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Michael Lee Madsen, Sr. has just submitted an Initiative to the Attorney General with a request that it appears on the November 2012 Ballot.The office of the AG just assigned #11-0018 to this application.
Pension challenge
Michael Lee Madsen, Sr
His wish list target date presents problems before getting Title and Summary approvals. Statewide Ballot Measures, that are citizen initiated, require perhaps close to one million signatures to assure their validity.
What he is proposing is that our Constitution be amended stating “California’s public employee retirement systems need to focusing on investing within the state in order to create employment opportunities and new revenue sources within this state.”
Page 4 reads in part as follows: (d) (1). The members of the retirement board of a public pension or retirement system shall, on and after January 1, 2016, invest and maintain at least 85 percent of the system’s assets in California-based businesses and shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless the circumstances it is so clearly not prudent to do so.
(2) As used in this subdivision, the term “California-based businesses” shall mean a business in which at least 70 percent of its employees are employed within California.
Gilbert comments. What percentage of the public agency pension funds are invested in our state today?
According to their web site CalPERS claims that $23.4 billion, or 9 % of their $231 billion (market value) funds, are in “California Investments and Committments.” Note: I could not find similasr data from CalSTRS.
What’s the risk of giving up national and international investments that may generate a higher rate of return, especially as the DOW has only earned 3 percent YTD.
With Defined Benefits rather than 401 K plans representing the lions share of this huge number there is a need to meet a guaranteed sum for each retired, current and future pension plan participant. CalPERS assumes a 7.75% rate while Warren Buffet has been quoted saying that 6% is a reasonable ROI.
It was reported that the 10 largest funds in our state have a combined shortfall of $240 billion dollars. California has 85 DB Plans covering 4.4 million current and retired workers.
Cal PERS, the largest pension plan in America, has1.6 million participants. Following right behind them, as the second largest pension plan in America, is Cal STRS, California State Teachers Retirement System, whose fund is at $154.6 billion of which 54% is in Global Equity.
For a huge wake up call let me suggest reading the Little Hoover Commission report on California pensions.
http://www.lhc.ca.gov/studies/204/Report204.pdf
Mr. Gilbert – has Mr. Madsen actually filed petition signatures to qualify for the ballot, or has he simply taken out papers to try and gather the required signatures? A clarification would put his effort in better focus.
Also, in the spirit of reporting in a “fair and balanced way” readers might also want to read this critique of the Little Hoover Commission report that I found on the CalPERS siite:
http://www.calpersresponds.com/downloads/key-observations-lh-report.pdf
FMO.
When Mr. Madsen receives an official “Title and Summary” of his document the clock starts for gathering signatures. You can obtain that typical signature gathering calendar at the AG’s web site. Winging from prior Ballot Measures I think the minimum number of valid registered voters on this type of application is around 650,000 names. For that reason, as many will be thrown out, we generally shoot for just over one million. The “bounty”, paid to professional firms for gathering the signatures, may be $5.00 per signature.
Said another way you need at least one million dollars just to get the signatures. This does not include the cost of promoting your Initiative that in itself can cost several million to tens of millions of dollars as we discovered in the Prop 98 Ballot Measure for property rights reform.
Larry, I am sure it was just oversight that you missed the article I wrote for Fox and Hounds Daily over two months ago.
http://foxandhoundsdaily.com/blog/frank-ury/8852-calpers-should-be-required-invest-california-based-companies
Frank Ury
Mayor Pro Tem, Mission Viejo
Mr. Ury. You assume that I read Fox and Hounds. While I am on Joel Fox’s distribution having 2700 emails as of now I have been deleting hundreds of emails that have not been read. Fox and Hounds being several of them.
What I didn’t report, in that is has no bearing on any official action, is that Mr. Madsen’s 5 page text is dated 02/04/11 03:58 PM.The date on the letter from Madsen to the Office of Attorney General and the date RECEIVED on the document from the Initiative Coordinator, Attorney Generals Office reads June 24, 2011.
So if you did a story two months ago it predated the legal submission.
I was not asleep at the keyboard and posted this story as soon the office notified me of this application.
Folks. Notice that MV council man Frank Ury makes his first appearance on the Juice and lets the world see his “i’m better than you” attitude by linking to a story he wrote a few months earlier than myself on a blog that most, if not all, Juice readers are not aware of. He gives the impression that everyone reads it. The difference is that this post was based on an email from SAC after the Initiative was officially submitted and accepted on Friday of last week. Enough said.
