Finding $240 Billion for CalSTRS

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

A recent post at The Volcker Alliance examines a subject of great importance to the California Legislature this week as it searches for an extra $240 billion to pay for employee retirement costs. State and local government retirement costs are already rising but as Warren Buffett wrote recently, those outlays are just beginning their climb. […]

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Full Explanation Required From CalSTRS’s CEO

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

On February 19, California State Teachers’ Retirement System (CalSTRS) CEO Jack Ehnes appeared before a committee of the California State Assembly considering CalSTRS’s request for a $240 billion bailout, starting with $4.2 billion this year. There is no question that CalSTRS needs the money.  Ehnes pointed out that, without the injection, the fund would be […]

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As Days Go By: Why Jerry Brown Must Act THIS Year On CalSTRS

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

The #1 rule of defined benefit pension plan management is that plan sponsors should supply enough cash each year to fund the “annual required contribution” (ARC).  Failure to pay the ARC produces pension deficits. The #1 violator of that rule is California. In 2013, the California teachers pension fund (CalSTRS) received only 44% of its […]

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Political Leaders Must Focus on CalSTRS Funding Crisis

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

The California State Teachers Retirement System (CalSTRS) funding crisis is real, immediate, huge — and to date ignored by California’s political leaders.  In 2013, the state and school districts provided CalSTRS with less than half of its Annual Required Contribution (ARC), which is the minimally required pension contribution. The unpaid amount — more than $3 billion — […]

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Another Smokescreen from CalSTRS’s CEO

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

There’s a memorable scene in the movie Airport in which Dean Martin, playing an aircraft captain, is asked by a passenger why it looks from the stars that the plane has turned around.   Not wanting the passengers to learn the truth (the plane had indeed changed direction), Martin responds with complex obfuscation designed to confuse […]

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Deciphering Public Pension Fund Investment Fee Reports

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

Recently there has been a good deal of press about public pension funds moving $600 billion to “alternative investments” managed by hedge funds and private equity funds.  Some commentators, such as Matt Taibbi of Rolling Stone and David Sirota of Salon, criticize alternative investments as transfers of wealth to Wall Street because alternative investment managers […]

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What’s Really the Principal Cause of CalSTRS’s Shortfall?

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

Recently CEO Jack Ehnes of the California State Teachers’ Retirement System (CalSTRS) asserted that the pension fund’s $71 billion unfunded liability “stems largely” from the 2008-9 economic downturn.  But CalSTRS’s own information appears to contradict that claim and to point to another culprit. Over the last decade – including the economic downturn — CalSTRS reported […]

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California’s New Taxes Are Paying for Pensions

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

What if a corporation raised $500 million in a securities offering on the premise that the proceeds would go for operating expenses, then disclosed a few months later that $300 million of this amount would instead be used to service a debt that wasn’t disclosed in the offering document? This would be false advertising, subject […]

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Pension Problems not the Fault of Employees

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

Crossposted on Sacramento Bee Anyone who reads the papers knows that cities and states are being hit hard by fast-rising pension and retirement health care costs for public employees. Cities such as Stockton and San Bernardino have even declared bankruptcy. But few of those papers make clear that this crisis was not caused by the […]

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With Retirement Costs Consuming One-Fifth of Discretionary Spending, California Must Reduce Un-Accrued Pension Benefits

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

Crossposted on Advancing A Free Society Pensions and other retirement costs will consume more than 23% of discretionary state spending in fiscal year 2012-13, according to the budget recently passed by the California State Legislature and signed by Governor Jerry Brown – nearly three times the share taken up by retirement costs just ten years […]

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