Politics, Government & Business in California's Inland Empire
Ed Mendel
May 8, 2017
Long-delayed legislation is more than doubling the CalSTRS rates paid by school districts and the state. But even if the all-important pension fund investment earnings are on target, the huge CalSTRS debt is expected to continue to grow for another decade.
Observations on California and its politics
By Dan Walters
[email protected]
May 02, 2017 - 5:10 PM
Throughout California, local government and school district officials are writing new budgets and confronting rapidly rising costs of pensions.
Business & Real Estate
By Adam Ashton
[email protected]
February 1, 2017 - 5:50 PM
The fund that manages pensions for California teachers on Wednesday voted to lower its investment forecast by half a percentage point, a decision that will have many educators stepping up their payroll contributions for their retirement plans by several hundred dollars a year.
By Ed Mendel
January 30, 3016
The two big state pension funds have been on very different paths since both had large surpluses in 2000. But they will have identical funding levels if CalSTRS, like CalPERS last month, adopts a recommended lower investment earnings forecast this week.
Ed Mendel
November 21, 2016
The state’s two largest public pension systems never recovered from huge investment losses during the deep recession and stock market crash in 2008. CalPERS lost about $100 billion and CalSTRS about $68 billion.
By Dan Walters
[email protected]
September 11, 2016 - 4:00 AM
The “unfunded liabilities” of state and local pension funds are California’s biggest unresolved political issue – at least in financial terms.
By Dan Walters
[email protected]
August 1, 2016 - 6:00 AM
Ron Seeling, the California Public Employees Retirement System’s chief actuary, believed he was speaking to a closed-door seminar in 2009 when he warned that public employee pension costs were becoming “unsustainable.”
By Ed Mendel
July 18, 2016
The two big California public pension funds, CalPERS and CalSTRS, are going opposite ways on a controversial investment strategy, hedge funds, that is under fire from a powerful teachers union.
By Ed Mendel
May 23, 2016
Annual rates paid by employers to CalPERS and CalSTRS are going up, pension funding levels haven’t recovered from a big drop during the recession, and Gov. Brown’s pension reform put a lid on pension increases.
By Ed Mendel
March 28, 2016
Following new accounting rules, the annual state financial report issued this month shows a “net pension liability” of $63.7 billion, a dramatic increase from the $3.2 billion “net pension obligation” reported last year.
.
By Daniel Borenstein
[email protected]
Posted: 02/04/2016 06:00:00 PM PST
Updated: 02/04/2016 09:14:06 PM PST
Two years ago, Gov. Jerry Brown pushed through a 32-year plan to shore up the California State Teachers’ Retirement System.
By Dean Starkman and Melody Petersen
September 2, 2015
The California State Teachers’ Retirement System, the nation’s second-largest public pension system, is considering a new strategy that would shift up to 12% of its $191-billion portfolio into safer investments, such as long-term Treasury bonds.
By Dean Starkman
August 13, 2015
California’s two major public pension funds, the biggest in the nation, lost a total of more than $5 billion on energy-related investments for their fiscal years, ended June 30, according to a new report.
The State Worker
By Jon Ortiz
[email protected]
August 5, 2015
Sacramento — With a new ballot proposal reigniting debate over government retirement benefits, the latest federal figures show California’s public pension debt in 2013 stood at $4,425 for every man, woman and child in the state, despite strong investment returns by public retirement funds.
By Ed Mendel
June 29, 2015
An accounting board best known for requiring the calculation and reporting of the debt owed for retiree health care promised government workers, which often turned out to be shockingly large, is having another moment.
By Dale Kasler
[email protected]
June 8, 2015
Ending a lengthy effort that had frustrated school teachers, CalSTRS has sold its investment in the firearms manufacturer linked to the 2012 massacre at a Connecticut elementary school.
By Ed Mendel
February 2, 2015
A bitter breakup of a well-known Ohio company, Timken, approved by shareholders in a battle led by CalSTRS and one of its investment funds, Relational, has become a case study as activist shareholders try to squeeze more profit from companies.
