Pensions: How To Earn 7.8% for 20 Years But Be Short $100 Billion

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

Board members at CalPERS and other public pension funds often mislead citizens about the reasons for rising pension costs and worsening Funded Ratios (the ratio of pension liabilities to pension assets) but the principal reason is surging liabilities. In 1995 CalPERS reported a Funded Ratio of 96%. Over the next 20 years it earned a […]

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The Consequences of Weak Pension Earnings

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

Several reporters have asked about the consequences of CalPERS’s weak investment earnings. Although CalPERS has not issued an actuarial report since June 30, 2014, one can draw an inference that its Unfunded Liability has grown about $50 billion since then, to $140 billion. Here is how you get there: Start from this chart on page […]

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Protecting CA Students From Pension Costs

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

“The secret to stellar grades and thriving students is teachers,” writes The Economist in a recent editorial. One study cited by the magazine found that “in a single year’s teaching the top 10% of teachers impart three times as much learning to their pupils as the worst 10% do” and another “estimates that if African-American children were taught […]

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Prison Guards 3, Parks and Kids 0

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

If ever you wondered about the importance of elections to the California State Legislature, read below. While the legislature considers yet another compensation increase for state prison guards, a state commission considers imposing a new charge on visitors to state beaches to make up for cuts to the state parks budget. I.e., the California Legislature […]

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What Accrual Accounting Would’ve Exposed

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

Nothing has the power of accrual accounting to unmask and curtail reckless fiscal behavior by elected officials. As one example, accrual could’ve stopped the largest non-voter-approved debt issuance in California history. That happened in 1999, when legislation proposing a retroactive pension increase for state employees was introduced in the California Legislature. Accrual accounting would’ve forced state officials to acknowledge a […]

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More Truthiness From CalSTRS’s CEO

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

In 2005 Stephen Colbert coined the word “truthiness” to describe “truths we want to exist.” His invention was timely because at that moment I was contending with truthiness as practiced by the California State Teachers Retirement System (CalSTRS), to whose board I had been appointed that year. I discovered the organization was understating pension liabilities […]

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Jerry Brown’s Excellent Budget — At Least On a Cash Basis

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

Last week Governor Jerry Brown continued his steady stewardship of state finances by proposing a budget for the 2016–17 fiscal year that restrains spending despite hefty projected revenue growth. Brown once again reminded observers that healthy revenues today are likely to turn infirm tomorrow because of the state’s reliance on capital gains and that officials should plan accordingly. For […]

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CA’s Pension Liability Increases by $24 Billion in 2015

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

Annual reports just issued by California’s two largest public pension funds indicate that the state added roughly $24 billion of unfunded public pension liability in fiscal year 2015. In December, California’s two principal pension funds, CalPERS and CalSTRS, posted online annual reports for the most recently completed fiscal year, which ended June 30, 2015. Traditionally, […]

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Political Philanthropists Beware: Know Your Candidate, Use Business Principles!

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

CHECK YOUR DONOR BEHAVIOR–Last month I attended the Philanthropy Innovation Summit hosted by the Stanford Center on Philanthropy and Civil Society (PACS). The event kicked off with a discussion between entrepreneurs Reid Hoffman and Peter Thiel moderated by PACS chairman Laura Arrillaga-Andreessen, who urged philanthropists to “invest” rather than spend and to seek “differential impact” when making […]

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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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