southseasbear;842327528 said:
I could write paragraphs on how unbecoming it is for you to attack 88Bear for his political views, on how you ignore the recent pension reforms that have been enacted (and which amount to serious paycuts for underpaid public employees....,
How proud you must feel with the trial court's Vergara decision. We are one step closer to making sure that teachers in your community worship at the right religious establishment, belong to the right club, date (and ultimately marry) the right person, read the right books (such as "Thomas Piketty's book on Capital"), and harbor the right political and economic beliefs.
.
Before I get into the detail, I have not said in any post that I disfavor the tenure system, though I did note that the legislature, with union support, has responded to the court's decision by making it much easier to fire teachers without even saying whether I view this as good or not.
Tenured teachers get laid off in mass when the PUBLIC schools get emasculated. Lets try some recent articles from the Chronicle, since I don't think you know what your talking about when it comes to pension shortfall or have any comprehension of what it means:
Just the teachers:
.
In Gov. Jerry Brown's promise to start paying off California's massive liabilities, the largest single unfunded debt will not be seeing any additional pay-down in the coming fiscal year.
The unfunded liability for teachers' pensions stands at more than $80 billion, a gap so large that the fund is projected to deplete all its assets in about 30 years. It is the largest single component of both the state's unfunded retirement liabilities, which the Department of Finance puts at nearly $218 billion, and of the state's overall $354 billion in long-term obligations.
Gov. Jerry Brown responds to a question concerning his proposed 2014-15 state budget he unveiled at a news conference at the Capitol in Sacramento, Calif.,
Gov. Jerry Brown responds to a question concerning his proposed 2014-15 state budget he unveiled at a news conference at the Capitol in Sacramento, Calif., Thursday Jan. 9, 2014. (Rich Pedroncelli / AP)
The deficit for the nation's largest educator-only pension fund is so huge it would cost teachers, local school districts, community colleges and the state budget a combined $4.5 billion a year to bridge. The California State Teachers' Retirement System says it grows by $22 million each day nothing is done.
Brown has no plans to start closing the gap in the fiscal year starting July 1.
Instead, he said he will meet with the key players over the next year to create a plan for long-term solvency. The proposal, which he discussed Thursday as he released his annual budget blueprint, is likely to include higher contributions from teachers whose future pension checks might otherwise be in jeopardy.
The debate "is going to be quite contentious," said Brown, a Democrat who is up for re-election this year.
Unlike other professions, teachers in California do not pay into Social Security and thus do not receive it when they retire, making their CalSTRS pensions particularly vital.
And unlike the California Public Employees' Retirement System, which covers a wide range of state and municipal employees, CalSTRS cannot unilaterally increase the amount it collects from state and local governments. CalSTRS contributions can be increased only if the Legislature votes to do so.
While CalPERS plans to boost contribution levels again next month for the third time in the last two years, the 8 percent that teachers pay into the pension fund from their salaries has not changed since 1972. The 8 percent that school districts pay has not been altered since 1990.
While the state's share can vary slightly, it has hovered at 5.5 percent including an annual cost-of-living adjustment -- about $1.4 billion a year. The state's general fund contribution to CalPERS is projected to top $1.8 billion next fiscal year.
The bulk of the pension funds' revenue comes not from contributions but from investment income. And that also is the cause of CalSTRS' problems.
The dot-com boom led to the fund being fully funded by 1998, but the windfall prompted state lawmakers to increase benefits and decrease the state's contribution. CalSTRS Chief Executive Officer Jack Ehnes said the fund has been seeking an increase ever since the tech market balloon deflated more than a decade ago, but the bottom really dropped out during the Great Recession.
There is general agreement that the gap cannot be bridged by the rebounding economy alone, said Ehnes and Ryan Miller, a CalSTRS analyst with the state's nonpartisan Legislative Analyst's Office.
"There is no silver bullet," Ehnes said.
The Brown administration says the state cannot afford to absorb the full $4.5 billion annual increase because it would overwhelm other budget priorities. Paying $4.5 billion on top of the current $1.4 billion would eclipse state spending for the University of California and California State University systems combined, according to the legislative analyst.
And while we are at it, let's move on the State:
Just when things couldn't be more challenging for California's budget, we are discovering that the shortfall in three major public employee pension funds (CalPERS, CalSTRS and the UC Retirement System) is far worse than expected. According to our analysis, these three funds face a $500 billion shortfall, about six times this year's state budget.
