By Dan Walters The Sacramento Bee
Published: Sunday, Jun. 5, 2011 – 12:00 am | Page 3A

The pensions received by California’s public employees have erupted into a very hot political issue, so hot that it has become one of the key issues in the state budget stalemate.

Scarcely a day passes without some new anecdotal revelation of seeming pension excess, such as quarter- or even half-million-dollar pensions for some retirees, including those who face criminal charges.

In Sacramento, The Bee and others have sued to gain access to specific pension information from the county’s retirement system. A similar battle is under way in San Diego.

A pension reform group is noodling with a 2012 ballot measure, while unions are running a media campaign to oppose big changes.

So it goes, day after day. But all the heated words about specific pensions, or whether public employees are getting too much in relation to those in private employment, miss the real point.

The legitimate pension debate is, or should be, not about what public pensioners are receiving, but whether the pension systems make economic and fiscal sense. That is, are state and local pension trust funds adequately financed to cover benefits that have been promised?

Any changes in benefits, such as shifting from defined benefit plans to 401(k)-style defined contribution plans, or changing who pays what into the funds, should be developed from an objective appraisal of their long-term adequacy, not heated exchanges of anecdotal propaganda.

Certainly there was no thought of long-term consequences in 1999 when the Legislature blithely expanded benefits for state workers, a step that was quickly matched by most local governments. Politicians relied on a brief, self-serving – and false – assurance from the California Public Employees’ Retirement System that new benefits could be covered with no taxpayer funds.

We know that pension costs have risen sharply, largely because of pension fund investment losses, and we know that virtually all major pension funds, state and local, now have hefty “unfunded liabilities.” But we don’t really know how big those shortfalls may be because estimates rely on very disparate projections of future investment earnings.

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