more bad news from California

[audrey_girl]

fyi (LA Times):

http://www.latimes.com/business/la-f...,3667497.story

Reporting from Sacramento —

California's biggest public pension fund is likely to give California taxpayers an extra $700-million bill Wednesday to meet future obligations for retirees, whose benefits have been threatened by steep investment losses.

The anticipated request by the board of the California Public Employees' Retirement System follows a $115-million investment loss in the 2008-09 fiscal year. And it would deepen a $19-billion hole in Gov. Arnold Schwarzenegger's budget for the fiscal year that begins July 1.

[cjppjc]

Re: more bad news from California

Wan't the guy who ran that fund going to double down on the market and reap the rewards?

[reggie]

Re: more bad news from California

fyi (LA Times):

http://www.latimes.com/business/la-f...,3667497.story

Reporting from Sacramento —

California's biggest public pension fund is likely to give California taxpayers an extra $700-million bill Wednesday to meet future obligations for retirees, whose benefits have been threatened by steep investment losses.

The anticipated request by the board of the California Public Employees' Retirement System follows a $115-million investment loss in the 2008-09 fiscal year. And it would deepen a $19-billion hole in Gov. Arnold Schwarzenegger's budget for the fiscal year that begins July 1.

First, see:

Comprehensive Annual Financial Report
Provides comprehensive information on all CalPERS programs and benefits, including investment information, for the fiscal year ended June 30, 2009.

Then, read this article:

State’s pensions aren’t massively underfunded, CalPERS says
April 13th, 2010, 10:00 am
posted by Teri Sforza, Register staff writer

We told you last week about the Stanford University analysis saying that the amount of money California will owe its public retirees – but won’t have – is nearly eight times the official number – or more than $425 billion.

“Why should Californians care?” asked David Crane, special advisor to Gov. Arnold Schwarzenegger, in the Los Angeles Times. “Because this year’s unfunded pension liability is next year’s budget cut to important programs.”

Well, the California Public Employees Retirement System fired back, saying the Stanford study is deeply flawed and “relies on outdated data and methodologies out of sync with governmental accounting rules and actuarial standards of practice.”
Specifically, the Stanford study relied on data from when CalPERS’ assets were down $45 billion, and it used current interest rates in its calculations, which are at historical lows “and make liabilities appear to be much higher.” CalPERS said. “That method is inconsistent with the Governmental Accounting Standards Board and current actuarial standards.”

It’s awesome when accountant-types get into a fight. For CalPERS full statement on the Stanford report, click above or read below.

CalPERS Response to Stanford Policy Brief on Public Pension Funds

Stanford’s Institute for Economic Policy Research released a policy brief “Going For Broke: Reforming California’s Public Employee Pension Systems” that relies on outdated data and methodologies out of sync with governmental accounting rules and actuarial standards of practice. The report fails to take the following into account:

Investments

• Over the past 20 years, we have earned an average annual investment return of 7.9 percent – which includes the past two years when we suffered significant investment losses due to the Great Recession. Thus, our assumptions, from actual experience, have proven valid, relative to the 7.75 percent discount rate.
• The study appears to use the yield of the 10-year Treasury bond as the risk-free discount rate to estimate the present value of liabilities. The duration of the 10-year bond is around 8 years and well below the estimated duration of the CalPERS liability in the study. It would be more appropriate to use the yield of the 30-year Treasury bond as the risk-free discount rate for purposes of such a comparison.
• CalPERS does not believe that using a risk-free rate as suggested in the study is appropriate since the fund can earn a premium over the risk-free rate with high certainty by investing in a diversified portfolio with an acceptable level of risk.
• The study relies on data when the system had $45 billion less in assets than it has today. CalPERS assets are valued at $206 billion – a gain of more than $45 billion since the market downturn.
• Additionally, its findings are based on a mathematical model that uses current interest rates, which are very low and make liabilities appear to be much higher. That method is inconsistent with the Governmental Accounting Standards Board and current actuarial standards.
• The study recommendations are based on bond returns over the past 25 years of 7.25 percent for investment grade corporate bonds, which are only 0.66 percent lower than CalPERS total return of 7.91 percent but with much lower volatility. CalPERS experts believe that this reasoning is flawed. Prospective returns on bonds are much lower today since yields are at an historic low and the return to bonds will equal the current yield to maturity which is around 4 percent for most broad band indices. Also bonds could be more volatile than the past if economic conditions are more uncertain as in the recent period.
• CalPERS is taking steps to modify its asset allocation approach and better allocate assets according to their macro risks and fundamental characteristics. This could result in addressing inflation and interest rates as macro risks.
• It ignores our diversified investment portfolio that has been time-tested during our 78 year history. If CalPERS had followed the recommended approach in the study, we would have given up billions of investment earnings, that have helped finance pensions rather than tax dollars.

