UNDERFUNDED/OVERGENEROUS PUBLIC PENSION UPDATE: California City Abandons Sinking Pension Fund.

Calpers already has its hands full with rebellious cities. The fund has been embroiled in a long fight with San Bernardino, which is looking to delay payments as it goes through bankruptcy. But Canyon Lake is the only city so far that has decided to leave the fund entirely, and it’s not yet clear how Calpers will react to this move. It’s not that Calpers is afraid of the city’s departure on its own. Canyon Lake is an extremely small city, with only two full time employee. But if other, larger cities follow Canyon Lake’s lead, Calpers will have a serious problem on its hands.

It’s kind of like a bank run — once it looks like others are going to pull their money out, it’s rational to bolt. And given Calpers’ management, it’s probably rational to bolt anyway . . . .