Some public pension funds like to blame the 2008 stock market crash for the pension cost crisis but as the chart below shows, pension costs started rising well before the 2008 stock market crash.

In fact, those pension costs increased sharply through the decade even though CalPERS and other public pension funds earned money for the period including the 2008 crash. This is because public pension costs rise whenever public pension funds earn less than they expect to earn. Put another way, when it comes to pension costs, what matters is the "spread" between expected returns and actual returns.

When pension promises are made, employers and employees make contributions into pension funds.  The size of those contributions is based upon an expected return from investment of those contributions so that, together, the contributions and investment earnings on those contributions are supposed to be enough to pay the pension when it’s due. The higher the expected investment return, the lower the contributions when the promises are made. But if the actual investment return falls short of the expected return, the employer must make up all the difference.

Nearly one month into the new fiscal year that began on July 1, there
is growing concern that Democrat leaders will attempt an end-run around
the Proposition 13 requirement that tax increases must be approved with
a two-thirds vote of the Legislature.

The state faces a $19 billion budget deficit, but instead of cutting
waste and out-of-control spending, Democrats are looking for schemes to
increase taxes with a simple majority vote.

This wouldn’t be the first time the Democrats have tried an end-run
around the state Constitution. In January 2009, they tried to pass
billions in tax increases with a majority vote. The Howard Jarvis
Taxpayers Association filed a lawsuit against these unconstitutional
tax increases, and almost immediately the Governor announced he would
veto the plan.

Once
again a flawed bill is racing through California’s legislature with
little concern over its dangerous consequences. In this case the stakes
are higher than simply adding more bureaucracy, toothless regulations
or self-inflating decrees – there are significant public safety impacts
that have gone completely unheeded.

SB 346
(Kehoe) aims to reduce the copper content in urban waterways – a noble
goal – but does so by targeting the chemical formulation of brake pads
in our vehicles. Unfortunately, there is no current substitute for
copper in brake pads that carries the same performance quality. So as
our legislators start cramming through bills at the end of session and
playing games with our state’s budget, it’s critical that they don’t
lose sight of the potential safety and brake performance ramifications
of SB 346. As it is currently written, Kehoe’s
bill fails to ensure the availability of safe, commercially viable
brakes for all vehicles on California’s roads.

New technological advances and anti lock brake systems have made brake
failure a rare event among today’s cars and vehicles. The motor vehicle
industry is constantly working to maximize brake safety and ensure the
highest performance standards are upheld. The use of copper in brake
pads is for a specific reason – it is a critical component that reduces
heat and friction, thereby increasing durability and safety and
reducing vibration and noise.

Keith Richman was my assemblyman and my friend. He was a passionate man. His passions focused on health care — both as a physician and the head of a health care provider service — and for his desire to see a healthy California through a government that worked for the people.

Richman was not afraid to take on fights to achieve his goals whether it was against the powerful public employee unions who opposed his pension reforms or members of his own Republican Party who objected to his budget votes.

Anchoring the you-could-fit-‘em-in-a-broom-closet Moderate Caucus with Northern California Democrat, Joe Canciamilla, the Southern California Republican did his best to find common ground solutions to California’s problems.

There are very few industries in California that not only drive the
state’s economy but make up a seminal part of its identity. The
entertainment business fits that bill-and from an economic standpoint,
the most significant part of the industry is production, whether the
medium is feature films, television or commercials.

But California’s employment base in film production has been eroding
for more than a decade. Between 1997 and 2008, the state lost more than
10,000 direct jobs in the industry and 25,000 more indirect jobs; all
told, that’s a loss of $2.4 billion in wages and $4.2 billion in real
output.

Although these losses pale in comparison to California’s overall
unemployment numbers, they’re still significant because they represent
an ongoing structural erosion, not just collateral damage from the
recession. And the losses haven’t been limited to Los Angeles.
California has also been bleeding post-production jobs in specialties
such as special effects and animation, trends that have had a big
impact in Silicon Valley and other parts of Northern California.

Cross posted with NewGeography.com

Nearly a century and
half since the United States last divided, a new "irrepressible
conflict" is brewing between the states. It revolves around the
expansion of federal power at the expense of state and local
prerogatives. It also reflects a growing economic divide, arguably more
important than the much discussed ideological one, between very
different regional economies.

This conflict could grow in the coming years, particularly as the Obama
administration seeks to impose a singular federal will against a
generally more conservative set of state governments. The likely
election of a more center-right Congress will exacerbate the problem.
We may enter a  golden age of critical court decisions over the true
extent of federal or executive power.  

Some states are already challenging the constitutionality  of  the
Obama health care program. Indiana, North Dakota, Mississippi, Nevada
and Arizona joined a suit on March 23 by Florida Attorney General Bill McCollum to overturn the
law. And Arizona’s right to make its own pre-immigration regulations
has gained support from nine other states: Texas, Alabama, Florida, Nebraska, Pennsylvania, South Carolina, South Dakota, Michigan and Virginia.

It’s sickening to see the way Eli Broad is being mugged by Los Angeles.

Here’s a statesman who’s trying to make a gift to the city, and one
that’s exceedingly generous. So you’d think the so-called leaders of
Los Angeles County and the city would have the decency to say thank you.

Instead, they’re leveling the blued-steel barrel of government power at him and saying, "Stick ’em up."

The Following Piece Is Exclusive to Fox & Hounds Daily

The recent retirement announcement from California Supreme Court Chief Justice Ronald George reminds us that the governor has very important appointment powers.

A governor’s judicial nominees speak volumes about their guiding principles. Moreover, these appointees – and their decisions – live long after the governor who appointed them has left office.

Californians expect their governor to take these appointments seriously, and I want people to know what I would expect of those whom I would appoint to the bench.

The Davenport Institute at the Pepperdine University School of Public Policy recently released a report analyzing K-12 public school expenditures in California. Fox and Hounds Daily interviewed the co-author, Dr. Steven Frates, who is Director of Research at the Davenport Institute. You can find the full report here.

F&H:  Your report reveals that total statewide expenditures for K-12 education increased more rapidly than inflation from FY 2003-04 through FY 2008-09.

Frates: Yes, that is correct.

F&H: We’ve heard a lot in the press over the last few years about cuts in education financing, but your report indicates otherwise. What are the facts?