Actuarial/Benefit Formula Related

• The study misstated some of the benefit formulas in Table 3 and seems to suggest that CalPERS violate the California Constitution by using surpluses to “reduce state debt.” Pension raids were determined to be unlawful during the Wilson Administration.
• To adhere to some of the changes suggested in the report, CalPERS would be violating actuarial standards of practice and undo 50 years of governmental accounting rules in favor of an approach that would be “zero” risk.
• Funded status should not be viewed as a long-term irreversible trend. A pension fund’s funded status – whether a liability or surplus – is constantly changing, depending on current economic circumstances. It is a snapshot in time that can change dramatically over a fairly short period of time due to the health of the overall economy. Funded status snapshots are useful in showing how far or how near one is to full funding. Experts agree that a funded status of 80 percent is the mark of a very healthy plan. CalPERS notes that the Stanford Report acknowledges that using the data selected, CalPERS was more than 80 percent funded.
• Benefit formulas are not set by CalPERS. They are determined through the collective bargaining process, between the employer and the employee representatives. CalPERS recently held the California Retirement Dialogue, and information on the various viewpoints on benefit formulas is available here.

Future Steps

• CalPERS regularly evaluates its assumed rate of return every three years. At our May investment committee meeting, the Board will hold a workshop on capital market assumptions, finalize those assumptions in September, hold an asset-liability workshop in November, and take final action on an asset mix in December. In February, the Board will take the final step in the process by setting the actuarial assumed rate of return/discount rate. These meetings are open to the public and CalPERS is committed to obtaining all viewpoints on these issues. We invite the authors of the study to participate in the discussions.

[c1ue]

Re: more bad news from California

So what are you trying to say, reggie? That CALPERS doesn't have a problem, therefore the $700M bill is presenting is mostly for stamps and paying the power bill?

The actual CALPERS performance since 2002:

CALPERS track record.jpg

In 2009, CALPERS did better:

http://articles.latimes.com/2010/jan...rs20-2010jan20

Reporting from Sacramento — Heavy losses in real estate holdings battered 2009 investment returns at California's giant public pension fund, although the portfolio overall rose in value for the year.

The California Public Employees' Retirement System earned an 11.8% return on its portfolio as global stock markets recovered from the collapse of 2008, the fund said Tuesday. The portfolio had dived 27.1% in 2008.

---

FOR THE RECORD:
CalPERS investments: An article in Wednesday's Business section about the 2009 investment performance of the California Public Employees' Retirement System said the pension fund's internal benchmark for its private equity portfolio was 45.2% for the first nine months of the year, and that CalPERS' return was drastically below that at minus 6%. CalPERS said Friday that it had misstated its benchmark, which was actually minus 4%. —

Then there's the idiocy of this statement:

Over the past 20 years, we have earned an average annual investment return of 7.9 percent – which includes the past two years when we suffered significant investment losses due to the Great Recession. Thus, our assumptions, from actual experience, have proven valid, relative to the 7.75 percent discount rate.

Uh, what is the actual average risk free interest rate in that period?

