The public was suckered.
How is clarified in this dry but instructive article. If you want to understand why more and more of your state tax dollars go to public employee pensions, slog through the story.
“CalPERS dropped the state rate (the amount over CalPERS’ investment returns the state — we — must pay towrd pensions) from $1.2 billion in 1997-98 to less than $160 million in 1999-00 and 2000-01. A booming market yielded a brief surplus, and CalPERS spread the wealth by sponsoring a major state worker pension increase, SB 400 in 1999.”
So during the boom CalPERS persuaded everybody to budget pensions as if the boom economy were permanent. And when the boom inevitably ended, and CalPERs’ rosy revenue projections were proved a bunch of malarkey, taxpayers were on the hook to make up the difference.
Yet CALPERS is using its formidable power to fight any bankrupt city that proposes to cut pensions. It’s my hope that the federal judge adjudicating Stockton’s bankruptcy filing refuses to let Stockton to bankrupt until it stops treating pensions like some sacred cow. I know the city manager fears this will trigger a mass exodus of Stockton public employees and “muncipal chaos.” But I’d rather risk a bit of chaos than sanction a privileged class.