Until Gov. Brown ended the practice, California public employees could add up to five years of credit for time they didn’t actually work to their pension formulas. A perk called “airtime.”
CalPERS’ investment returns paid the pensions — unless its investments tanked, when taxpayers have to pay public employees for time they didn’t work.
Last month was the last chance to book this coach on the gravy train. A year ago, public employees were applying for airtime at the rate of 400 a month. Last month a horde of 12,000 applied, Bloomberg reports.
A CalPERS spokesman said all the additional airtime won’t cost taxpayers anything, “as long as the system meets its target investment return of 7.5 percent over the long term.”
That’s pure CalPERS.
A 7.5 percent return is a big if. CalPERS routinely over-estimates its revenue returns. It does so because its labor-friendly board uses inflated revenue projections as a way to sell cities and other agencies on more expensive pension programs. By promising rosy revenue projections, they can assure cities that they, not cities, will pay much of the pension cost.
But when the money doesn’t materialize, cities are left holding the bag. Good riddance, airtime. Lawmakers ought to regulate CalPERS’ revenue projections, too, forcing their fiscal team to hew to responsible accounting practices. The pension giant should be forbiden to use rosy projections as a marketing tool that ultimately bleeds taxpayers.