By Ed Mendel
December 22, 2014
The debt or “unfunded liability” state Controller John Chiang reported last week for state worker retiree health care, $72 billion, is larger than the unfunded liability for state worker pensions reported by CalPERS in April, $50 billion.
By Dan Walters
[email protected]
12/14/2014 12:01 AM
California’s perpetual political debate over public employee pensions usually focuses on the benefits themselves – whether they are fair compensation for those doing the public’s work or, conversely, too generous.
By Marc Lifsher
November 13, 2014
A decade ago, many of California’s public pension plans had plenty of money to pay for workers’ retirements.
Ed Mendel
Monday, November 10, 2014
A new look at how CalSTRS members changed during the last 15 years shows the average teacher working fewer years, retiring at an older age and collecting a pension that grew faster than pay or inflation.
By Ed Mendel
Monday, October 27, 2014
The CalSTRS board was told this month that financial experts are forecasting investment earnings of 7 percent a year or less during the next decade, below the 7.5 percent assumed by the pension fund.
By Ed Mendel
Monday, September 8, 2014
CalSTRS was bracing to report the nation’s biggest pension debt under new government accounting rules that take effect this fiscal year — $167 billion, an amount so huge some thought it might increase the cost of issuing local school bonds.
By TERI SFORZA / STAFF COLUMNIST
Published: Aug. 3, 2014 Updated: 6:20 p.m.
Public investment types may be rubbing their hands together muttering, “money, money, money,” after stellar returns over the past year, but some have a lot more to crow about than others.
By Ed Mendel
July 28, 2014
Bankrupt Detroit announced last week that current workers and retirees voted overwhelmingly to cut many pensions by 4.5 percent and to trim or eliminate cost-of-living adjustments.
By Dale Kasler
[email protected]
Published: Tuesday, Jul. 15, 2014 - 12:00 am
Last Modified: Tuesday, Jul. 15, 2014 - 12:13 am
Continuing to claw their way back from the 2008 market crash, California’s two giant public pension funds said Monday they each earned more than 18 percent on their investments in the just-ended fiscal year.
By Ed Mendel
Monday, July 7, 2014
A bill that started out as Gov. Brown’s proposal to restructure the CalPERS board emerged from the Legislature last week as a more modest change: a requirement that CalPERS board members receive 24 hours of education in pension fund operations.
Chris Megerian
June 28, 2014
When fifth-grade teacher Maggie Ellis receives her next paycheck at the end of the month, it will be a bit lighter. That’s because she’ll be contributing more money to the teacher pension fund, a small part of a sweeping, long-term plan to repair one of the state’s most difficult financial problems.
Capitol Alert
The latest on California politics and government
June 24, 2014
Gov. Jerry Brown signed legislation Tuesday to begin paying down an estimated shortfall of more than $74 billion in the California State Teachers’ Retirement System, acting on the last of a raft of budget-related bills ahead of the July 1 start of the next fiscal year.
By Ed Mendel
Wednesday, June 18, 2014
Full funding of the troubled California State Teachers Retirement System was approved by the Legislature last weekend, with most of the additional $5 billion coming from school districts that get no offsetting money from the state.
Chris Megerian
May 21, 2014
When Gov. Jerry Brown released his plan for repairing California’s troubled teacher retirement system, his calculations assumed the pension fund would see investment returns of 7.5% over the next three decades.
Howard Blume, Chris Megerian
May 20, 2014
California’s public school districts could face difficult cutbacks if state officials move forward with a plan to bail out the retirement fund for teachers, officials and educators say, but even those painful steps may fall short of curing the pension deficit if investments don’t meet expectations.
By Daniel Borenstein, staff columnist
Posted: 05/17/2014 09:00:00 AM PDT
Gov. Jerry Brown last week proposed the first substantive strategy to shore up the state’s woefully underfunded teacher pension plan.
By Ed Mendel
May 14, 2014
Gov. Brown yesterday made a long-delayed proposal to get CalSTRS to full funding over the next three decades, giving the biggest rate hike to schools and smaller increases to the state and teachers.
By Ed Mendel
Monday, April 7, 2014
On a split vote, the CalSTRS board last week gave members in two unusual retirement accounts, which have a guaranteed minimum return, a $300 million credit from a surplus.