1 month CD Rates via Economagic:

http://www.economagic.com/em-cgi/data.exe/fedbog/cd1m

			$100.00
1980 01 3513.26		13.26	$101.11
1980 02 4613·93		13.93	$102.29
1980 03 6516.81		16.81	$103.73
1980 04 916.23		16.23	$105.15
1980 05 429.77		9.77	$106.01
1980 06 48.53		8.53	$106.76
1980 07 738.59		8.59	$107.53
1980 08 469.62		9.62	$108.39
1980 09 4610.89		10.89	$109.38
1980 10 5412·69		12.69	$110.54
1980 11 7115.39		15.39	$111.97
1980 12 9619.24		19.24	$113.78
1981 01 3617.99		17.99	$115.50
1981 02 4216.11		16.11	$117.06
1981 03 5814·33		14.33	$118.47
1981 04 1514.92		14.92	$119.95
1981 05 2818·16		18.16	$121.78
1981 06 3817·55		17.55	$123.57
1981 07 6417.98		17.98	$125.43
1981 08 8717.91		17.91	$127.32
1981 09 6116·31		16.31	$129.06
1981 10 3914.97		14.97	$130.68
1981 11 3912·45		12.45	$132.04
1981 12 2112·27		12.27	$133.40
1982 01 9813.03		13.03	$134.86
1982 02 6514·78		14.78	$136.53
1982 03 6114·12		14.12	$138.14
1982 04 5014.44		14.44	$139.82
1982 05 2913.95		13.95	$141.45
1982 06 6114·18		14.18	$143.13
1982 07 3112·88		12.88	$144.68
1982 08 3210.07		10.07	$145.89
1982 09 7010·23		10.23	$147.14
1982 10 999·36		9.36	$148.30
1982 11 768·82		8.82	$149.39
1982 12 498.64		8.64	$150.47
1983 01 588.28		8.28	$151.51
1983 02 738·40		8.4	$152.57
1983 03 498.62		8.62	$153.67
1983 04 118.60		8.6	$154.78
1983 05 608·44		8.44	$155.87
1983 06 69.06		9.06	$157.05
1983 07 279·30		9.3	$158.27
1983 08 519.52		9.52	$159.54
1983 09 649.28		9.28	$160.77
1983 10 429·11		9.11	$162.00
1983 11 109.22		9.22	$163.25
1983 12 269·67		9.67	$164.57
1984 01 849·33		9.33	$165.85
1984 02 529·43		9.43	$167.16
1984 03 279.91		9.91	$168.55
1984 04 2010.24		10.24	$169.99
1984 05 6010.62		10.62	$171.50
1984 06 3211.01		11.01	$173.08
1984 07 2911·28		11.28	$174.72
1984 08 4111.32		11.32	$176.37
1984 09 5711·20		11.2	$178.03
1984 10 310·18		10.18	$179.54
1984 11 949.09		9.09	$180.91
1984 12 238.47		8.47	$182.19
1985 01 648.05		8.05	$183.42
1985 02 108.50		8.5	$184.72
1985 03 228·73		8.73	$186.07
1985 04 238.35		8.35	$187.37
1985 05 967.83		7.83	$188.59
1985 06 237·38		7.38	$189.76
1985 07 427·58		7.58	$190.96
1985 08 247.76		7.76	$192.20
1985 09 917·88		7.88	$193.46
1985 10 407·85		7.85	$194.73
1985 11 47.82		7.82	$196.01
1985 12 367.87		7.87	$197.30
1986 01 157.83		7.83	$198.59
1986 02 807.69		7.69	$199.86
1986 03 877·33		7.33	$201.09
1986 04 916.73		6.73	$202.22
1986 05 576·68		6.68	$203.35
1986 06 896·79		6.79	$204.50
1986 07 916·43		6.43	$205.60
1986 08 475·97		5.97	$206.63
1986 09 315.73		5.73	$207.61
1986 10 385·71		5.71	$208.60
1986 11 445·80		5.8	$209.62
1986 12 876.66		6.66	$210.78
1987 01 765·94		5.94	$211.83
1987 02 226·10		6.1	$212.91
1987 03 986·18		6.18	$214.01
