The state’s obligations are outstripping its ability to pay. Now is a good time to put reforms back on the table.
CalPERS estimates this year’s losses at close to 30%. Meanwhile, costs for the current fiscal year are expected to reach $3 billion, of which more than half is to come from the state’s general fund.
“Reforms”, of course, means gutting existing and proposed pension benefits. Some municipalities in California have already declared bankruptcy so they can re-negotiate or break existing contracts with unions. Yes, the financial crisis can be used to justify all manner of evil mischief. But the simple fact is, California can no longer afford existing public pensions.
Why is this a powder keg? Because public pensions under current law must be fully funded. If the bumbling idiots at CalPERS screwed up and the fund lost 30% in just one year, oh well, not to worry, they can force the state and others to make up the difference while continuing to pay themselves well for their incompetence. That just isn’t going to play well with people who are losing homes, and private pensions and are now blithely told they must pay more to fully fund public pensions.