“The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported,” according to the L.A. Times.
A new study by the Pew Foundation dug up more disturbing news about our unfunded public employee pension crisis.
In aggregate, states’ systems were 84 percent funded–a relatively positive outcome, because most experts advise at least an 80 percent funding level. Still, the unfunded portion–almost $452 billion–is substantial, and states’ overall performance was down slightly from an 85 percent combined funding level, against a $2.3 trillion total liability, in fiscal year 2006. These pension bills come due over time, with the current liability representing benefits that will be paid out to both current and future retirees. Liabilities will continue to grow and, as more workers approach retirement, the consequences of delayed funding will become more pronounced.
What does this all mean? It means that the unfunded public pension debt is “seven times greater than all the outstanding voter-approved state general obligation bonds in California.”
The next time a government worker treats you badly or does a crappy job, remember that while you are working until you are 85, he will be sipping Mai Tai’s on some beach, enjoying a nice retirement and pension while we slave away to pay for his good times…
1) NATIONAL DEBT:
We have an UNFUNDED TRUE National Debt of $54 Trillion compared to about $12 Trillion US total economy. (About $34 Trillion of it was added from 2000-2006 during the Bush Administration and Republican controlled Congress according to the GAO Annual Report to the US Congress)
See page 17:
http://www.gao.gov/cghome/d08446cg.pdf
2) UNFUNDED PENSIONS in California
Also, as article shows our State of CA faces not just an ANNUAL Shortfall/DEFICIT of about $34 Billion, but we have also have the long-term UNFUNDED Deficit in the Pension system of about $500 Billion.
3) UNFUNDED Health Care Benefits in California:
We also face UNFUNDED Retirement Health Benefits of about $62 Billion.
http://latimesblogs.latimes.com/comments_blog/2010/02/california-other-states-face-problem-of-growing-pension-liabilities.html
4) Orange County
Not sure what the current levels are for Orange County, but remember the bankruptcy of the mid- 1990’s…does anyone know???
5) Santa Ana
I understand the City of Santa Ana may have a DEFICIT of $28 million…but this is unconfirmed.
A) So if you consider my points for California #2 (Annual Deficit plus $500 Billion Deficit) & #3 ($62 Billion Deficit), and that former Governor Davis was recalled…what did that get us???
B) So, Short of a BANKRUPTCY which may wipe out the “Contractual” obligations of Pensions and Retirement benefits, or short of taking away from other CRITICAL and essential services, how are we holding our elected officials accountable, including not just the Governor but also the CA Legislature or city officials????
Francisco “Paco” Barragan CPA, CIA
(My opinions only and not those of any group)
In the Orange County bankruptcy of the mid-90’s the active county employees fell into the category of unsecured creditors with regard to any retirement benefits earned to date (Actual county retirees were not vulnerable in this bankruptcy because the county retirement fund is seperate from county government and the money in the retirement fund was not part of the bankrupt county investment pool). When the county developed its bankruptcy recovery plan it proposed to make all creditors whole over time, except for the current county employees earned rights and benefits. I have been told the federal bankruptcy judge found this unacceptable, stating that all unsecured creditors had to be treated equally, the county could not treat some more favorably than others. Thus the earned benefits of then county employees became part of the recovery plan and they were made whole. This is the story as I have heard it. If accurate, it would seem that a government bankruptcy is not a vehicle to allow a government entity to pick and choose among creditors to treat some better than others. It sounds, then, like a municipal/state bankruptcy would wind up hurting many creditors, not just employees or retirees. A complex issue that needs to be approach very carefully. As with many things in life, nothing is as simple as one might think.
#2 BAAW: Thanks for your thoughtful response!
Elected officials must act more like elected LEADERS rather than elected POLITICIANS because our long-term problems require long-term solutions.
Postponing and postponing acting with political courage, while many matters are still under our control, will only continue to make matters worse, ; otherwise, a time will come where we will have no control, and not jut all creditors but also the taxpayers will be worse off.
Francisco “Paco” Barragan
How can elected officials be held accountable for long term problems?
We have term limits for most political offices.
Short term leaders can not solve long term problems.
This is a big problem of the current system of “full pay, full time“, government run by short term amateurs.
Get rid of term limits and retain seasoned experience leaders.
YOU ASK:
How can elected officials be held accountable for long term problems?
Short term leaders can not solve long term problems.
MY ANSWER: Because bad Decisions or IN-ACTIONS NOW can have long-term negative impacts LATER, Voters must scrutinize the actions of elected politicians and hold them accountable.
The guiding principles should be:
“Does this ADD to the GREATER Good for the LONG-TERM?”, or “Does this Hurt us in the long-run, even if politically expedient now?”
Francisco “Paco” Barragan
*Cook – Oh boy, “if we just didn’t have term limits!” then the politicians could fix things that are long term!”
If we elect someone for ONE day…..they can either work to fix the problem or resign and let the next guy do it! We don’t need no stinking “term limits removed”….In fact, we need laws that say, if you even worked for an elected….you can NEVER run for office….EVER!
Ron and Anna.
Did you write NEVER and EVER in the same sentence?
Those were the same words Judge Rodriguez rejected in the Mission Viejo Right to Vote ballot argument. No, I am not accusing you of plagiarism.
However they remind me of those who signed the no tax increase pledges from CA electeds to Bush 41.