LOL: L.A. Times gives CalPERS credence on pension reform!

I giggled, I really did, when I went to Rough & Tumble on Thursday morning and saw this headline on an L.A. Times story: “CalPERS report undermines Gov. Jerry Brown’s pension overhaul plan.” Michael J. Mishak has only been with the Times a couple of years, but doesn’t he have access to archives? Doesn’t he have editors? Yo, Mike: CalPERS has less credibility on pension issues than Newt Gingrich does on family values. It largely created the crisis in 1999 with a series of lies that would have resulted in prison time if put forth by finance executives in the private sector. Ever since, it’s been trying to cover its tracks. For CalPERS to embrace pension reform now after 13 years of deceit and deception would be the institutional equivalent of waiving its Fifth Amendment rights against self-incrimination.

In 1999, CalPERS persuaded lawmakers that a 50 percent retroactive increase in the formula governing pensions for state employees would cost little if anything — as if CalPERS’ great tech-bubble investment returns in the late 1990s would never end. This started the dominoes falling that led to huge retroactive pension increases at the local level — a catastrophic policy bandwagon that CalPERS directly encouraged.

Ever since then, CalPERS has been running from responsibility for this debacle on several fronts. As the nutty prediction that returns would always be great proved its nuttiness, CalPERS used gimmicks like “smoothing” local government payment obligations over a long time frame to hide the fact that pensions were far more costly than predicted.

As the media picked up on this fiasco, CalPERS turned to juvenile tricks like calling reporters who were skeptical of the agency “anti-pension ideologues” and “vultures” — the terms CalPERS’ top PR person, Pat Macht, used a few years back for a Reuters reporter who dug into and raised questions about CalPERS’ confident investment forecasts.

The juvenile quality of CalPERS’ attitude knew no bounds. In September 2009, on my old blog, I posted an item about CalPERS’ now-former actuary, Ron Seeling, warning that its practices were “unsustainable” — a rare moment of honesty from a top CalPERS official that may have led to its appointing a new actuary.

I also quoted leading pension reformer Marcia Fritz questioning CalPERS’ assertion that the status quo was fine, just fine..

What turned up in the comments? Remarks mocking Fritz as a poorly informed liar — posted by someone whose IP address I confirmed was from a CalPERS computer server.

And in June 2009, as the 10th anniversary of the SB 400 debacle approached, I sought CalPERS’ response repeatedly to how it viewed the fiasco in retrospect. Officials ducked comment for days, before finally grudgingly saying that was for others to judge. Groan. So much for a powerful institution dealing honestly with its history.

The capper came in July 2010, when the inestimable Ed Mendel of dug up evidence that CalPERS knew back in 1999 that it was playing with fire by encouraging a 50 percent retroactive pension spike for state employees. Officials were told by number-crunchers that it could go wrong — disastrously wrong — if investment returns were mediocre. But they kept the information from the Legislature.

Attention, Michael J. Mishak: This sort of behavior would be criminal in the private sector — persuading people to make a multibillion-dollar commitment while hiding adverse facts from them.

On a scale of 0 to 10, with 0 being abjectly stupid, “CalPERS report undermines Gov. Jerry Brown’s pension overhaul plan” is a 0. An accurate newspaperese head would be this: “Despite daunting numbers, CalPERS defends pension status quo.”

My preference would be this: “CalPERS continues dishonest crusade to hide its past perfidy.”


n. pl. per·fi·dies

1. Deliberate breach of faith; calculated violation of trust; treachery:
2. The act or an instance of treachery.

If karma is real, and not just a theory, the people who ran CalPERS in the late 1990s are going to hell.

Perhaps Michael J. Mishak can do some browsing with Nexis so he grasps that this is the case — instead of taking the villains at face value when they comment on their villainy.

One thought on “LOL: L.A. Times gives CalPERS credence on pension reform!

  1. One Calpers actuary beeiveld that the penion plan only had a 50 percent chance of achieving a 7.5 percent return and suggested that a more realistic number should be 7.25 percent, which would place it among the lowest in the country. The only reason these estimates weren’t lowered further were concerns at Calpers about the government’s ability to pay. (Via Meadia)If Calpers can’t achieve an average annual growth rate of 7.5 percent for its portfolio something is seriously wrong with the people managing the pension fund.For the past 20 years, Harvard has managed an annualized growth rate of 13.1 percent; for the past 10 years, in a challenging investment environment, the annualized rate of return for it’s endowment has been 9.4 percent.In October, 2011, Yale reported that the annualized growth rate for its portfolio was 10.1 percent measured over a ten year period.In light of this, an assumption of a 7.5 percent rate of return on Calpers investments seems perfectly reasonable.

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