By Dale Kasler
[email protected]
Published: Thursday, Apr. 3, 2014 - 11:00 pm
Last Modified: Thursday, Apr. 3, 2014 - 11:12 pm
CalSTRS said Thursday that its long-term funding shortfall has risen to $73.7 billion, a stark reminder of the financial issues facing the teachers’ pension fund.
By Dan Walters
[email protected]
Published: Sunday, Mar. 30, 2014 - 12:00 am
Last Modified: Sunday, Mar. 30, 2014 - 12:11 pm
One of the conceits of Capitol politicians – much on display during this election year – is that they finally balanced the state budget after years of deficits.
By Ed Mendel
March 24, 2014
The total spending increase needed to get CalSTRS, brought low by mismanagement, back to full funding may be the biggest-dollar scenarios ever presented to a California legislative committee.
By Chris Megerian
March 19, 2014, 2:17 p.m.
SACRAMENTO — The longer California’s leaders delay shoring up the cash-strapped teacher pension fund, the more money it will cost taxpayers in the long run, according to an analysis presented to lawmakers on Wednesday.
By Ed Mendel
Monday, February 24, 2014
Getting CalSTRS back to full funding, if rates are steadily increased over the next half dozen years, would take an annual increase reaching more than $5 billion a year by 2020 — about what the state general fund currently spends on UC and CSU combined.
John Myers
KXTV 2:37 p.m. EST February 19, 2014
State legislators are getting a cold dose of reality about California’s ailing pension fund for teachers: find a way to boost contributions by almost $1 billion in 2015 and $5 billion a year soon thereafter… or watch the system collapse by the time current teachers reach retirement.
Article by: FENIT NIRAPPIL , Associated Press
Updated: February 16, 2014 - 10:50 AM
SACRAMENTO, Calif. — A rift between Gov. Jerry Brown and the board overseeing the nation’s largest public pension fund over rising liabilities tied to longer retiree life expectancies highlights a concern about how decisions are made at an agency with tremendous influence over state finances.
By Daniel Borenstein, Staff Columnist
Posted: 02/07/2014 12:00:00 PM PST
Updated: 02/09/2014 08:10:25 AM PST
Kudos to Gov. Jerry Brown for demanding last week that CalPERS stop kicking pension debt further down the road. Too bad he hasn’t applied the same standard to the CalSTRS shortfall.
By Ed Mendel
Thursday, February 6, 2014
Gov. Brown yesterday urged CalPERS to speed up a $1.2 billion rate increase needed because workers are living longer. Assembly Speaker John Perez said last week he wants to speed up a $4.5 billion CalSTRS rate hike plan, acting this year not next year as the governor suggested.
Capitol Alert
The latest on California politics and government
January 29, 2014
With California facing a massive teacher pension shortfall, Assembly Speaker John A. Pérez, D-Los Angeles, unveiled an effort Wednesday he hopes would fully fund the system.
By Dale Kasler
[email protected]
Published: Thursday, Jan. 16, 2014 - 6:42 pm
CalSTRS said Thursday it earned a hefty 19.1 percent return on its investments in 2013 but repeated its plea for funding assistance from the Legislature.
By Dale Kasler
[email protected]
Published: Monday, Jan. 13, 2014 - 11:35 pm
CalPERS reported its best annual investment gains in a decade Monday, a development that could alter the political climate as another fight looms over pension reform.
By Don Thompson, Associated Press
Posted: 01/12/2014 02:41:40 PM PST
Updated: 01/13/2014 06:09:14 AM PST
SACRAMENTO — In Gov. Jerry Brown’s promise to start paying off California’s massive liabilities, the largest single unfunded debt will not be seeing any additional pay-down in the coming fiscal year.
By Ed Mendel
Monday, January 13, 2014
A new state budget Gov. Brown proposed last week does not have a long-sought rate hike for CalSTRS, which is projected to run out of money in three decades. But the budget does call for talks with teachers, schools and others to work out a rate-hike plan.
The Associated Press
Published: Saturday, Dec. 14, 2013 - 8:37 pm
LOS ANGELES — California Treasurer Bill Lockyer is warning that the state teacher retirement system is rapidly running out of money.