1987 04 216.42		6.42	$215.15
1987 05 586·81		6.81	$216.38
1987 06 636.84		6.84	$217.62
1987 07 306·60		6.6	$218.82
1987 08 806·63		6.63	$220.03
1987 09 667·25		7.25	$221.36
1987 10 57·39		7.39	$222.73
1987 11 426.80		6.8	$223.99
1987 12 237·86		7.86	$225.47
1988 01 136.78		6.78	$226.74
1988 02 216·55		6.55	$227.98
1988 03 606·56		6.56	$229.23
1988 04 346.80		6.8	$230.54
1988 05 407.04		7.04	$231.89
1988 06 47·41		7.41	$233.33
1988 07 377·73		7.73	$234.84
1988 08 218.08		8.08	$236.42
1988 09 118·12		8.12	$238.03
1988 10 768·15		8.15	$239.65
1988 11 508·43		8.43	$241.34
1988 12 169·37		9.37	$243.23
1989 01 169·06		9.06	$245.07
1989 02 849·33		9.33	$246.99
1989 03 09·91		9.91	$249.03
1989 04 789.81		9.81	$251.08
1989 05 689·61		9.61	$253.10
1989 06 969.35		9.35	$255.08
1989 07 158.96		8.96	$256.99
1989 08 908.77		8.77	$258.87
1989 09 88·83		8.83	$260.78
1989 10 108.62		8.62	$262.66
1989 11 468·44		8.44	$264.52
1989 12 608.65		8.65	$266.43
1990 01 08.17		8.17	$268.25
1990 02 458.19		8.19	$270.09
1990 03 708.30		8.3	$271.96
1990 04 228.32		8.32	$273.85
1990 05 338·25		8.25	$275.74
1990 06 498·20		8.2	$277.63
1990 07 908.09		8.09	$279.51
1990 08 347·98		7.98	$281.38
1990 09 218.08		8.08	$283.28
1990 10 908.03		8.03	$285.18
1990 11 327·92		7.92	$287.07
1990 12 798.27		8.27	$289.05
1991 01 57.10		7.1	$290.77
1991 02 656.45		6.45	$292.33
1991 03 496.47		6.47	$293.91
1991 04 656·03		6.03	$295.39
1991 05 495·86		5.86	$296.84
1991 06 956.00		6	$298.33
1991 07 165.92		5.92	$299.80
1991 08 255·64		5.64	$301.22
1991 09 415·47		5.47	$302.59
1991 10 255·23		5.23	$303.91
1991 11 374·86		4.88	$305.15
1991 12 184·84		4.84	$306.39
1992 01 974.07		4.07	$307.43
1992 02 274·05		4.05	$308.47
1992 03 384·23		4.23	$309.55
1992 04 273.97		3.97	$310.58
1992 05 563.79		3.79	$311.56
1992 06 953.83		3.83	$312.56
1992 07 723.35		3.35	$313.43
1992 08 593.29		3.29	$314.29
1992 09 833.14		3.14	$315.12
1992 10 503·11		3.11	$315.93
1992 11 143·23		3.23	$316.79
1992 12 493·57		3.57	$317.73
1993 01 663.14		3.14	$318.56
1993 02 393·08		3.08	$319.38
1993 03 673.10		3.1	$320.21
1993 04 543·08		3.08	$321.03
1993 05 213·07		3.07	$321.85
1993 06 323·13		3.13	$322.69
1993 07 583.10		3.1	$323.53
1993 08 583.09		3.09	$324.36
1993 09 863.09		3.09	$325.20
1993 10 243.09		3.09	$326.04
1993 11 393·11		3.11	$326.88
1993 12 693.26		3.26	$327.77
1994 01 273·08		3.08	$328.61
1994 02 363.31		3.31	$329.52
1994 03 873.56		3.56	$330.50
1994 04 193.75		3.75	$331.53
1994 05 324.23		4.23	$332.71
1994 06 144.30		4.3	$333.90
1994 07 34·45		4.45	$335.14
1994 08 684·60		4.6	$336.43
1994 09 174·85		4.85	$337.79
1994 10 294.98		4.98	$339.19
1994 11 165·38		5.38	$340.72
1994 12 986.01		6.01	$342.43