As members of the generation that must face this fiscal burden, we urge that this not become a political tug of war between liberals and conservatives. Instead, the discussion should center on building a sustainable retirement system that honors our commitment to state retirees, but also sets our state on a path to long-term financial stability.
State law affirms that pension benefits are a form of deferred compensation and must be paid. In short, the debts owed to retired state workers are no different from state general obligation debt.
Why does that matter? Retirement funds discount the value of their future liabilities at the expected rate of investment returns (e.g., 7.75 percent for CalPERS). That accounting gimmick grossly understates future liabilities because payments to retirees are guaranteed.
Instead, sound accounting and economic principles require that future liabilities be discounted at what we call a "risk-free" rate, similar to a long-term U.S. Treasury bond.
Using that risk-free rate, combined with the recent market decline, we estimate that California's three largest pension funds face a shortfall of approximately $500 billion.
Our research team also discovered that understating liabilities is only one element of a broader accounting and fund management problem. Public employee pension funds project an expected rate of return on investments, but downplay market volatility and uncertainty.
That means that funds ignore the wide range of possible investment outcomes, including outcomes when investments underperform expectations. For instance, we discovered - irrespective of how we discount future liabilities - that there is a 44 percent chance that CalPERS will be at least $250 billion underwater in the next 16 years. That means the money has to come from somewhere.
Solutions to this mounting crisis require that more money be injected into pension funds today and that funds invest in less risky assets. Contributions should also be made to pension funds on a steady basis, unlike in the past when payments were allowed fluctuate with market conditions.
And despite much opposition, the state should implement a 401(k)-style retirement system for its future hires, which takes the state taxpayers off the hook if the pension funds don't perform well enough to cover promised payouts.
This predicament will not go away; in fact, it will worsen over time unless proactive change begins now. It is a significant problem for taxpayers and state residents, who will see services decline as the state is forced to cover increased pension obligations. We urge fiscal realism and a productive debate focused on implementing the difficult changes, not the politics we can no longer afford.
JUST SO YOU GET IT: THIS IS THE PRESENT SHORTFALL WITH THE STOCK MARKET AT ALL TIMES HIGH, AND WITHOUT INCLUDING FUTURE PENSIONERS. SO TELL ME, HOW DO YOU WANT TO CUT A DEFICIT THAT WITH THE TEACHERS ADDED THAT IS SEVEN TIMES THE ENTIRE CURRENT STATE BUDGET DESPITE HAVING THE HIGHEST TAX IN THE COUNTRY AND MORE TAX REVENUES THAN ANY OTHR STATE. DESPITE A DFICIT THAT IS 7 TIMES THE ANNUAL STATE BUDGET FOR EXISTING PENSIONS. YES, THE PROBLEM MAY GROW LESS WITH LESS PENSIONS FOR FUTRE EMPLOYEES (SO WHAT, ITS ONLY 9 OR 10 TIMES THE TOTAL STATE BUDGET IN THE FUTURE?).,
THE LAST TIME THERE WAS A ANNUAL BUDGET SHORTFALL, IN FELL ON THE PUBLIC SCHOOL AND HIGHER EDUCATION. WHEN THE PENSION PAYMENTS HAVE TO BE MADE, DO YOU THINK ITS GOING TO BE ANY DIFFERENT? YOU CAN BLAME VODOO ECONOMICS, TRICKLE DOWN, OR THE REST OF THE MISSTATED MACROECONOMIC CRAP MENTIONED IN THE POST, BUT NONE OF IT APPLIES TO THE CURRENT SITUATION IN CALIFORNIA. NOR WAS IT THE LACK OF TAX REVENUES OR THE LACK OF TOP INCOMERS PAYING TAXES (MORE ABOUT REVENUES IN THE NEXT POST). IT WAS HORRIBLE GIVE AWAYS BY THE STATE. AND THE VICTIM IN ALL THIS WILL BE PUBLIC EDUCATION UNLESS YOU CAN SHOW ME WHERE THE HUNDREDS OF BILLIONS OF DOLLARS WILL COME FROM. DO YOU REALLY THINK YOU CAN RAISE TAXES IN THIS STATE TEN FOLD (HINT: AT THE HIHGER RATES 9OU END-UP WITH MORE THAN 100%)?
MORE ON WHAT '88 SAID IN ANOTHER POST SINCE NOTHING IN IT HAS ANYTHING TO DO WITH TENURE.