In California, the greedy, union-benefits outfit working for public employees, called Calpers, is treated with kid gloves in both law and in practice. Law says that when municipalities file for bankruptcy, Calpers must be paid even if the benefits paid to Calpers are causing the bankruptcy. Police can be fired, private vendors stiffed, teachers laid off, investors in public debt can get zero pennies on the dollar, but union benefits must be paid.
The city of San Bernardino however is challenging union dominance over their balance sheet. The city is $5 million behind in pension payments, “the city simply says it's broke,” reports the San Francisco Chronicle. But “San Bernardino is treating CalPERS like any other creditor that's not getting paid.”
Of course the Chronicle is livid over union benefits being treated “like any other creditor that's not getting paid.”
“We urge San Bernardino to come to a solution with CalPERS that doesn't involve shorting the fund and its own retirees - or dumping its burdens on California's other taxpayers,” says the Chronicle.
But that’s exactly what Calpers already does.
Calpers is under-funded by anywhere from 55 percent to 75 percent in large part because Calpers uses math that would land private pension managers in jail. Calpers uses annualized growth rates of 7.5 percent when in fact the pension system only returned one percent last year. A 30-year Treasury right now only returns 2.79 percent. Last year the stock market returned zero percent and this year is up about 5 percent.
And really, under the law, a private pension manager would go to jail for using a 7.5 percent assumption to manage their pension fund.
That’s because someone will have to pay the difference between the assumption and the real rate of return. In both the Calpers and the private cases it will be the taxpayers who will pick up the tab.
Why should the city have to lay off workers because previously-elected officials entered into unsustainable retirement programs with unions who bankrolled their candidacies? Or because unions don’t have to use generally accepted accounting practices?
Cities -and states- shouldn’t have to choose between public safety and other necessities so that liberal council members and legislators can have an adequate supply of yard signs and bumpers stickers during an election year.
And taxpayers shouldn’t have to bailout union bad behavior again, just because they bought the Democrats with cash, credit and corruption.