1995 01 205·84		5.84	$344.10
1995 02 776·01		6.01	$345.83
1995 03 766.02		6.02	$347.57
1995 04 186·01		6.01	$349.31
1995 05 105·98		5.98	$351.06
1995 06 775.97		5.97	$352.81
1995 07 995.80		5.8	$354.52
1995 08 485.77		5.77	$356.22
1995 09 415.74		5.74	$357.93
1995 10 375.75		5.75	$359.65
1995 11 575.75		5.75	$361.38
1995 12 305.75		5.75	$363.11
1996 01 615.47		5.47	$364.77
1996 02 285·23		5.23	$366.37
1996 03 35·31		5.31	$367.99
1996 04 965.34		5.34	$369.63
1996 05 255.32		5.32	$371.27
1996 06 125.37		5.37	$372.94
1996 07 55.37		5.37	$374.61
1996 08 205·32		5.32	$376.28
1996 09 135.38		5.38	$377.97
1996 10 765.28		5.28	$379.63
1996 11 565.30		5.3	$381.31
1996 12 15.50		5.5	$383.06
1997 01 305.35		5.35	$384.78
1997 02 305.31		5.31	$386.48
1997 03 735·44		5.44	$388.24
1997 04 635.57		5.57	$390.04
1997 05 75.58		5.58	$391.86
1997 06 115·57		5.57	$393.69
1997 07 985.54		5.54	$395.51
1997 08 545.54		5.54	$397.34
1997 09 985.56		5.56	$399.18
1997 10 815·55		5.55	$401.03
1997 11 05.61		5.61	$402.91
1997 12 485·88		5.88	$404.89
1998 01 845.53		5.53	$406.76
1998 02 255·53		5.53	$408.64
1998 03 705.58		5.58	$410.54
1998 04 455.56		5.56	$412.45
1998 05 695·56		5.56	$414.37
1998 06 555·57		5.57	$416.29
1998 07 275·57		5.57	$418.23
1998 08 675.56		5.56	$420.17
1998 09 845.49		5.49	$422.10
1998 10 75.24		5.24	$423.95
1998 11 135·16		5.16	$425.77
1998 12 655·47		5.47	$427.72
1999 01 834.89		4.89	$429.46
1999 02 434·86		4.86	$431.21
1999 03 964.88		4.88	$432.96
1999 04 114.84		4.84	$434.71
1999 05 474·84		4.84	$436.47
1999 06 495.01		5.01	$438.30
1999 07 685.13		5.13	$440.17
1999 08 45·25		5.25	$442.10
1999 09 815·34		5.34	$444.07
1999 10 365·36		5.36	$446.06
1999 11 465.50		5.5	$448.11
1999 12 696·34		6.34	$450.49
2000 01 155·74		5.74	$452.65
2000 02 415.83		5.83	$454.85
2000 03 746.01		6.01	$457.13
2000 04 546·10		6.1	$459.46
2000 05 36·49		6.49	$461.95
2000 06 256.60		6.6	$464.50
2000 07 196·57		6.57	$467.05
2000 08 336.55		6.55	$469.61
2000 09 276.56		6.56	$472.18
2000 10 736.55		6.55	$474.77
2000 11 736·56		6.56	$477.37
2000 12 56·62		6.62	$480.01
2001 01 915.83		5.83	$482.35
2001 02 995.47		5.47	$484.55
2001 03 555.09		5.09	$486.61
2001 04 934.77		4.77	$488.55
2001 05 264.11		4.11	$490.22
2001 06 373.86		3.86	$491.80
2001 07 63·76		3.76	$493.35
2001 08 473.59		3.59	$494.82
2001 09 852·99		2.99	$496.06
2001 10 502·43		2.43	$497.06
2001 11 942·08		2.08	$497.93
2001 12 401.90		1.9	$498.71
2002 01 501·75		1.75	$499.44
2002 02 231·81		1.81	$500.20
2002 03 121.84		1.84	$500.96
2002 04 711.81		1.81	$501.72
2002 05 251·80		1.8	$502.47
2002 06 681·80		1.8	$503.23
2002 07 771.78		1.78	$503.97
2002 08 641.76		1.76	$504.71
2002 09 411.78		1.78	$505.46
