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Big Money Talks in California Politics

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Everyone knows about the pharmaceutical companies, defense contractors and other financial interests that dominate political spending in Washington, D.C. Because federal spending provides a big share of those businesses’ revenues, it’s not surprising they spend heavily for a Congress sympathetic to their interests. But fewer know about the financial interests that dominate political spending in […]

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Stock Market Soars — And So Do Public Pension Costs

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

The way our government accounts for public employee pension promises is nothing short of fraud, yet no public official has gone to jail or paid a price for what surely ranks among the largest muggings of citizens in US history. Let me explain. As the stock market reaches record levels, little is heard anymore from […]

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How The Past Can Devour The Future

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

The stock market has hit record highs and public pension funds are reporting record levels of capital, yet public pension costs keep growing, leaving some observers puzzled. A new book by French economist Thomas Piketty helps clear up the confusion. In his book, Capital in the 21st Century, Piketty explains that capital is wealth derived […]

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Finding $240 Billion for CalSTRS

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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 and Research Scholar at Stanford University and President of Govern for California

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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