need ( which their investment don't realize and we are on the hook for) at a pace that doesn't shock anyone.

the horse is out of the barn. the state deferred or short paid the system for several years based on the last forecast which didn't exactly stand up, now going forward.......

After crash, one-two punch for pension funds?
By Ed Mendel

Lower investment earnings forecast for CalPERS and CalSTRS could lead to higher costs for state and local governments — and an accounting change could put similar pressure on all public pension funds.

The new burdens loom as CalPERS and other public pensions begin to impose higher costs on government employers to cover investment losses in a historic stock market crash.

The giant California Public Employees Retirement System received 10-year earnings forecasts last week (p. 97) from its staff and four consultants averaging 7.29 percent, well below the current assumed rate of 7.75 percent a year.

Investment earnings provide most of the CalPERS revenue, about 75 percent in recent years. Lowering the expected earnings rate would create a gap in the projection of assets needed to meet future pension obligations.

Among the options for closing the gap are higher annual payments to the pension fund from state and local government, riskier investments to get higher yields, higher contributions from workers, and lower pension benefits for new hires.

In the past, the CalPERS staff is said to have worked out earnings forecasts with consultants and presented them to the investment committee with little debate or public discussion.

Now the CalPERS board, which critics say has “masked” debt with overly optimistic earnings assumptions, is making a point of holding public sessions while preparing to adjust its investment strategy early next year.

“We want to be transparent, challenge our assumptions and listen to contrasting views, so we can arrive at a well-considered decision,” George Diehr, the CalPERS investment committee chairman, said at a workshop last week.

The CalPERS board, like most public pensions in California, has the power to impose a contribution rate increase that must be paid by employers. Employee contributions usually are determined by labor negotiations.

An exception is the California State Teachers Retirement System, the nation’s second largest public pension fund, which lacks the power to set employer contribution rates, instead needing legislation.

In a staff recommendation to the board next week, the CalSTRS assumed rate of return on investments would be dropped from 8 percent to 7.5 percent. A consultant, Milliman, had suggested a reduction of a quarter or half percent in February.

CalSTRS has needed a contribution increase equal to 14 percent of pay to reach full funding, nearly doubling the current contribution: school districts 8.25 percent of pay, teachers 8 percent, and state 2 percent.

Lowering earnings to 7.5 percent would boost the contribution increase needed for full funding to 20 percent. Under a 1990 law, the staff report said, lower earnings could produce a shortfall triggering a 0.5 percent state contribution increase, $150 million.

Critics such as the governor’s pension adviser, David Crane, cite expert investor Warren Buffet and others while arguing that a more realistic earnings rate would be much lower, perhaps around 6 percent.

Corporate pension funds are required to assume earnings based on corporate bond rates, which were averaging 6.4 percent at the end of 2008. Some academics advocate an even lower “risk-free” government bond rate for calculating pension debt.

A Stanford graduate student study last month used a government bond rate of 4.1 percent to calculate that California’s three big state pension funds (CalPERS, CalSTRS and UC Retirement) have a “hidden shortfall” of more than $500 billion.

In a similar study last fall, Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University concluded that the three California state retirement systems were underfunded by $475 billion.

Now the Governmental Accounting Standards Board reportedly will consider asking underfunded public retirement systems to use government bonds when calculating some of their ability to make future pension payments.

The pension funds could use their higher assumed earnings for estimating benefits that could be paid in the future by their current investments. But when the assets and their projected earnings are used up, the calculation switches to government bonds.

In addition, the board also reportedly will consider shortening the time period used in calculating the payment of pension debt, now often 30 years. That could be cut by half in a switch to corporate-style payment period.

“Mathematically, it doesn’t take a genius to figure out what all this means for public employers,” Girard Miller, a pension fund consultant wrote in Governing magazine last week while describing the proposals.

“Annual pension budget costs will increase significantly if these rules become effective (probably 2013 at the earliest, judging from the project timetable and past implementation practices),” he said.

The “tentative decisions” posted on the GASB website will be considered at a meeting next month. If the board proceeds with the proposed changes, state and local government groups will be asked for comment.