2002 10 211.77		1.77	$506.21
2002 11 321.39		1.39	$506.80
2002 12 671·37		1.37	$507.38
2003 01 531·29		1.29	$507.92
2003 02 441·27		1.27	$508.46
2003 03 451·25		1.25	$508.99
2003 04 561·26		1.26	$509.52
2003 05 401.26		1.26	$510.06
2003 06 221.10		1.1	$510.53
2003 07 81.05		1.05	$510.97
2003 08 271.07		1.07	$511.43
2003 09 81·07		1.07	$511.89
2003 10 681·06		1.06	$512.34
2003 11 381·06		1.06	$512.79
2003 12 61.09		1.09	$513.26
2004 01 871·04		1.04	$513.70
2004 02 171.03		1.03	$514.14
2004 03 791·03		1.03	$514.58
2004 04 411.04		1.04	$515.03
2004 05 311·05		1.05	$515.48
2004 06 321.21		1.21	$516.00
2004 07 981.37		1.37	$516.59
2004 08 61·55		1.55	$517.26
2004 09 221·73		1.73	$518.00
2004 10 971·86		1.86	$518.81
2004 11 872.09		2.09	$519.71
2004 12 02.34		2.34	$520.73
2005 01 642.44		2.44	$521.79
2005 02 252.57		2.57	$522.91
2005 03 642.77		2.77	$524.11
2005 04 462.94		2.94	$525.40
2005 05 873.05		3.05	$526.74
2005 06 513.20		3.2	$528.14
2005 07 723.38		3.38	$529.63
2005 08 933.56		3.56	$531.21
2005 09 463.74		3.74	$532.86
2005 10 383.95		3.95	$534.62
2005 11 774.11		4.11	$536.45
2005 12 164·32		4.32	$538.39
2006 01 224·45		4.45	$540.39
2006 02 724·55		4.55	$542.44
2006 03 744·72		4.72	$544.58
2006 04 134·88		4.88	$546.80
2006 05 195.04		5.04	$549.10
2006 06 635·22		5.22	$551.49
2006 07 795·34		5.34	$553.95
2006 08 75.31		5.31	$556.41
2006 09 675·29		5.29	$558.87
2006 10 485·28		5.28	$561.33
2006 11 345.29		5.29	$563.81
2006 12 495·31		5.31	$566.31
2007 01 225.29		5.29	$568.81
2007 02 895·28		5.28	$571.32
2007 03 95·28		5.28	$573.84
2007 04 115·29		5.29	$576.38
2007 05 635·28		5.28	$578.92
2007 06 715.30		5.3	$581.48
2007 07 945·29		5.29	$584.05
2007 08 925·51		5.51	$586.74
2007 09 975.46		5.46	$589.41
2007 10 74.95		4.95	$591.85
2007 11 84.78		4.78	$594.21
2007 12 165.07		5.07	$596.73
2008 01 523.85		3.85	$598.64
2008 02 323.11		3.11	$600.20
2008 03 932.82		2.82	$601.61
2008 04 322·82		2.82	$603.02
2008 05 842.50		2.5	$604.28
2008 06 82.50		2.5	$605.54
2008 07 172·49		2.49	$606.80
2008 08 152·46		2.46	$608.05
2008 09 733.44		3.44	$609.79
2008 10 214.04		4.04	$611.85
2008 11 721.63		1.63	$612.68
2008 12 611·04		1.04	$613.21
2009 01 230·37		0.37	$613.40
2009 02 830·49		0.49	$613.65
2009 03 760.49		0.49	$613.90
2009 04 970·40		0.4	$614.10
2009 05 660·30		0.3	$614.26
2009 06 290·28		0.28	$614.40
2009 07 710.27		0.27	$614.54
2009 08 690·25		0.25	$614.67
2009 09 560.21		0.21	$614.78
2009 10 210.20		0.2	$614.88
2009 11 260.18		0.18	$614.97
2009 12 530·18		0.18	$615.06
2010 01 740.16		0.16	$615.14
2010 02 460·16		0.16	$615.23
2010 03 320·19		0.19	$615.32
2010 04 470.24		0.24	$615.45
Formula = (1+x)^30.33 = 6.1545; x = exp(ln(6.1545)/30.33)-1
			6.17%

