California is the nation’s shameful example of what happens when Democrats influenced by big government labor rule the statehouse for forty years.
With 12.5% unemployment (up from 4.5% a mere three years ago) a “recognized” budget deficit of $21 billion, California has just found out it is in much, much more financial trouble than anyone, especially a Democrat, really wants to admit.
California’s governor Schwarzenegger commissioned a study by Stanford University which has found California’s 3 public employee unions ( The California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS), and University of California Retirement System (UCRS) lost $109.7 billion in portfolio value in one year (June ’08 to June ’09) and is currently in shortfall of “more than half a trillion dollars.”
By law, California taxpayers are required to pay the public employees’ pensions shortfalls that may occur. Local governments cannot “print money” like the federal government does, to cover budget deficits.
What should have been considered a huge scandal in the state pension fund system in the past year got little attention but is more pertinent now: The two largest unions, CalPERS and CalSTRS were reportedly near bankruptcy in 2009 after it was learned the funds had lost from 25-41% of their value due to risky investments in real estate and the stock market. Former employees of the state unions were accused in January of getting huge fees to direct pension investments to certain banks or ventures.
There are outrageous examples of abuse in the California public pension system.
PensionTsunami.com, which has been tracking the pension fund liability issue for five years, has found 9, 233 retired members of CalPers or CalStrs receive more than $100,000 per year in retirement benefits, amounting to more than a billion dollars a year. .
The retired city administrator of Vernon, California, Bruce Malkenhorst, receives an annual pension of $449,675 from CalPERS. Vernon, a Los Angeles suburb, has 92 residents.
California’s state employee pension fund liabilities have ballooned for years with increased numbers of state employees, many of whom can retire at age 50, can “spike” their last years’ income with overtime to increase their retirement, and can then move on to other government or private jobs without losing their pensions.
Why should Californians care about this confusing, complicated budget problem with a huge, unfathomable invoice attached? David Crane, writing for the Los Angeles Times, says today’s pension fund shortfall is tomorrow’s budget cut to something some Californian is likely to miss.
“In California’s case, past pension underfunding means reduced funding of current programs. This explains why pension costs rose 2,000% from 1999 to 2009, while state funding for higher education declined over the same period.”
Californians are feeling the pain of the budget crisis, but often misplace their criticisms.
Let’s go to the videotape this year of the many demonstrations on the many University of California campuses, where students have rioted against proposed 32% state tuition increases and program cuts.
Approximately 22,000 California teachers have just received “pink slips” indicating they may be laid off due to budget cuts next fall. An additional 20,000 were laid off last year. California is cutting “live” teachers out of classrooms in order to pay for retired teachers.
California schools have gone from number one ranking in the country in the 1970s to at or near the bottom in performance and funding.
Who is to blame for this ticking-time bomb of unfunded public pension liability?
“Thank” Jerry Brown. As Governor “Moonbeam” of California in 1978, he signed the “Dill Act” which gave California public employees the right to collective bargaining.
Brown, who has been governor, Oakland mayor, and attorney general now wants to be California governor…..again. Four big, grateful government labor unions are backing him….again.
Speaking recently to the Service Employees International Union, Jerry Brown “the populist” said he was proud to have given state employees “the choice” to belong to unions in the 70s, and will “take a look” at the pension funds to make sure they are actuarily sound. Big applause line.
Speaking to another union group in Sacramento, Brown was caught on videotape asking the labor leaders to “do the dirty work” and “attack” Republican candidates who oppose him in the governor’s race. (Hear it here.)
Who else to blame?
Since Brown gave them a green light in the 1970s, public employee unions have become a muscular, dominating force in California politics. State employee unions spent a whopping $31.7 million on state races just from 2001-2006, according to the California Fair Political Practices commission, higher than any other group, including corporations. The majority-Democrat California legislature has voted accordingly.
What can be done?
Jerry Brown, the re-run, who is running technically unopposed by any other candidate in the Democratic primary, has been oddly silent on his state’s dire budgetary woes. His campaign site news releases do not mention budget problems.
