Issue Updates

This will take effect starting July 1, 2014.  Yes, that number is still way too high and even the actuary's methodology came up with 7.09% (still too high).  This impact of dropping the rate is that the pension cost increases for both the employer and employee because it assumes the money that is being invested is earning less to help pay the cost of pensions.

CalPERS' corruption, insider dealing and politicized investments have overwhelmed taxpayers with debt.  This City Journal article thoroughly explores the issues.

Why is that rate so critical?  Because if it is too high (such as Contra Costa and its 7.75%) then too little is collected from the employees and the employer on the assumption that earnings will cover more of the ultimate pension cost.  In Europe they are using on the average of 3-4%.  In the US, a tidal wave was set off when Indiana had the temerity to go down to 6.75%.  But the underfunding is rapidly sucking the life out of local and state budgets.

This is one way to reduce the pension and salary costs. Others should consider it.

http://sanfrancisco.cbslocal.com/2013/01/05/morgan-hill-is-first-city-to-sign-fire-service-pact-with-cal-fire/

The argument made for having to have immense pensions in order to attract personnel has been given a blow by the number of police recruits vying for spots in the bankrupt City of Stockton. See the story below:

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20121215/A_NEWS/212150317

The results might surprise you. I not only spent some time with the NPR folks, but I also sent them material. 

http://www.npr.org/blogs/money/2012/12/18/167265874/episode-424-how-much-is-a-firefighter-worth

Following passage of AB 340 last fall -- aka Governor Brown's pension reform -- Contra Costa County's Firefighter and Deputy Sheriff's unions filed a lawsuit challenging provisions that would end pension "spiking" practices involving vacation payouts.  It is not clear who, if anyone, will defend the law against the suit.