Now here is a story that SHOULD make your blood boil, especially because for some reason the story “hit” on Christmas Eve.
To sum it up, CALPERS wants NO reduction in the contributions by municipalities into the California public employees’ retirement system — even if it means firing every single policeman, fireman, medic, teacher and other employees just so the local government will keep sending money to CALPERS. This attitude is nothing less than the ultimate expression of parasite philosophy and psychology –I’ll suck the host dry and keep on sucking even if it kills the host and kills me too. But in the meantime, in between time, ain’t we got fun.
Public employees and their unions of course try to make a case that their employers’ contributions into the system are part of the compensation package specified in their employment contract. Who would not want to make that case. The problem is that the generosity in these contracts is second only to the “golden parachutes” in the private sector; public employees get a far better deal than regular private employees could even dream of.
Let’s examine some facts.
Far from ruling that CALPERS or any PERS is FIRST in line to be paid first and must be paid IN FULL before all others, the real issue before the court should be, exactly how is the PERS is fulfilling its fiduciary duties in the management of the funds entrusted to it.
In the specific case of CALPERS, they throw their weight around and spend money to promote a full array of left wing causes, stage shareholder revolts in companies whose management they dislike and want replaced — not for business but for political reasons — and aggressively press for investment decisions to channel corporate money into politically correct projects such as “green” energy, or divesting from Israel. At times CALPERS has been so blatant about their extra-fiduciary activities that they make even Democrats balk. Needless to say, the squawks are especially loud when the political investments don’t pan out, and CALPERS is back making more demands for increased payments to it.
Clearly there should be a law requiring that funds must be managed only according to sound investment principles, not transient political fads, but I am not enough of a lawyer to find the right words to preclude deliberate distortion and misinterpretation.
The validity and the terms of a PERS contract must be re-examined, if the contract resulted from fraudulent collusion between public officials on one side of the negotiating table and a public employees’ union on the other side. These two join forces to rob the one entity NOT represented at the table, the tax payer. The fact that the officials and the unions are on the SAME side results from the raw fact of political contributions, volunteers and other political action undertaken by the union to elect compliant officials. This is especially egregious in a right-to-work state such as Nevada, where the simple rule in the private sector is, and should also be so in the public sector, that you as an employee don’t have to take the job if you don’t like the terms, and you as an employer do not have to offer terms more generous than what people are willing to accept. How ELSE will you as a manager keep costs in check?
Let us recall that the great socialist FDR himself was vehement in his opposition to the very concept of government employee unions, which he skewered with the simple question, against whom would they go out on strike? There is no direct free market in government jobs, so the law should be that a government job pays no more than the regional average for an equivalent job in the private sector. But in fact study after study shows that both the pay and the benefit package for the average government job are 140% of their equivalent in the private sector.
To add insult to injury, defenders of PERS also point out that public employees are not part of Social Security and Medicare. Of course not. From the feds right down to the humblest hamlet, they get a far better deal than us suckers (suckees!) in the private sector.
This one is easy to fix. Either you upgrade the Social Security and Medicare benefits to the same level as what Congress and federal employees get, or enroll everybody without exception, from the President on down, into Social Security and Medicare. If it’s good for the goose, it’s good for the gander.
On top of all that, public employees reserve the right to DOUBLE DIP, which is very difficult if not impossible to do in the private sector. I have not known of a single coworker who would be fully vested in one job, start vesting in another job, and retire with full benefits from both, or collect full benefits from one job and go to work in another one, as is common practice with public “servants.” Also, no salary-based private retirement fund ever pays benefits larger than what your actual take home pay was — that is, gross pay minus the taxes and deductions to which your paycheck was subject when you were working. By contrast, public employees are not subject to this “adjustment” in their retirement benefits, and there are horror stories out there of people retiring with 125% pay.
There are a few ways to fix this. One is to apply the same rule to retired government employees as for private employees under Social Security: your benefits are based on your average salary, not on “vestedness,” no matter how many government jobs with vesting you had. Another one is, retired government employees should not get benefits greater than the average in the private sector, especially when both fully or partially vested retirement payments come from government in general, or as is often the case, the very same jurisdiction. Another one is, after retiring from a government job, you can only go into the private sector for your “retirement” job; no drawing retirement benefits and a salary, both from the (same) government.
The purpose of a PERS is supposedly to manage a fund (“lock box”) that collects contributions, makes investments to grow the fund, and pays out benefits to currently living retirees. However, the blatant action taken by CALPERS to demand continued contributions to support CURRENT retirees reveals it to be just as fraudulent in theoiy and in practice as Al Gore’s Social Security “lock box.” THERE ISN’T ONE AND THERE NEVER WAS ONE, EVER. Every such plan, public or private, is run like a ponzi scheme, or at least as a regular insurance but definitely NOT like an annuity, because collections from current “investors” are used to pay out current benefits. YOU don’t sock away YOUR money to be paid to YOU when YOU need it; it only looks that way, and you don’t know the difference, only as long as current “investors” are able to keep up their payments.
To solve his problem, Congress and the state legislatures have a decision to make. Either they assume that employees are unintelligent, irresponsible and undisciplined wretches who need the nanny state to look after their best interests, and therefore they run the PERS a welfare system, such as Social Security, in which current tax payers support current beneficiaries. Or they assume that employees are intelligent, responsible and disciplined individuals who are fully capable of looking after their best interests, and therefore they should run a PERS like a private annuity or IRA, into which YOU contribute as much as YOU want, and then YOU make withdrawals in whatever amount YOU need for as long as YOU need it in your retirement, based on how much YOU paid into it and how smart YOU and YOUR custodian / investor / fund manager had been with YOUR specific investments. Of course normal people fall somewhere in-between, and I have no doubt that, recognizing that fact, the wise men in our legislatures will devise some strange compromise.
All that still leaves the problem of the unfunded liabilities that any state’s PERS is subject to. The problem is said to be so severe that even an economic recovery and above average growth will not generate the revenues necessary to cover them. Because estimates vary hugely over time and from one jurisdiction to another, the only thing we can say for sure is that we either begin the process of limiting pay-outs as painlessly as possible, or it will be forced on us in a brutal fashion — no more pay-outs to anyone — when the different jurisdictions start going into bankruptcy.
How does any of this apply to Nevada?
Nevada may not be quite as generous or irresponsible as California, but from what I’ve seen so far, we are well on our way to becoming so californicated that pretty soon we might as well merge the two states. The threat to CALPERS and any other PERS is that governments are running out of money; they spend too much at all levels, at rates greater than what tax payers can sustain even for basic essential services. Therefore it is inevitable that the PERS problem is closely tied into the general budget problem. The problem of the unfunded liabilities of PERS can be separated out from the budget by restricting the matching contributions into a PERS to employees who are making contributions (future retirees), but not making any additional contributions on behalf of employees who have stopped contributing (current retirees). That would make the payments into PERS nothing more than a part of the current payroll, which is subject to adjustment as economic conditions change.
But who in the Nevada legislature would dare to submit a bill with the proposals made above, and who is wily, wise and lucky enough to survive the challenge of Democrat demagoguery on such a sensitive issue?
Even if the Nevada legislature had a Republican majority, there are enough RINOs and not enough conservatives in elected office to make PERS reform possible before the whole thing collapses. Like the Bible says, we are reaping what we sowed. Like the Chinese curse says, we are heading into interesting times. God save us — save us from our own stupidity. But because we are in this mess because of our own stupidity, I doubt He will.