What Thompson also doesn’t mention in his AP piece is that some states managed their pension funds better than others did.
A March 2011 report on the Best and Worst State Funded Pensions by Adam Corey Ross of The Fiscal Times offers a more balanced picture. Ross wrote, “State pension programs across the country have undergone a major transformation, as more and more of them are cutting back the amount of money they set aside for retired workers, gambling that they can meet their obligations through investments instead of savings …”
In fact, Ross lists the best fully-funded state pensions that existed then, which were: New York, Wisconsin, Delaware, North Carolina, Washington, South Dakota, Tennessee, Wyoming, Florida and Georgia. He also lists the worst state pensions where the gamble did not pay off. However, with Governor Scott Walker in Wisconsin and Cuomo of New York, the public pension plans for those two states are probably doomed along with the public unions in those states if the voters don’t get rid of them in the next election.
California fell between the two lists, but thanks to recent legislations plans to fill the funding gap in a more sensible way. In addition, nowhere does Ross or Thompson mention that California has two state pension plans—CalPERS and CalSTRS.
As Public Pensions Shift to Risky Wall Street, Local Politicians Rake in Political Cash
The California State Teachers’ Retirement System [CalSTRS], with a portfolio valued at $189.1 billion as of June 30, 2014, is the largest teacher pension fund and second largest public pension fund in the United States. In addition, CalSTRS makes it clear that “it’s important to understand that the risk of facing depleted assets exists approximately 30 years from now versus actually facing insolvency today.”
Due to losses from investments during the 2008 global financial crises, the CalSTRS retirement “fund took an enormous hit to its stock portfolio when the market plunged during the heart of the recession, losing nearly $43 billion—roughly 25 percent of its value—from June 2008 to June 2009.”
However, in June 2014, California’s Governor Brown signed Assembly Bill 1469 to stabilize CalSTRS funding in an effort to bridge the nearly $74 billion funding gap that would keep the fund solvent beyond 30 years. Teachers’ Retirement Board Chair Harry Keiley said, “Educators in California do not receive Social Security for their CalSTRS-covered employment and the benefit they earn from years in the classroom serves as the cornerstone of their retirement income. Today’s actions further strengthen the Governor and Legislature’s commitment to uphold the state’s promise of a secure retirement to teachers.”
The vote in the State Senate was 37 – 0, and in the Assembly was 76 – 1. – legislature.ca.gov
Lloyd Lofthouse is a former U.S. Marine and Vietnam Veteran,
who taught in the public schools for thirty years (1975 – 2005).
Lofthouse’s first novel was the award winning historical fiction My Splendid Concubine [3rd edition]. His second novel was the award winning thriller Running with the Enemy. His short story A Night at the “Well of Purity” was named a finalist of the 2007 Chicago Literary Awards. His wife is Anchee Min, the international, best-selling, award winning author of Red Azalea, a New York Times Notable Book of the Year (1992).
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