CalPERS

Our retired pubic employeers are putting billions of dollars a year back into California with their pensions. The vast scope was unknown until a major study measured the impact in terms of dollars spent and jobs created. SacBee:

California's retired schoolteachers, firefighters and other public employees pack a powerful economic punch in the state economy, surpassing the impact of three major University of California campuses combined, the airlines or the oil and gas industry, according to a new study.

Whether retirees are spending their pension dollars on rent or groceries, the money is fueling the growth of 139,000 new jobs a year with an annual payroll of $4.8 billion, researchers said in an economic impact report to be released today by California's giant public pension funds.

There are 675,000 retirees currently receiving pensions from the Cal-PERS and Cal-STRS programs. The study shows this amounts to an estimated $21 billion in annual economic activity in California, producing a "$1.36 billion boost to state and local tax coffers". The researchers were actually stunned by their results.

I missed this Sac Bee business section article for my earlier post, but it reconfirms what I wrote. Last year was a "banner year for CalPERS" and CalSTRS, with a 15.4% and 16.6% return respectively.

For the fourth straight year, the California Public Employees' Retirement System recorded another double-digit investment return, closing 2006 with a 15.4 percent gain and $230.3 billion in assets.

[snip]

The results were slightly behind the 15.8 percent growth in the Standard & Poor's 500 index but bested the median of 14.34 percent for other public funds with more than $1 billion in assets.

CalPERS exceeded their goals for the year and CalSTRS did even better.

The pension system for California's teachers, firefighters, peace officers and others who serve the public is fundamentally sound, despite what you have been hearing from Arnold. In many ways, this mirrors the battle over Social Security in 2005. You have a Republican politician inventing a "crisis", in an attempt to privatize a secure working system with a risky and untried plan. In this case, they want to hike up the age of retirement and switch people over to inefficient 401k plans. Arnold put together a commission to look at the problem. They held their first meeting yesterday.

Dave Low, a representative of the California School Employees Association, told Fritz that his 58-year-old sister, a schoolteacher for more than 30 years, is fighting cancer and was recently forced to retire to deal with her illness. The proposal Fritz is backing, Low charged, would leave people like her with a reduced pension and no health benefits.

"This hits close to home," he said.

Willie Pelote, a representative of the American Federation of State, County and Municipal Employees, his voice rising and falling like a preacher giving a sermon, followed Fritz to the lectern and told the panel not to mess with the status quo.

"You have a safe, secure system for working people," Pelote said. "There is no crisis."

(emphasis mine)

The Republicans may be blaming retirement costs on budgetary problems, but the reality is that the PERS and STRS systems are fundamentally strong and near full funding. In January the Wall Street Journal said:

After years of steep under-funding, pension plans are now healthy, thanks to several years of double-digit investment gains and rising interest rates.

Arnold doesn't have the greatest track record with administrative appointees. He had the incredible wisdom to appoint now indicted Cunningham co-conspirator Brent Wilkes to a race track commission and board. The governor just gave two positions to personal friends, including the best man at his wedding. The really newsworthy appointments today are not those with criminal ties or nepotism, but huge fiscal conflict of interests. He has recommended two people to study public employee pensions who earn salaries at firms that invest CalPERS money. It is a huge no, no. Chron:

Two appointees tapped by Gov. Arnold Schwarzenegger to study ways to rein in public pension costs receive income from firms that invest $750 million annually for the California Public Employees' Retirement System, business ties that some say could call the panel's independence into doubt.

Gerald Parsky, the former head of the state Republican Party, is a partner in a Los Angeles firm, Aurora Capital Partners, which invests $150 million for CalPERS. Schwarzenegger appointed him chairman of a 12-member commission responsible for recommending ways to overhaul public pension systems, whose future obligations have become an increasing worry for state budget writers and Wall Street.

Commission member Matt Barger is a senior adviser at San Francisco-based Hellman & Friedman, which invests $600 million of the giant pension fund's $230 billion in assets.

These companies and their employees earn money from CalPERS. They have a vested interest in any change to that system, which is what this commission is intended to study and propose.