Monday, November 5, 2012

Dan Walters: Bankruptcy filings by California cities may rein in pensions

Money and Truth aren't the same, but Money is based on reality.  No matter what wild schemes people try to dream up the Money will reflect the Truth.  And sadly that has happened with the over generous pension plans.  The Truth is, the Money just isn't there.

"The increased retirement costs that the city will experience are unsustainable," the city says, "and therefore immediate major intervention is necessary now."

On one level, cities suffering pension-cost angst don't deserve our sympathy. They expanded pension benefits, especially those for high-cost police officers and firefighters, with little regard to future impact.

But CalPERS encouraged those increases by supporting legislation to raise state employee pensions in 1999, claiming that investment gains would easily pay for them, not taxpayers.

Moreover, much of the cities' added costs are being imposed by CalPERS to make up for the horrendous investment losses that the pension fund incurred in the last decade. A day of reckoning is coming, and it may come in federal bankruptcy court.

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