Hey Frank Ury – how about an investment like the Tejon Ranch development fiasco? Another good old boys get rich off retiree money scheme – no thanks. Your agenda is too transparent.Pick the bones of the taxpayers, pick the bones of the public workers retirement funds. Keep the wolves away from the door of the vault please.
Another flagrant abuse of the initiative system.
It’s absolute nonsense to think that CalPERS would find a balanced portfolio of investment opportunities in California for it’s 225 billion dollar portfolio that would somehow allow them to achieve the returns that they have historically.
What kind of innumerate fool came up with this crap?
Mayor Quimby.
The sad news is that anyone who is able to come up with a $200 check can submit an Initiative
You can find a report on the extent and efforts of CalSTRS invetments in the State of California online at: http://www.calstrs.com/publicdocs/Page/CommonPage.aspx?PageName=DocumentDownload&Id=275dea49-635b-4234-bf2f-97c05b972638
It’s a report submitted to the CalSTRS Investment Committee every September. This particular report reflects our position as of June 30, 2010, wich is $19.9 billion invested in our California portfolio or 15.3 percent of the overall portfolio in California investments.
Thank you Ricardo. I did a quick search and came up empty.
15.3 percent is a long way from the 85 percent target in the Initiative
Thanks for the report Larry. You’ve even managed to keep the lefties away on here (so far) with their excuses about how the numbers are blown out of proportion, we’re not hemorrhaging money, and conservatives are only demonizing public employees. With every report that comes out confirming the dire situation we face, we’re that much closer to actually being able to effect real change. Keep up the good work.
Unfortunately, Republicans in the legislature missed a tremendous opportunity to push through meaningful pension reform because they are morons.
Instead we have a majority budget without a Republican vote, less revenue, and a real chance that progressive taxes rather than regressive sales tax increase will pass in the future, and that prop 13 will move towards a split role. protecting homeowners, but getting rid of the loopholes exploited by commercial property owners.
As to Larry’s rants, and the pension tsunami crowd, there is a large term problem that needs to be addressed seriously and incrementally. Republicans can’t figure out how to count votes, so they can’t get anything done. Morons.
Honorable Mayor Quimby. I am honored that you take the time to not only read my RANTS but the fact that you set aside valuable time to respond is truly appreciated.
Mayor Quimby.
Less revenue? Are you saying we should vote to raise taxes?
Living within our means should be practiced by each of us so that we don’t end up with huge, unsurmountable debts as we see in DC
*Let us understand this: CALPERS and CALSTRS invest billions in CDO’s, Sub-Prime Mortgage rip-offs and Institutional Investments in Oil and Energy. They pocket billions and billions as the market went up. Now that Land values are less than half of what they were in 2007……does the writer suggest we have this Institutional Investors go back to investing in Sub-Prime California Loans again? How about Credit Default Swaps? How about old Bernie Madoff investment properties? Greek Bonds perhaps?
Just like to know what is the corrective solution being offered…..by anyone responding to this article.
Folks. As MV councilman Frank Ury jumped on this thread I would be remise not to point out that he was the sole vote to retain access to “lifetime health care” for some members of the Mission Viejo city council, including himself. My point is that actions speak louder than words.
Actions speak louder than words. Well, since I voluntarily rescinded my rights to lifetime medical benefits months before, the vote taken was nothing more than grandstanding. My recission carried more weight, since any future council could reinstate the benefits. So I guess my voluntary withdrawl was not “action” enough for you. And funny how you never mentions your buddies who put lifetime medical in place to start. Hmmm.. Where were you when that vote was taken????
And if you would take the time to READ my article in Fox and Hounds, you would have understood the main thesis was to criticize CA bureaucrats for enjoying the investment returns on companies and jobs they are REGULATING out of the state. I specifically cited the head of AQMD, who has over 20% of his retirement in investments from China and India and other overseas companies. So AQMD regulates a company so they have to move out of state, we lose 1000’s of jobs here, and then the regulators get to retire from earnings from those companies. You may think losing all those high paying jobs from CA is a good idea, I do not. Unless these regulating bureaurates have some skin in the game, they will continue costing us jobs.
Unless you think they should be rewarded for killing jobs….