So just investing straight into 1 month CDs would have yielded 6.17% with ZERO management fees.

Last but most important: the CALPERS performance in the past decade was clearly a function of the bubble - both up AND down. Even assuming that doesn't factor any more, the 30 year trend has been clearly for interest rates to stay low.

With a Fed Funds rate of 0.25% today and a low Fed/US interest rate for the foreseeable future - just how likely is CALPERS to maintain even its 7.94% growth rate?

Somewhere between zero and infinitesimal.

[reggie]

Re: more bad news from California

So what are you trying to say, reggie? That CALPERS doesn't have a problem, therefore the $700M bill is presenting is mostly for stamps and paying the power bill?

Why are you so deliberately and unnecessarily combative? It's not only off-putting but a real sign of weakness on your part.

I posted a link to the latest Annual Consolidated Financial Report published by Calpers. This is a legal reporting requirement for all public controllers - they must follow a standard format and the report is audited. It only seems logical to me that if one wanted to understand Calpers' balance sheet position that they would consult this report first, prior to becoming inundated with media and "expert" interpretations. Their investment performance starts on page 83, showing total book value of investments at $197B. Any meaningful discussion should commence with the data in this report.

[c1ue]

Re: more bad news from California

Why are you so deliberately and unnecessarily combative? It's not only off-putting but a real sign of weakness on your part.

Why are you unable to actually state what you are saying?

Putting up some CALPERS counter-press release doesn't say a damn thing.

As for weakness, it like many other things is entirely in your own mind.

I've posted the reality of CALPERS performance in the last 10 years according to their own figures; I've also posted what a true 'risk free' performance would be to put CALPERS statement in context.

And this is even without checking to see what games CALPERS has played with its performance numbers.

So again, what are you trying to say?

[tsetsefly]

Re: more bad news from California

good to know that bureaucrats are being taken care off...

[reggie]

Re: more bad news from California

Why are you unable to actually state what you are saying?

Putting up some CALPERS counter-press release doesn't say a damn thing.

As for weakness, it like many other things is entirely in your own mind.

I've posted the reality of CALPERS performance in the last 10 years according to their own figures; I've also posted what a true 'risk free' performance would be to put CALPERS statement in context.

And this is even without checking to see what games CALPERS has played with its performance numbers.

So again, what are you trying to say?

I'm saying that a scientist, data analyst or someone remotely interested in understanding whether there is really a problem, and properly defining that problem in context, and then searching for solutions to the actual problem if in-fact a problem does exist, would not proceed without reviewing the most comprehensive and reliable data set available. But then, why care about any of that when the media has already made up your mind for you and anyone who questions that frame is dealt with in a hostile and offensive manner.

You really need to read "One Dimensional Man" by Herbert Marcuse.

[c1ue]

Re: more bad news from California

I'm saying that a scientist, data analyst or someone remotely interested in understanding whether there is really a problem, and properly defining that problem in context, and then searching for solutions to the actual problem if in-fact a problem does exist, would not proceed without reviewing the most comprehensive and reliable data set available. But then, why care about any of that when the media has already made up your mind for you and anyone who questions that frame is dealt with in a hostile and offensive manner.

Your 'analysis' has been nonexistent; another post with ZERO content.

This isn't Fox News - 'fair and balanced' is irrelevant.

If you don't believe there truly is a problem at CALPERS, then say (and show) it.

For my part, there is clearly a huge problem at CALPERS.

The CALPERS 30 year performance is highly skewed by the interest rates prior to 1999. I've just shown that simply rolling the money into 1 month CDs would have yielded a performance within 1.71%. The reality is that anyone with the scale of money CALPERS controls can get above average CD rates, much as the person with $1M gets higher rates than the person with $10,000.

Secondly CALPERS has made huge investments into real estate. It is quite clear now that these were, and are, a huge mistake.

Thirdly the number of state employees has increased dramatically since 1999.