At the same time, it has been noted by the tabloid media that Jerry Brown has been weirdly over-involved as California’s attorney general, his current job, in the celebrity death investigations of Anna Nicole Smith, Michael Jackson and Corey Haim. His office spent several months investigating ACORN employees who were caught in a videotape sting organizing houses of prostitution in government housing. Brown has just determined there will be no prosecution of ACORN in his state.
Brown also went to the unusual extra step to seal his gubernatorial records from his 1970s-80s term for 50 years. (U.S. presidents can only seal records up to 12 years for national security purposes.)
Brown refuses to join with 14 other states attorneys general in challenging the recently-passed health care reform law, even though it will mandate billions more in unfunded expenses to the financially-strapped California Medicaid program. He says to challenge Obamacare would be to engage in “poisonous partisanship.”
Republican gubernatorial candidates are tacking the pension fund liability:
Steve Poizner says he supports a “two-tier” system for current and new state employees but doesn’t think a new governor will be able to come in and “steamroll” the unions.
Meg Whitman has campaigned on cutting state employee rolls and advocates “401k” style pensions for government workers, higher retirement ages (from age 50 to 55 or 65)
What can California do?
The U.S. Constitution technically does not allow for states to go bankrupt. Vallejo, California was the first city in the country to go bankrupt and has been establishing new “tiers” of retirement plans for police and fire employees.
The newly-elected governor of New Jersey, Chris Christie, is tackling government employees’ unions with some effect. Christie has announced to cut substantially from government executive positions, privatize other state jobs and cut positions.
There has been criticism of increased funding and budget over-runs for state prisons due to the influence of the California prison guards’ union.
The Citizen Power Campaign seeks to “unplug” the public employee unions and is endorsed by many of the conservative candidates for office in California, including Republican Steve Poizner for governor.
One thing California clearly does not need is the déjà vu “hair of the dog” in the person of 1970s re-tread Democrat Jerry Brown.
Whitman-Poizner, GOP Candidates for CA governor
{ 8 comments… read them below or add one }
Bettina Viviano commented on your link:
“Wow. Great read. I can’t STAND Governor Moonbeam. California deserves what they get if people are idiotic enough to elect that tired old retread loon. All of that stuff needs to get out in November. You’re an amazing gal!”
Jules S. Zeman commented on your link:
“Jerry is running as a dem again for governor. Good article–thank you for posting.”
Yes, Jules…we need to stop recycling him and can him for good.
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Shane Hayes commented on your link:
“Don’t worry Jane our RomneyCare system is bankrupting us too. Race you to failed status
”
And just what were employee rights before he signed the “Dill Act” which gave California public employees the right to collective bargaining. Are you willing to give up some of the things collective bargaining has done to improve the working conditions of all working people. Lets start with the 8 hour day, go tell your boss you want to work 10-14 hours a day. Don’t even ask to keep getting paid overtime. When the weekend comes , keep working through both days. While your at it let your boss know there will be no more breaks, that includes restroom too. That pension plan you have, that’s not something you need, collective bargaining,And what do you need pay increases or bonuses for, let the boss keep it. What are you willing to give up ?
So whats the point about Vernon Ca having 92 residents.
Oh……….please! It isn’t like DMV workers are getting their fingers cut off in sausage machines!
Who in the private sector works just an 8 hour day? Who in the private sector gets a pension anymore? Who in the private sector gets insurance paid for life?
It’s OVER. Why should we pay for what we ourselves don’t get?
Smallest violin in the world playing here.
Absolutely right, Jane. The unionization of public-sector employees was the Obamacare of its time. It set government on a path of permanently increasing power, created multiple generations of greedy, politicized union thugs, and now, 40 years later, despite all the damage government unions have done, people seem to concede there’s no way government employees can ever be de-unionized. No, we just have to live with the depredations of these greedy, arrogant bastards forever — or at least until their blind greed finally bankrupts both the state & federal governments. I dread the suffering that bankruptcy will cause, but I don’t see any other way to get the unions’ hands off the throats of the American people. De Tocqueville & the Founders were absolutely right when they worried that a republic might not survive the discovery, by organized groups, that they can vote themselves benefits directly out of the public treasury. We should have listened and kept the prohibition on pubic employees’ unionizing.