April 2, 2013 Leave a Comment
The $900 million Stockton owes to the California Public Employees Retirement System to cover pensions is its biggest debt -â€“ as is the case with many cities in California.
Stockton slashed its police and fire departments, halted bond payments, cut employee benefits and adopted an emergency spending plan that cut many city services. But the city continues to pay into the state pension.
CalPERS – California’s retirement system for government employees – has a long history of problems itself. Some of it is due to ridiculously over-generous pensions, with some state retirees pulling down more than $100,000 every year in retirement. CalPERS let’s employees retire as early as 55, so those retirement payments can stretch out for decades. CalPERS’s own actuary says the pension costs are “unsustainable.”
Were California’s state government a business, it would be a candidate for insolvency with a negative net worth of $127.2 billion, according to an annual financial report issued by State Auditor Elaine Howle and the Bureau of State Audits.
The report listed the state’s long-term obligations at $167.9 billion, nearly half of which ($79.9 billion) were in general obligation bonds, with another $30.8 billion in revenue bonds, many of which were issued to build state prisons, whose “revenue” is lease payments from the state general fund.
The list of long-term obligations did not include the much-disputed unfunded liabilities for state employees’ future pensions, nor the $60-plus billion in unfunded liabilities for retiree health care. The Governmental Accounting Standards Board and Moody’s, a major bond credit rating house, have been pushing states and localities to include unfunded retiree obligations in their balance sheets and were they to be added to California’s, it could push its negative net worth down by several hundred billion dollars.
So that $127 billion doesn’t even include the underfunded liability for CalPERS and other government employee retirement and healthcare. This report lists the underfunded liabilities for just three programs – CalPERS, CalSTRS, and the University of California Retirement Plan – at $137 billion. This is what happens when politicians operate on the “buy votes now, pay debts after you’ve left office” plan.