That’s your problem Frank. This post is not about you!!!!!!!!!!!1
The vote that counts, and will be remembered next Nov, is your LAST vote where you voted YES to retain access to lifetime health care while the other four members voted NO.
One disadvantage for incumbents , that even our president is now discovering, is that your record speaks for itself. You can run but you cannot hide.
Larry, then where were YOU when your boy JP Ledesma voted lifetime benefits in?? You were at the meeting, and I am sure you read the agenda. How could you miss this one? Are you just a professional whiner or did you just really fumble on this one? It only cost the city over $4.5M. What’s that, nothing to say????
One disadvantage for Larry: he never missed a meeting or agenda in 20 years, just ask him. I am right here, what are you hiding from by your silence?
Frank. What makes you think that every council member we have supported follows our advise?
In fact several of us helped you get elected in 2004 before you left the conservative ranks.
Readers might check out your report card by http://www.LibertyFirst.org
where you have a grade “F” @59%
FYI. Liberty First did not record your SECOND/FINAL vote on the health care issue but we can all see it on the city web site when it happened.
One disadvantage of an incument. Your voting record.
Frank Ury voted to retain access to lifetime health care as confirmed on the city of Mission Viejo website as follows:
Council Minutes 12 July 6, 2010
Council Member Schlicht
36.
Elimination of Lifetime Healthcare Benefits for the Remaining Eligible Council Members
The following spoke in opposition to Lifetime Medical Benefits for Council Members: Larry Gilbert, M.V. and Rhonda Reardon, M.V.
The following presented written comments in support of the proposal: Max and Barbara McDougall, M.V.
Motion made by Council Member Ury, seconded by Mayor Kelley, to lay the item on the table.
On roll call, said motion failed by the following vote:
AYES:
Kelley and Ury
NOES:
Leckness, Ledesma, and Schlicht
ABSENT:
None
Motion made by Council Member Schlicht, seconded by Council Member Ledesma, to approve an Amendment to the Council Policies to eliminate current and future council members from eligibility in the Mission Viejo Employee Retiree Medical Benefit Program.On roll call, said motion carried by the following vote:
AYES:
Kelley, Leckness, Ledesma, and Schlicht
NOES:
UryABSENT:
None
Mr. Ury seems to think the regulations and other job killing actions of state and regional government are conceived by empoyees of government – he likes to call them bureaucrats as that is a word with a negative connotation. However, reality is that it is the electeds, and those they appoint to such bodies as the governing Board of the AQMD, that legislate and regulate. The job of the so-called “bureaucrats” is to carry out the policy decisions of those elected and appointed officials, no matter how dumb the policy is. The “bureaucrats” are the messenger, and Mr. Ury seems to deiire to perpetuate the end resutl of shooting the messenger rather than hold the policy makers accountable for the things he does or does not like. A very shallow approach to public policy.
*So what does CALPERS invest in again? Hmmm…..no one seems to have even an inkling of an idea.
Oh well, thank goodness this is only politics we are talking about. To think it could
actually effect people’s lives would be scarry.
What ever they have been doing it is working. The returns they have been able to maintain even in the current ecomony are impressive. If they would be restricted to investing just in california the taxpayers of the state would be on the hook to make up the difference in the likely event current return rates of over 7% and historic return rates of over 12 % drop due to unwise restrictions.
If they had invested unwisely in junk items as suggested above they would have been in the boat with a lot of other less well managed private funds and 401ks — Broke or projected to run out of money.
If something is actually working perhaps it is best to leave it alone.
*Dr. Benson,
Ever hear of Short Selling? CALPERS did a lot of it during the crisis……just before
the boat sailed……Was it Lehman Bros, Merrill Lynch, Goldman-Sachs or Walmart
that let them know the insider info? Who knows…..and who cares? Well, Teachers and other Public Employees do, of course! It wouldn’t have been nice to upset those folks…eh?
Working?….that is a matter of conjecture to be sure. If in fact Real Estate values plumment to their current true selling and buying price…..maybe that picture may not look so rosy. We wish them all well…..but they can only prop up worthless land and property values so long, before someone finally says: “Not worth a dime!”
Yes I know what short selling is, they were smart enough or perhaps had some help to see the writing on the wall. I for one am glad they did act or the taxpayers would be on the hook for the balance.
I could see what was coming before it happened, I just did not know what the timing would be.