You always knew it was a lowdown, cheap, dishonest racket, right?
When one of the tiniest pension funds imaginable — for Citrus Pest Control District No. 2, serving just six people in California — decided last year to convert itself to a 401(k) plan, it seemed like a no-brainer. After all, the little fund held far more money than it needed, according to its official numbers from California’s renowned public pension system, Calpers.
Except it really didn’t. In fact, it was significantly underfunded. Suddenly Calpers began demanding a payment of more than half a million dollars.
“My board was somewhat shocked,” said Larry Houser, the general manager of the pest control district, whose workers tame the bugs and blights that threaten their corner of California citrus country. It is just a few miles down the road from Joshua Tree National Park.
Those who live in California know that Calpers — the California Public Employees Retirement System — is the monster that will eventually devour the Golden State, a bureaucratic beast that will swallow up every single red cent originating in the state in the name of “fairness” and “compassion.” Remember, it’s not’s what illegal that’s the problem — it’s what is legal:
It turns out that Calpers, which managed the little pension plan, keeps two sets of books: the officially stated numbers, and another set that reflects the “market value” of the pensions that people have earned. The second number is not publicly disclosed. And it typically paints a much more troubling picture, according to people who follow the money.
[The crisis] raises serious concerns that governments nationwide do not know the true condition of the pension funds they are responsible for. That exposes millions of people, including retired public workers, local taxpayers and municipal bond buyers — who are often retirees themselves — to risks they have no way of knowing about.
Thinking about leaving the “system”? Think again:
The market value of a pension reflects the full cost today of providing a steady, guaranteed income for life — and it’s large. Alarmingly large, in fact. This is one reason most states and cities don’t let the market numbers see the light of day.
But in recent years, even the more modest actuarial numbers have been growing, as populations age and many public workers retire. In California, some struggling local governments now doubt they can really afford their pension plans, and have told Calpers they want out.
In response, Calpers has calculated the heretofore unknown market value of their pension promises — and told them that’s the price of leaving, payable immediately. Few have that much cash, so it’s welcome to the Hotel California: You can check out anytime you like, but you can never leave.
There’s a word for an organization like this: a criminal shakedown racket. As Walter Russell Meade notes:
Kudos to Walsh, and to the NYT for that matter, for pushing a story that discredits some of the most important assumptions behind blue model governance. The truth is that many American state and city governments are not paying their way, pension systems are not sustainable, and the conflicts of interest linking politicians to public sector union leaders are a dangerous and deeply destructive force.
And yet the leftist ninnies would rather fret about the non-existent threat of man-made global climate whatever than stifle the money spigot that keeps them and their union buddies in power. There’s a word for that, too.