Six years ago GASB shook up state and local governments by directing that the debt for retiree health care be calculated and reported. Many governments had not been setting aside money for future health care, ignoring mounting long-term obligations.

A governor’s commission in January 2008 issued the first calculation of the cost of retiree health care promised current stat and local government employees in California: $118 billion over 30 years, $48 billion for the state share.

At the CalPERS workshop last week, even the prospect of a relatively small reduction in the earnings rate was worrisome.

Board member Tony Oliveira, a Kings County supervisor and president of the California State Association of Counties, said local government have a limited ability to pay higher pension costs if earning assumptions are lowered.

Board member Dan Dunmoyer said the option of lowering pension benefits for future employees should be considered if higher pension costs force cuts in other programs or the fiscal health of the state.

rest at-
After crash, one-two punch for pension funds? Calpensions

The state - meaning the people of California - could pay if they chose to. But they choose not to.

Toro, frankly you can that about anything anywhere. choosing to pay for that and not choosing to pay for something else? its not that simple, its a matter of value for one thing, many people ask where is the value in raising taxes to pay for this? And since we have a crunch in just about every other sector why are they first ( well legally they are but just sayin') as compared to other things that need payments to be keep afloat. we can raise taxes but this isn't somehting i think most folks see as a priority. There is only so much money out there and so much of a tax burden you can put on the pop. and still maintain growth we must have.

 

[boedicca]

It's clear this moron can't even click on a link and look at data.

The time series is distorts the growth. CA grew like crazy during the dotcom era. Since that time, the areas of growth have been Real Estate, Health & Social Services, and the size of Government. Hi Tech and Professional Services have grown, but I'd like to know how much of the former is due to consolidated revenues from foreign subsidiaries.

Overall, CA's economy has basically flat lined since 2007, and there is out migration from the state as businesses leave the hostile climate. TX is benefitting from this out migration as more high tech is relocating there, and will see stronger growth as the economy recovers.

In contrast, CA is strangling itself with the Green Economy nonsense.

You are data mining.

The time period 2000 through 2009 represents one of the worst periods in California's economic history. During that time, they have had to deal with the depression in the teleconomy - not the boom, just the depression - and the boom and bust of the real estate bubble, which did not affect Texas anywhere near it did California. Texas has benefited enormously from the price of oil rising from $10 to $90 in a decade. The rise in the price of oil is a happy accident of geography and has nothing to do with the Texas political culture given that almost all of the incremental demand in oil over the past seven years has come from overseas.

That is not to denigrate Texas, but had oil not risen nearly 10x, the Texas economy would have been much worse.

And if real estate and government and health care had not growth so much, CA's would have been much worse. There is also a big difference between the CA deficits and TX. CA is burdened with much higher spending and public employee entitlements - the day of reckoning is going to be very ugly.

I'd still like to know how much of the High Tech industry growth is due to consolidated results from foreign subs.

 

[sangha]

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

I am sure you realize that the study was found flawed by the very people who benefit from that view. the state didn't want to shovel anymore cash than they had/have to into the funds, that they needed elsewhere and don't have spooking the horses or wakjing the rubes whatever anology you wish to employ. Hey let say tit is flowed every study contains some fudge factor, okay lets give them a die variance , of say an incredible 50%..thats still 250 billion.

Calpers job is to keep the herd calm and make/keep the atmosphere conducive to more of the same, more pension spending i.e. raising benefit allowances , pay etc. there by setting up collection of payments they need ( which their investment don't realize and we are on the hook for) at a pace that doesn't shock anyone.

the horse is out of the barn. the state deferred or short paid the system for several years based on the last forecast which didn't exactly stand up, now going forward.......

After crash, one-two punch for pension funds?
By Ed Mendel

Lower investment earnings forecast for CalPERS and CalSTRS could lead to higher costs for state and local governments — and an accounting change could put similar pressure on all public pension funds.

The new burdens loom as CalPERS and other public pensions begin to impose higher costs on government employers to cover investment losses in a historic stock market crash.

The giant California Public Employees Retirement System received 10-year earnings forecasts last week (p. 97) from its staff and four consultants averaging 7.29 percent, well below the current assumed rate of 7.75 percent a year.