By Dan Walters
[email protected]
Published: Sunday, Dec. 15, 2013 - 12:00 am
Assembly Speaker John A. Pérez summoned reporters to the Capitol last week to unveil what he called a “blueprint for a responsible budget.”
Capitol Alert
The latest on California politics and government
November 19, 2013
California’s retirement funds for teachers and state employees will receive nearly $300 million from a sweeping settlement between the Justice Department and financial titan JPMorgan.
By Ed Mendel
Monday, September 16, 2013
New government accounting rules will more than double the pension debt reported by CalSTRS, boosting an “unfunded liability” that is now about $71 billion to a newly calculated “Net Pension Liability” of $166.9 billion.
By Ed Mendel
Monday, August 26, 2013
CalPERS is not investing enough money through minority-owned firms, two trade associations and several money managers say, and some want a legislative audit of “unfair” decisions, particularly for lucrative private equity funds.
Sunday, July 21, 2013 - 11:00 a.m.
Here’s some news flowing across the transom last week. In cased you missed it!
Detroit files bankruptcy
Yes, this time it’s Detriot. That’s a city located in the state of Michigan. For those that didn’t know!
By Dale Kasler
[email protected]
Published: Sunday, May. 26, 2013 - 12:00 am | Page 1D
CalSTRS has been making waves on Wall Street lately, taking a more aggressive stance with corporations while grabbing a bit of the spotlight from its big brother CalPERS.
By Dan Walters
[email protected]
Published: Sunday, May. 12, 2013 - 12:00 am | Page 3A
Last Modified: Sunday, May. 12, 2013 - 7:33 am
There’s absolutely nothing wrong, per se, with incurring debt, whether it’s by families, businesses or governments. A functional credit market is absolutely vital to a modern economy.
By Dan Walters
[email protected]
Published: Sunday, Apr. 28, 2013 - 12:00 am | Page 3A
Last Modified: Sunday, Apr. 28, 2013 - 7:25 am
David Crane, a businessman who advised former Gov. Arnold Schwarzenegger on financial matters – particularly long-term public pension deficits – recently wrote an I-told-you-so piece for the Bloomberg news service about the State Teachers Retirement System.
By Ed Mendel
Monday, April 15, 2013
If not for pension and benefit increases as the stock market boomed more than a decade ago, CalSTRS would be one of the nation’s best-funded large retirement systems with 88 percent of the assets needed to pay promised pensions.
By Dale Kasler
[email protected]
Published: Thursday, Mar. 21, 2013 - 12:00 am
Last Modified: Thursday, Mar. 21, 2013 - 7:48 am
Lawmakers began confronting a multibillion-dollar budget headache Wednesday that’s been looming for years: the funding gap at the state teachers’ pension fund.
By Ed Mendel
Monday, March 11, 2013
A nationwide study, including CalPERS and CalSTRS, projects that huge pension fund losses during the financial crisis will be offset over three decades by a wave of recently enacted cost-cutting reforms — but only if several things happen.
By Ed Mendel | 02/18/13 12:00 AM PST
Some still have hard feelings about what happened when CalSTRS, now deep in the red, had a brief funding surplus more than a decade ago: Teacher and state payments into the fund were cut, and retirement benefits were raised.
By Daniel Borenstein, Staff columnist
Posted: 02/08/2013 12:00:00 PM PST
Updated: 02/09/2013 05:49:07 PM PST
Gov. Jerry Brown’s claim that he balanced his proposed 2013-14 budget ignores that he’s driving the state teacher pension system deeper into debt by shortchanging it at least $4.5 billion.
By Dale Kasler
[email protected]
Published: Saturday, Feb. 9, 2013 - 12:00 am | Page 6B
CalSTRS reported higher investment returns this week, but the teachers’ pension system continues to grapple with an enormous long-term funding shortfall.
Capitol Alert
The latest on California politics and government
February 4, 2013
The trust fund that provides pensions to retired teachers has a $64 billion deficit and would need a $4.5 billion per year infusion of revenue to become fully solvent, according to a new internal study.
