California's Public Pension Disaster

California has promised its public employees lavish pensions and retiree health benefits without setting aside nearly enough money to pay for those benefits. As a result, California already admits to a $75.5 billion shortfall in paying for these promises to public employees—$40.5 billion for the teachers’ retirement plan (California State Teachers’ Retirement System, or CalSTRS) and $35 billion for the California Public Employee Retirement System (CalPERS).

As the pension and health-care benefit crisis sweeps across the nation, some states are seriously dealing with these multibillion-dollar problems that threaten public services and treasuries. And other states remain in deep denial. California, to no one’s surprise, is moving stridently in the wrong direction. That continues a troubling trend that’s been building for years, one that has had a particularly harsh effect on black workers. While the private sector has been adding jobs since the end of 2009, more than half a million government positions have been lost since the recession.

A new estimate from the state’s public retirement system shows a change in benefits could prove costly.
Earlier this fall, lawmakers asked the retirement system to run some numbers.
They wanted to know how much it would cost employers- that are the state, cities and towns - if New Hampshire went from a defined benefit plan to a defined contribution plan.

Going from a system where the employers are responsible for guaranteed benefits, to one where employers only guarantee they pay a certain contribution.

Initial numbers from the retirement system’s actuarial firm are sobering. Read more....