Investment earnings provide most of the CalPERS revenue, about 75 percent in recent years. Lowering the expected earnings rate would create a gap in the projection of assets needed to meet future pension obligations.

Among the options for closing the gap are higher annual payments to the pension fund from state and local government, riskier investments to get higher yields, higher contributions from workers, and lower pension benefits for new hires.

In the past, the CalPERS staff is said to have worked out earnings forecasts with consultants and presented them to the investment committee with little debate or public discussion.

Now the CalPERS board, which critics say has “masked” debt with overly optimistic earnings assumptions, is making a point of holding public sessions while preparing to adjust its investment strategy early next year.

“We want to be transparent, challenge our assumptions and listen to contrasting views, so we can arrive at a well-considered decision,” George Diehr, the CalPERS investment committee chairman, said at a workshop last week.

The CalPERS board, like most public pensions in California, has the power to impose a contribution rate increase that must be paid by employers. Employee contributions usually are determined by labor negotiations.

An exception is the California State Teachers Retirement System, the nation’s second largest public pension fund, which lacks the power to set employer contribution rates, instead needing legislation.

In a staff recommendation to the board next week, the CalSTRS assumed rate of return on investments would be dropped from 8 percent to 7.5 percent. A consultant, Milliman, had suggested a reduction of a quarter or half percent in February.

CalSTRS has needed a contribution increase equal to 14 percent of pay to reach full funding, nearly doubling the current contribution: school districts 8.25 percent of pay, teachers 8 percent, and state 2 percent.

Lowering earnings to 7.5 percent would boost the contribution increase needed for full funding to 20 percent. Under a 1990 law, the staff report said, lower earnings could produce a shortfall triggering a 0.5 percent state contribution increase, $150 million.

Critics such as the governor’s pension adviser, David Crane, cite expert investor Warren Buffet and others while arguing that a more realistic earnings rate would be much lower, perhaps around 6 percent.

Corporate pension funds are required to assume earnings based on corporate bond rates, which were averaging 6.4 percent at the end of 2008. Some academics advocate an even lower “risk-free” government bond rate for calculating pension debt.

A Stanford graduate student study last month used a government bond rate of 4.1 percent to calculate that California’s three big state pension funds (CalPERS, CalSTRS and UC Retirement) have a “hidden shortfall” of more than $500 billion.

In a similar study last fall, Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University concluded that the three California state retirement systems were underfunded by $475 billion.

Now the Governmental Accounting Standards Board reportedly will consider asking underfunded public retirement systems to use government bonds when calculating some of their ability to make future pension payments.

The pension funds could use their higher assumed earnings for estimating benefits that could be paid in the future by their current investments. But when the assets and their projected earnings are used up, the calculation switches to government bonds.

In addition, the board also reportedly will consider shortening the time period used in calculating the payment of pension debt, now often 30 years. That could be cut by half in a switch to corporate-style payment period.

“Mathematically, it doesn’t take a genius to figure out what all this means for public employers,” Girard Miller, a pension fund consultant wrote in Governing magazine last week while describing the proposals.

“Annual pension budget costs will increase significantly if these rules become effective (probably 2013 at the earliest, judging from the project timetable and past implementation practices),” he said.

The “tentative decisions” posted on the GASB website will be considered at a meeting next month. If the board proceeds with the proposed changes, state and local government groups will be asked for comment.

Six years ago GASB shook up state and local governments by directing that the debt for retiree health care be calculated and reported. Many governments had not been setting aside money for future health care, ignoring mounting long-term obligations.

A governor’s commission in January 2008 issued the first calculation of the cost of retiree health care promised current stat and local government employees in California: $118 billion over 30 years, $48 billion for the state share.

At the CalPERS workshop last week, even the prospect of a relatively small reduction in the earnings rate was worrisome.

Board member Tony Oliveira, a Kings County supervisor and president of the California State Association of Counties, said local government have a limited ability to pay higher pension costs if earning assumptions are lowered.

Board member Dan Dunmoyer said the option of lowering pension benefits for future employees should be considered if higher pension costs force cuts in other programs or the fiscal health of the state.

rest at-
After crash, one-two punch for pension funds? Calpensions

The state - meaning the people of California - could pay if they chose to. But they choose not to.