By Ed Mendel
Monday, Fenruary 4, 2013
A new report says CalSTRS needs $4.5 billion more a year to fully fund pensions over the next three decades, a 75 percent increase in the $6 billion total annual payments now being made by teachers, school districts and the state.
By Jon Ortiz
[email protected]
Published: Thursday, Dec. 20, 2012 - 12:00 am | Page 3A
We expect government transparency. Wall Street loves the backroom deal.
On ever-shifting ground between them you’ll find public pension funds, unique government organs that pump hundreds of billions of taxpayer dollars into private investments.
PolitiCal
On politics in the Golden State
December 17, 2012 | 4:58 pm
BushmasterAn investment made by the California teachers pension fund is coming under scrutiny because of its link to the manufacturer of the assault rifle used in the Connecticut elementary school massacre.
By Ed Mendel
Monday, September 17, 2012
What CalSTRS regards as its “most significant reform issue” was not in the pension reform bill signed by Gov. Brown last week. But a long-sought first step toward closing a huge gap in the teachers’ pension fund is in a companion measure.
By Ed Mendel
Thursday, August 31, 2012
A pension reform plan worked out by Gov. Brown and Democratic legislators could save state and local government employers $40 billion to $60 billion over the next 30 years.
The preliminary CalPERS estimate, which will be refined before the Legislature votes on the plan Friday, expects most savings to come from two cost-cutting strategies used in labor negotiations: lower benefits for new hires and higher employee contributions.
By Ed Mendel
Monday, August 13, 2012
If the Legislature attempts pension reform this month, one of the targets may be “air time,” a decade-old policy that allows CalPERS and CalSTRS members to boost their pensions by buying up to five years of additional service credit.
By Ed Mendel
Monday, July 30, 2012
The IRS is taking a new look at whether public pension systems qualify for tax deferrals, raising questions about nonprofit charter schools in CalSTRS and county systems using “excess” earnings to fund retiree health care.
Taxes on employer-employee contributions to pension systems and their investment earnings can be avoided until retirees are paid. But if the rules are not followed, the IRS can change the tax status and impose fines and penalties.
By Marc Lifsher, Los Angeles Times
July 17, 2012, 7:00 p.m.
SACRAMENTO — Corporate and public pension funds across the country are seriously underfunded, threatening the retirement security of workers and straining the financial health of state and local governments, according to a pair of independent studies.
In 2011, company pensions and related benefits were underfunded by an estimated $578 billion, meaning they only had 70.5% of the money needed to meet retirement obligations, according to a report by S&P Dow Jones Indices.
By Ed Mendel
Monday, May 29, 2012
New public pension accounting rules scheduled to be issued next month, once expected by some to reveal massive hidden debt, now seem less likely to trigger a shake-up and are even getting applause from pension officials.
Under the new rules, experts say, most California pension systems will make little if any use of a lower “risk-free” government bond-based earnings forecast, currently about 4 percent, that causes debt to soar.
By Ed Mendel
Monday, April 30, 2012
Stockton has enrolled three mayors and 14 city council members in CalPERS since 1991, despite a provision in the city charter that clearly states no council member shall receive retirement or death benefits, the Stockton Record reported last week.
The discovery of $276,954 in unlawful city pension contributions comes as Stockton is in the national media spotlight during a last-ditch attempt to avoid bankruptcy, mainly by getting unions to agree to cuts in retirement and other costs.
By Ed Mendel
Monday, April 23, 2012
An annual look at CalSTRS, the nation’s second largest public pension system, once again raises the question of whether there is an urgent need to begin putting more money into the pension fund.
By Ed Mendel
Thursday, March 29, 2012
After a decade of similar below-target investment earnings, punctuated by huge losses during the stock market crash in 2008, the nation’s two largest public pension funds are looking at different futures.
The California Public Employees Retirement System, putting a new focus on risk, worries about another recession dropping pension funding levels to 40 percent or below, a “warning track” zone that could make it difficult to get back to full funding in the future.
By Dale Kasler
[email protected]
Published: Friday, Feb. 3, 2012 - 12:00 am | Page 6B
By lowering its investment forecast by another quarter point, CalSTRS made a bow toward economic reality – but also may have complicated efforts to shore up its finances.
