Sunday, December 6, 2009
Is Arnold Gaming This CalPERS Pension Contribution?
I just read that the Governator wants to pay CalPERS $4.8 billion next year rather than one of the lower and longer-term options CalPERS offered the state.
But is this more or less fiscally responsible than paying one of the lower options this year and more in later years? By paying more now, Arnold puts CalPERS more on the hook for their own promise of 7.75% per long-term-average year. I wager that CalPERS' calculations of the higher payments that the state would have to make later, if it contributed a lower amount next year, are based on that 7.75% assumption. Perhaps Arnold doesn't think the state's tax economy will grow 7.75% per year in the future. I would not predict it either. (Of course, taxes are not a fixed proportion of the economy.)
On the other hand, neither Arnold nor CalPERS have offered any answers to the questions above. How will CalPERS identify and invest in enterprises whose returns will fund retirees' pensions and whose workers will produce directly the most sustainable good and services? Will these enterprises offer 7.75% ROI? I would not predict that either.
But we don't need 7.75%, especially if we are investing in direct production such as properly civilizing and empowering our children. Or investing in ecovillage smart growth.
More immediate relief could come in the form of state retirees stepping up to the plate and en masse agreeing to progressive reductions in benefits, where the smallest pensions were maintained while the largest bore the brunt of an evidence-based sliding scale. Or CalPERS could invest in the state educational system.