Toro, frankly you can that about anything anywhere. choosing to pay for that and not choosing to pay for something else? its not that simple, its a matter of value for one thing, many people ask where is the value in raising taxes to pay for this? And since we have a crunch in just about every other sector why are they first ( well legally they are but just sayin') as compared to other things that need payments to be keep afloat. we can raise taxes but this isn't somehting i think most folks see as a priority. There is only so much money out there and so much of a tax burden you can put on the pop. and still maintain growth we must have.

Sure people can choose to BUY what they want and not BUY what they don't want. However, what's going on in CA is that they are BUYING what they want, but they don't want to PAY for what they BUY

 

[Toro]

I am sure you realize that the study was found flawed by the very people who benefit from that view.

The people who benefit from that view are the taxpayers of California, who would otherwise have to needlessly pony up an enormous amount of taxes to dramatically and unnecessarily over-collateralize a pension plan.

I have worked in the pension business. This statement that you posted and referenced...

A Stanford graduate student study last month used a government bond rate of 4.1 percent to calculate that California’s three big state pension funds (CalPERS, CalSTRS and UC Retirement) have a “hidden shortfall” of more than $500 billion.

Is flat out ridiculous.

I don't know of any real pension plan in the world that uses a government bond rate to discount back its liabilities. Why? Because the pension plan isn't 100% composed of government bonds, nor should it be. Pension plans invest in all sorts of assets, and the long-term return from a typical asset allocation is much higher. So the discount rate should be much higher, not the government bond rate. Should the discount rate be 6% or 7% or 8% over the next decade? I don't know. But it shouldn't be the government bond rate, which is what you are arguing.

The same arguments were used by politicians in the 90s to lower contributions because they looked backwards at what the last 10-20 years and assumed the high returns they'd already earned would be the returns will be going forward, which was spectacularly wrong. Now, the Stanford article argues we repeat the same mistake, only in the other direction. That is why it has been panned in the pension community.

 

[GHook93]

California is a whale of an economy with lots of industries and innovation others envy, plus everybody wants to live here.

But we have a morass of legal and political problems that conspire to cause intractible fiscal deficits, and the costs of doing business here are too high.

The California economy was ideal for a robust, vibrant economic era, but is proving to be totally disastrous in a shrinking economic era.

If we can make the adjustments we will be fine, we are an engine of growth. If we don't we are in for a world of hurt.

Yet you fools will be crying to the Federal Government for a bailout (along with the other tax and spend blue states) very soon! TX, UT, IN, NM, ND, SD, ID etc won't be asking for shit!

When CA is so over run with illegals that are demanding a Kosovo style secession, you will be screaming for Federal help also!

 

[Trajan]

THere are a couple of inconsistancies in your statement that I wonder if you'd be so kind to clear up for me:

"They may be a basket-case, but they aren't broke," means what? Do you mean a political "basket case?"

It appears to be a political basket-case to an outsider because they are unable to solve a fiscal problem as special interests are so entrenched and passage of necessary reforms difficult because entrenched rules and powerful special interests block reforms. Both parties nominate candidates who appeal to each others' hardcore constituencies, making compromise difficult. Then they pass laws through popular voting seemingly without regards to fiscal consequences. To an outsider, this looks fucked up. However, I believe there has been a recent law passed which will allow independents to participate in the nominating process, which should alleviate all this somewhat.

"They have lots of money, but the will to pay isn't there," means what? Again the mystery is who has "lots of money" vs who doesn't have "the will to pay" for what? Are they the same Californians? If debt is only 7% GDP then for what should "they" have the will to pay?

California is a rich state. They can raise taxes and/or cut spending to deal with the deficit but do not have the political will to do so. California may one day default, just like Orange County did, but that doesn't mean they can't afford it. They just don't want to pay for the laws they've passed. They're like the successful plastic surgeon who chooses to stiff his interior decorator.

does congress have the political will? who does? just saying you think we can pay? at what price?

raising taxes, in a state with a tax burden that we have in this environment; ecological regs that will soon kick in, they are and I can tell you as a denizen of cali Fee'ing us to death aside from a close to 10% state income tax rate, well good luck.

silicon valley unemployment is over 10%, in the central valley due to agro. issues its higher than that and cali wide its 12.4%, you think raising taxes is the answer/ cutting spending yes BUT we have as I said spending for line items in the budget that make this problematic t say the least which cannot be changed accept incrementally.( oh and the head of the biggest VC firm here just said a month ago, they are out of the Green biz btw).

