Remember 2003? Gray Davis was recalled, porn stars ran for governor, Arnold Schwarzenegger catapulted into office – and California’s state and, for the last time in many, many years, local governments paid more into their pension plans than they owed in outstanding pension debt.
In those halcyon days, your cities, state and local governments paid $7 billion to support their workers’ golden years, while the gap between what they owed those workers – and what they actually had squirreled away – was just a wee $6 billion, according to figures from the State Controller’s Office.
One year later – the year Ronald Reagan died, John Kerry faced off against George W. Bush, “The Lord of the Rings: The Return of the King” won 11 Oscars and newly-sweetened public employee retirement formulas kicked in in earnest – the gap between what California governments had on hand what they owed workers exploded to $50.9 billion.
And so it went. Each year, state and local governments shoveled more and more cash into pension funds – $16 billion, $19 billion, $21 billion – but each year, the growth of their “unfunded pension liabilities,” as it’s called in government-speak, continued at a monstrous rate nonetheless – to $64 billion, $128 billion, $241 billion.
Then – hallelujah! – the hole shrank a tad in 2015, dipping to $234 billion.
Did California turn the corner?
Unlikely, experts say. That dip was the work of some stellar years on the stock market – the mammoth California Public Employees’ Retirement System clocked returns of 13.2 percent in 2012-13, and 18.4 percent in 2013-14 – mixed with a brew of overly-optimistic expectations on investment returns and less-than-realistic assumptions on how long retirees will live, among other things, which will soon be sobering up in such a way that the unfunded figures will grow even more.
Even at that lower figure, unfunded liabilities can be viewed as a $6,000 debt for every man, woman and child in the state of California.
Why should you care? Because it’s your pocketbook. If that hole is not filled up with meatier earnings and heftier contributions from public workers and agencies, taxpayers could be called upon to fill it directly.
This is where folks start talking about heady…