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Old 04-17-2010, 10:24 PM
 
Location: Sacramento
14,044 posts, read 27,211,458 times
Reputation: 7373

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Some rather disturbing conclusions:

Adjusting the discount rate used on liabilities to a risk-free rate, we estimate the combined funding shortfall of CalPERS, CalSTRS, and UCRS prior to the 2008/2009 recession at $425.2 billion. At the time of this writing, the funds have not released more recent financial reports, but due to the previously mentioned $109.7 billion loss the threefunds collectively sustained, we estimate the current shortfall at more than half a trillion dollars.

http://siepr.stanford.edu/system/fil...orBroke_pb.pdf


That far exceeds our entire annual budget.
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Old 04-18-2010, 01:01 AM
 
30,895 posts, read 36,943,634 times
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Quote:
Originally Posted by NewToCA View Post
Some rather disturbing conclusions:

Adjusting the discount rate used on liabilities to a risk-free rate, we estimate the combined funding shortfall of CalPERS, CalSTRS, and UCRS prior to the 2008/2009 recession at $425.2 billion. At the time of this writing, the funds have not released more recent financial reports, but due to the previously mentioned $109.7 billion loss the threefunds collectively sustained, we estimate the current shortfall at more than half a trillion dollars.

http://siepr.stanford.edu/system/fil...orBroke_pb.pdf


That far exceeds our entire annual budget.
Problem is, people who have their eyes open already know this & know the pensions could bust the state. People who don't will ignore or minimize this fact.
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Old 04-18-2010, 01:32 AM
 
Location: 38°14′45″N 122°37′53″W
4,156 posts, read 11,008,372 times
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Quote:
Originally Posted by mysticaltyger View Post
Problem is, people who have their eyes open already know this & know the pensions could bust the state. People who don't will ignore or minimize this fact.
Amen.
And the blind citizens (which is pretty much most of them) who think their local government is trying their best to 'help' them by pushing through certain businesses for development and building for the 'community' good, are OBLIVIOUS to the fact that the contracting businesses are invetested into the CALPERS REIT.
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Old 04-18-2010, 01:10 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,304,764 times
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CAlPers has an answer to the Stanford study on their website.

CalPERS Responds to Stanford Policy Brief on Public Pension Funds
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Old 04-18-2010, 08:37 PM
 
Location: Sacramento
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I'll be intested to see if the Stanford staff responds to CalPERS.
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Old 04-18-2010, 08:44 PM
 
Location: SW MO
23,593 posts, read 37,468,022 times
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Originally Posted by NewToCA View Post
I'll be intested to see if the Stanford staff responds to CalPERS.
And selfishly, we're just interested in whether or not, actuarily, we'll out-live our retirement payments.
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Old 04-18-2010, 10:05 PM
 
Location: Sacramento
14,044 posts, read 27,211,458 times
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Originally Posted by Curmudgeon View Post
And selfishly, we're just interested in whether or not, actuarily, we'll out-live our retirement payments.
Based on the CalPERS response, it seems like you'd better be praying for a great stock market the next 20+ years.
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Old 04-19-2010, 02:28 PM
 
1,433 posts, read 2,981,712 times
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Quote:
Originally Posted by mysticaltyger View Post
Problem is, people who have their eyes open already know this & know the pensions could bust the state. People who don't will ignore or minimize this fact.
Along that line I predict an avalanche of municipal bankruptcies in the next 12 - 18 months to bust their pension obligations.

The trigger will be the point when town/city services get so bad they start compromising public safety & other services taken for granted.

Good article here: The Beholden State by Steven Malanga, City Journal Spring 2010
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Old 04-20-2010, 08:33 AM
 
8,673 posts, read 17,277,077 times
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People go crazy whenever the market shifts. Recession was "the new normal" in the early 1990s, then during the dot-com boom everyone criticized CalPERS for not making big fat money in the tech market--then, the problem was that their projections weren't optimistic enough. Anyone who actually manages their retirement portfolio should know that a "low-risk" financial portfolio is also a "low-return" financial portfolio--but that time reduces risk. PERS has maintained a relatively moderate course--not zero risk, but they took a lot smaller hit in the recent crashes than many private portfolio managers. But their critics are now playing Monday morning quarterback and claiming that PERS wasn't risk-averse enough!
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Old 04-20-2010, 03:21 PM
 
Location: Sacramento
14,044 posts, read 27,211,458 times
Reputation: 7373
Quote:
Originally Posted by wburg View Post
People go crazy whenever the market shifts. Recession was "the new normal" in the early 1990s, then during the dot-com boom everyone criticized CalPERS for not making big fat money in the tech market--then, the problem was that their projections weren't optimistic enough. Anyone who actually manages their retirement portfolio should know that a "low-risk" financial portfolio is also a "low-return" financial portfolio--but that time reduces risk. PERS has maintained a relatively moderate course--not zero risk, but they took a lot smaller hit in the recent crashes than many private portfolio managers. But their critics are now playing Monday morning quarterback and claiming that PERS wasn't risk-averse enough!
Easy to understand and agree with this sentiment, when the criticism comes from politicians or pundits.

When Stanford University issues a report, they kind of put their lofty reputation on the line.
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