We have to look ahead to see where we are going, bonds we have voted for, the pensions funds, education outlays locked into the system etc. its a mess...welcome to America......

political will is where its at I agree, nit raising taxes, cutting the spends we built in is whats necessary but we have everyone tied in so it will take a hell of a fight.

like drugs, the first taste is free...then what? By the time you realize you're hooked you don't want to get off the pipe. same with entitlements and all the rest.


exit question;

the pop. growth blurb I saw, whats the breakdown on that? is that wealth creators/ bus. people coming here or.... you know who?

 

[Trajan]

Sure people can choose to BUY what they want and not BUY what they don't want. However, what's going on in CA is that they are BUYING what they want, but they don't want to PAY for what they BUY

you are describing a political issue, or what has become a pol. issue. when you say they...what portion of the cali pop. works for a muni or state union?

 

[sangha]

THere are a couple of inconsistancies in your statement that I wonder if you'd be so kind to clear up for me:

"They may be a basket-case, but they aren't broke," means what? Do you mean a political "basket case?"

It appears to be a political basket-case to an outsider because they are unable to solve a fiscal problem as special interests are so entrenched and passage of necessary reforms difficult because entrenched rules and powerful special interests block reforms. Both parties nominate candidates who appeal to each others' hardcore constituencies, making compromise difficult. Then they pass laws through popular voting seemingly without regards to fiscal consequences. To an outsider, this looks fucked up. However, I believe there has been a recent law passed which will allow independents to participate in the nominating process, which should alleviate all this somewhat.

"They have lots of money, but the will to pay isn't there," means what? Again the mystery is who has "lots of money" vs who doesn't have "the will to pay" for what? Are they the same Californians? If debt is only 7% GDP then for what should "they" have the will to pay?

California is a rich state. They can raise taxes and/or cut spending to deal with the deficit but do not have the political will to do so. California may one day default, just like Orange County did, but that doesn't mean they can't afford it. They just don't want to pay for the laws they've passed. They're like the successful plastic surgeon who chooses to stiff his interior decorator.

does congress have the political will? who does? just saying you think we can pay? at what price?

raising taxes, in a state with a tax burden that we have in this environment; ecological regs that will soon kick in, they are and I can tell you as a denizen of cali Fee'ing us to death aside from a close to 10% state income tax rate, well good luck.

silicon valley unemployment is over 10%, in the central valley due to agro. issues its higher than that and cali wide its 12.4%, you think raising taxes is the answer/ cutting spending yes BUT we have as I said spending for line items in the budget that make this problematic t say the least which cannot be changed accept incrementally.( oh and the head of the biggest VC firm here just said a month ago, they are out of the Green biz btw).

We have to look ahead to see where we are going, bonds we have voted for, the pensions funds, education outlays locked into the system etc. its a mess...welcome to America......

political will is where its at I agree, nit raising taxes, cutting the spends we built in is whats necessary but we have everyone tied in so it will take a hell of a fight.

like drugs, the first taste is free...then what? By the time you realize you're hooked you don't want to get off the pipe. same with entitlements and all the rest.


exit question;

the pop. growth blurb I saw, whats the breakdown on that? is that wealth creators/ bus. people coming here or.... you know who?

Are you intentionally this stupid? What does Congress have to do with CA's budget?

And while you engage in the usual wingnuttery about high taxes killing jobs, you cant explain why CA, with it's high tax rates (and unions, and regulations, etc) has higher eco growth than TX.

 

[sangha]

Sure people can choose to BUY what they want and not BUY what they don't want. However, what's going on in CA is that they are BUYING what they want, but they don't want to PAY for what they BUY

you are describing a political issue, or what has become a pol. issue. when you say they...what portion of the cali pop. works for a muni or state union?

Are you being this stupid intentionally? What do govt employees have to do with this? It sounds like you're desperate to find a red herring

When the voters in CA vote to create a new program, but vote against paying for it, it is also an economic issue.