The teachers’ retirement board agreed Thursday to reduce CalSTRS’ official investment forecast to 7.5 percent, down from 7.75 percent. It was the second cut in 14 months, after the $144 billion fund left the forecast untouched for 15 years.
In a volatile investment climate, following a year in which CalSTRS’ portfolio earned just 2.3 percent, board members took their consultants’ advice and went with the lower number.
“I think it’s best that we be conservative,” said Terry McGuire, representing board member and state Controller John Chiang.
The board of the California State Teachers’ Retirement System voted 9-1 to reduce the forecast. The lone dissent came from Pedro Reyes of the Department of Finance. The higher forecast “is not unreasonable,” he argued. “Let’s stay where we are right now, (and) visit this in another year.”
By cutting investment projections, the board instantly ballooned CalSTRS’ funding gap – the estimated shortfall of assets available to meet the pension fund’s long-term needs. The gap will grow by nearly $6 billion, or roughly 10 percent.
That could create problems in the Legislature, which must OK changes in how CalSTRS is funded.
CalSTRS gets around $5.6 billion a year from the state, school districts and teachers. The pension fund had already calculated that it needed another $4 billion a year to eventually get healthy. With the lower investment forecast, those needs grow by another $500 million a year.
While CalSTRS is pushing for more money, many Republicans want to erase funding shortfalls for public pensions by reducing benefits. Democratic Gov. Jerry Brown wants to give newly hired employees a combination traditional pension and a 401(k)-style program.
Read more here: http://www.sacbee.com/2012/02/03/4235828/calstrs-gap-rises-as-return-forecast.html#mi_rss=Business#storylink=cpy
By Jon Ortiz
[email protected]
Published: Friday, Feb. 3, 2012 - 12:00 am | Page 3A
Gov. Jerry Brown laid out a detailed plan to alter California’s state and local public retirement systems on Thursday – and immediately drew fire from his core labor constituency.
By Dale Kasler
[email protected]
Published: Wednesday, Feb. 1, 2012 - 12:00 am | Page 6B
CalSTRS is thinking of cutting its investment forecast for the second time in barely a year, a move that acknowledges the increased financial strain on the pension fund.
The teachers’ retirement board on Thursday will consider a recommendation from its actuarial consultant to cut the forecast by a quarter point, to 7.5 percent.
Monday, January 30, 2012
By Ed Mendel
The nation’s two largest public pension funds last week reported slim annual investment earnings, CalPERS 1.1 percent and CalSTRS 2.3 percent, as experts continue to say hitting their long-term earnings target, 7.75 percent, will be difficult.
While CalPERS reported weak earnings in 2011, a prominent private-sector investment manager, Robert Arnott of Research Affiliates, told the board last week he thinks the most they can expect from stocks and bonds next decade is 4 percent.
By Ed Mendel
Monday,January 16, 2012
Mitt Romney’s presidential campaign is putting the spotlight on private equity, which public pension funds such as CalPERS and CalSTRS helped flourish and now need for better-than-average earnings.
Romney became wealthy while leading Bain Capital, a private equity firm he said created “tens of thousands of jobs” by buying and then selling troubled or stagnant companies after making them efficient, better managed and able to grow and prosper.
The State Worker
Chronicling civil-service life for California state workers
December 13, 2011
California’s three largest pension systems have promised $500 billion beyond their current ability to make those payments to retirees, according to a study released to today by Stanford University Professor and former Democratic Assemblyman Joe Nation and a student researcher.
The Stanford Institute for Economic Policy Research issued the report, documenting what it claims is the state’s deepening pension crisis. California Common Sense, an organization dedicated to engaging the public in “data-driven discourse” is also behind the report.
November 30, 2011 | 4:57 pm
Gov. Jerry Brown’s proposal to overhaul public pensions in California may face legal hurdles and create some new costs, according to officials with the state’s two largest public retirement systems.
Thursday, December 1, 1011
By Ed Mendel
Gov. Brown yesterday appointed two CalSTRS board members with decades of experience in law and financial firms, a first step toward an ambitious pension reform plan he issued in October to end abuses and cut costs.