Today a judge ruled that the city of Stockton California is indeed bankrupt and that the city acted in good faith. Creditors asked the judge to void the bankruptcy, saying the city could raise taxes instead. I have been watching this story for a while. Here is some background on the Stockton bankruptcy as reported by Arizona Central....
What if most of the public employee compensation enhancements of the past decade or more in California were based on inaccurately optimistic government financial statements? Or to be blunt, what if government decision makers thought they could afford these compensation enhancements, because the information they relied on used accounting gimmicks that would land a person...
In the classic “sword vs. gun” scene from Raiders of the Lost Ark, Indiana Jones encounters a massive assassin ominously wielding a three-foot sword. We all remember Indy taking pause, shrugging, grabbing his pistol and killing his adversary with one shot. Simple. Effective. In the ongoing Illinois pension saga, Gov. Pat Quinn and the incoming...
Gov. Jerry Brown continues to pose as an iconoclast who is willing to make the tough choices necessary to keep California afloat, but his new budget is more evidence that he remains the cat’s-paw for the state’s public-sector unions. “I want to advance the progressive agenda,” Brown said at the news conference unveiling his supposedly...
In Social Security Trends and Data there are numerous charts showing the unsustainable nature of the system as it is currently structured. But ensuring the solvency of Social Security is not that difficult a problem (at least in comparison to Medicare or public sector pensions). Numerous things could be done to put the system in the...
“Doublethink means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them.” ― George Orwell, 1984 The two largest public employee pension funds in California, CalPERS and CalSTRS, logged annual returns for their fiscal years ending June 30th, 2012, of 0.14% and 1.8%, respectively. These pension funds employ an...
Editor’s Note: If you want links to core data on Social Security finance, this post by UnionWatch contributor Mike Shedlock is a good place to start. Shedlock correctly notes that during the most recent 12 months the Social Security program ran a deficit for the first time in history. The 2013 resumption of full 6.25%...
Everyone remembers how thousands of bankers and millions of homeowners were caught by surprise when the real estate bubble collapsed in late 2008. One of the major reasons this prodigious bubble was allowed to inflate in the first place was because credit rating agencies did not properly evaluate the financial risks inherent in collateralized mortgage...
When a house is burning down, firefighters rush to save the occupants and put out the fire, often incurring personal risk in the process. Sometimes firefighters even die in the act of saving us. It’s a risk they accept when they take the job. That’s why we call them heroes. So why would firefighters participate...
“I wish it need not have happened in my time,” said Frodo. “So do I,” said Gandalf, “and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.” J.R.R. Tolkien, Lord of...
Among pension reformers there is a spirited ongoing debate regarding what might constitute a financially sustainable yet equitable solution. On one side there is a call to do away with defined benefits entirely, replacing them with defined contribution plans. The argument is compelling; with defined contribution plans, when the participant retires, they survive on the...
Since reporting on the State Controller’s government employee pay tracker last month (ref. California State Controller’s Employee Pay Tracker Grossly Understates Actual Compensation), the State Controller’s Office has responded to one of our concerns, writing: “…it is possible in certain situations to have the data from the Controller’s GCC database sorted by city or county. ...
Earlier this week the Los Angeles Times ran an article entitled “Signature gatherers duel over Riordan pension initiative.” In the article’s introduction, the Times reporter quoted a voter opposed to the initiative, writing “The Tarzana grandmother thinks younger generations shouldn’t have to worry about a retirement tied to the ups and downs of the stock...
Campaign Funding IBEW Union Boss Brian d’Arcy, the imperious business manager of the Department of Water and Power’s politically powerful and domineering union, is not a happy camper with Mayor Riordan’s proposed plan to reform the DWP’s very generous and seriously unfunded pension plan. How dare Riordan try to circumvent him? After all, DWP is...