 

[Trajan]

I am sure you realize that the study was found flawed by the very people who benefit from that view.

The people who benefit from that view are the taxpayers of California, who would otherwise have to needlessly pony up an enormous amount of taxes to dramatically and unnecessarily over-collateralize a pension plan.

i know that why I said what I said....needlessly? so everything is hunky dory? so my readjusted 250 billion is no good either? okay, do you have a number? or is this all a about nothing?

I have worked in the pension business. This statement that you posted and referenced...

A Stanford graduate student study last month used a government bond rate of 4.1 percent to calculate that California’s three big state pension funds (CalPERS, CalSTRS and UC Retirement) have a “hidden shortfall” of more than $500 billion.

Is flat out ridiculous.

I don't know of any real pension plan in the world that uses a government bond rate to discount back its liabilities. Why? Because the pension plan isn't 100% composed of government bonds, nor should it be. Pension plans invest in all sorts of assets, and the long-term return from a typical asset allocation is much higher. So the discount rate should be much higher, not the government bond rate. Should the discount rate be 6% or 7% or 8% over the next decade? I don't know. But it shouldn't be the government bond rate, which is what you are arguing.

The same arguments were used by politicians in the 90s to lower contributions because they looked backwards at what the last 10-20 years and assumed the high returns they'd already earned would be the returns will be going forward, which was spectacularly wrong. Now, the Stanford article argues we repeat the same mistake, only in the other direction. That is why it has been panned in the pension community.

*shrugs* see below...
from the link-

Now the Governmental Accounting Standards Board reportedly will consider asking underfunded public retirement systems to use government bonds when calculating some of their ability to make future pension payments.

as i said I'll accept the worse case and then hack 50%...if you think that the study studies are off by 75% or more, well, I don't know what to say.

I do know that as a member of UC pension plan and UC union member , I have witnessed union bargaining meetings listened closely to the arguments we make amongst ourselves, and as a person not generally favorable to unions anyway, and have no wish to defend them, from the inside so to speak, I can tell you, they think we are in trouble. BIG trouble.

 

[Toro]

does congress have the political will? who does? just saying you think we can pay? at what price?

Like I said, it is a choice. Taxes can be much higher to pay for all the stuff the lawmakers whom the people elect pass. Californians can pay but they choose not to.

 

[Trajan]

Sure people can choose to BUY what they want and not BUY what they don't want. However, what's going on in CA is that they are BUYING what they want, but they don't want to PAY for what they BUY

you are describing a political issue, or what has become a pol. issue. when you say they...what portion of the cali pop. works for a muni or state union?

Are you being this stupid intentionally? What do govt employees have to do with this? It sounds like you're desperate to find a red herring

When the voters in CA vote to create a new program, but vote against paying for it, it is also an economic issue.

I thought the issue was unions pensions liabilities etc. and for the record we do purchase these servcies/goods as a consumer.

when I go into a DMV I am serviced by an employee paid to help me, which has a cost, that is a good rendered and a service I pay for, its all part of the business, just because its a gov. bus. means squat. Their pay benes etc. come off the bottom line as an operational expense whether they serve as a profit base or not.

did you wipe your chin btw?

 

[Toro]

i know that why I said what I said....needlessly? so everything is hunky dory? so my readjusted 250 billion is no good either? okay, do you have a number? or is this all a about nothing?

I'm not sure what the number should be. But I know its not $500 billion.

as i said I'll accept the worse case and then hack 50%...if you think that the study studies are off by 75% or more, well, I don't know what to say.

I do know that as a member of UC pension plan and UC union member , I have witnessed union bargaining meetings listened closely to the arguments we make amongst ourselves, and as a person not generally favorable to unions anyway, and have no wish to defend them, from the inside so to speak, I can tell you, they think we are in trouble. BIG trouble.

Pension plans are an issue around the country. Many jurisdictions will be in trouble over the next 5-10 years. There needs to be reform.

 

[Trajan]

does congress have the political will? who does? just saying you think we can pay? at what price?

Like I said, it is a choice. Taxes can be much higher to pay for all the stuff the lawmakers whom the people elect pass. Californians can pay but they choose not to.

so this has all been a circular discussion...back to square one...

 

[Trajan]

i know that why I said what I said....needlessly? so everything is hunky dory? so my readjusted 250 billion is no good either? okay, do you have a number? or is this all a about nothing?

I'm not sure what the number should be. But I know its not $500 billion.

thats cool. hell I'll drop down to 200 billion.I don't think for today it gives us much pause. somehting has to change.

as i said I'll accept the worse case and then hack 50%...if you think that the study studies are off by 75% or more, well, I don't know what to say.

I do know that as a member of UC pension plan and UC union member , I have witnessed union bargaining meetings listened closely to the arguments we make amongst ourselves, and as a person not generally favorable to unions anyway, and have no wish to defend them, from the inside so to speak, I can tell you, they think we are in trouble. BIG trouble.

Pension plans are an issue around the country. Many jurisdictions will be in trouble over the next 5-10 years. There needs to be reform.

agreed.

here? I don't think have 5 years imho. the 'public 'sector' has become just like any other bus. expanse requiring more dollars than it generates in fees etc. ( fes keep gping up) so the whirligig starts, more money for more 'services' that requires more money....we don't work for them they work for us, we all must decide that longer lines at the dmv are whats in the future and bite the bullet etc etc etc..fine by me.

just as an aside they/we recently signed a new contract; when I retire I was guaranteed zero medical costs when I was hired and after a 5 year vest, now I am on the hook for 20% and thats because I was grandfathered in......... it was ridiculous to start with 100%??.
Oh and I will have to contribute 2% of my pay a year to my pension plan, BUT I got a 5% contract raise locked in for the next 4 years.......whoa is me. ...unreal man.

 

[sangha]

I am sure you realize that the study was found flawed by the very people who benefit from that view.

The people who benefit from that view are the taxpayers of California, who would otherwise have to needlessly pony up an enormous amount of taxes to dramatically and unnecessarily over-collateralize a pension plan.

i know that why I said what I said....needlessly? so everything is hunky dory? so my readjusted 250 billion is no good either? okay, do you have a number? or is this all a about nothing?

I have worked in the pension business. This statement that you posted and referenced...



Is flat out ridiculous.

I don't know of any real pension plan in the world that uses a government bond rate to discount back its liabilities. Why? Because the pension plan isn't 100% composed of government bonds, nor should it be. Pension plans invest in all sorts of assets, and the long-term return from a typical asset allocation is much higher. So the discount rate should be much higher, not the government bond rate. Should the discount rate be 6% or 7% or 8% over the next decade? I don't know. But it shouldn't be the government bond rate, which is what you are arguing.

The same arguments were used by politicians in the 90s to lower contributions because they looked backwards at what the last 10-20 years and assumed the high returns they'd already earned would be the returns will be going forward, which was spectacularly wrong. Now, the Stanford article argues we repeat the same mistake, only in the other direction. That is why it has been panned in the pension community.

*shrugs* see below...
from the link-

Now the Governmental Accounting Standards Board reportedly will consider asking underfunded public retirement systems to use government bonds when calculating some of their ability to make future pension payments.

as i said I'll accept the worse case and then hack 50%...if you think that the study studies are off by 75% or more, well, I don't know what to say.

I do know that as a member of UC pension plan and UC union member , I have witnessed union bargaining meetings listened closely to the arguments we make amongst ourselves, and as a person not generally favorable to unions anyway, and have no wish to defend them, from the inside so to speak, I can tell you, they think we are in trouble. BIG trouble.

Wingnuts are impervious to facts. This wingnut was given an explantion for why the Stamford report was flawed, but he STILL wants to use the flawed study as the basis for calculations.

The only true thing you've said is that you "don't what to say". That's because you don't understand the argument about why using the bond rates is wrong. All you can do is "shrug"

 

[boedicca]

The moron Sangha continues to confirm his economic and historical illiteracy.

The facts about CA are that despite strong increases in tax receipts, spending and the growth in the numbers of public employees have outpaced inflation and population growth.

Every picture tells a story:

reason.org/files/​a2ec7caccc5d660e870c4a21526ef5f8.pdf