You can see this indirectly via http://www.dof.ca.gov/budgeting/budg...ts/CHART-J.pdf

From 1998 to 1999, there was a 22.7% jump in state spending - and that was after the 26.6% budget increases over the 3 years from 1995 to 1998.

Another link from the same site shows the number of California employees since 1977:

http://www.dof.ca.gov/budgeting/budg...ts/CHART-J.pdf

Specifically there were 225567 state employees in 1980-1981, and 345288 in 2010. For reference, there were 282859 as late as 1998-1999; at least 18% of the present day population started working no earlier than 1998-1999.

Thus CALPERS' performance since 1999 is disproportionately underperforming. The contributions of this most recent spike in CALPERS contributors have basically not grown at all given the performance of CALPERS since 2001.

Last of all the CALPERS defensive press release makes ZERO mention of inflation. Rate of return is irrelevant; it is performance vs. inflation which matters.

Thus the absolute shortfall is likely somewhat lower than the media headlines, but the trend is absolutely not wrong.

[ricket]

Re: more bad news from California

I'm gonna go with c1ue on this. This is how this thread went:

c1ue: "CalPERS is having problems"

reggie: link to CalPERS data, with no commentary either positive or negative

c1ue: "reggie, what are you trying to say? What is your opinion based on the data that you just posted? Based on [x] and [y], it looks like CalPERS could...[insert contradicting opinion based on analysis of the data posted]. So again, reggie what are you trying to say??"

reggie: "WHY ARE YOU ATTACKING ME FOR POSTING DATA?!? You should go read a book"

c1ue: 'Uhhh...??? I was just trying to get your opinion on something"

Re-reading your post it seems that you think CALPERs is doing quite fine. However, you provide no explanation for why CALPERs is literally asking for the loan. If CalPERS is not unfunded as the 2nd article states, then why would they be asking for more money? The data and links you posted are completely contradicted by actual current events...

[reggie]

Re: more bad news from California

Re-reading your post it seems that you think CALPERs is doing quite fine. However, you provide no explanation for why CALPERs is literally asking for the loan. If CalPERS is not unfunded as the 2nd article states, then why would they be asking for more money?

Because events that make-up reality have been de-linked.

The data and links you posted are completely contradicted by actual current events...

Is it possible that the "actual current events" are manufactured propaganda? Isn't that also a possible explanation here?

We can talk about Calpers' disappointing performance all we want, but the narrative that is being put forward is that Calpers now needs to bill the California taxpayer to meet expenditures. So tell me, if one reviews the CAFR, which is the best data set available for Calpers financial state, can one show that Calpers requires the "extra $700-million" that the LA Times claims?

As of yet, I'm not coming down on any side of this discussion, but I am trying to see if any other perspectives and explanations are possible. I am not discounting anything, and I'm not going to bend to group dynamics or flame thrown slogans and labels.

[c1ue]

Re: more bad news from California

As of yet, I'm not coming down on any side of this discussion, but I am trying to see if any other perspectives and explanations are possible. I am not discounting anything, and I'm not going to bend to group dynamics or flame thrown slogans and labels.

How amusing. You discount the MSM, but take the CALPERS statements at face value.

Where is your own thought and analysis?

[Starving Steve]

Re: more bad news from California

Starving Steve's solution to California's budget mess:

1.) Cut spending, especially in pension benefits for senior teachers and school administrators;

2.) Repeal Proposition 13 so that the old farts who sit on properties held since the 1970s finally have to pay property taxes on the fair market value of their properties to-day;

3.) Build hydro-electric dams, build atomic power plants, and drill for oil in the California Bight offshore of Southern California.

Gosh, my ideas for California are not all that different from my ideas for British Columbia. In other words, dig-out of the debt hole by cutting spending, hiking taxes, banishing the eco-frauds and conservationists and preservationists. We need to face the fact that solar power and wind power and tidal power are not viable because they are too expensive and do not generate tax revenues--- rather, they suck govn't revenues and drive-away businesses because they raise the cost of utilities.

Why is Greece bankrupt? And the answer is very similar to the answer in California. We need to face the facts and the ugly truths. Why are there no jobs in BC? --- same answer.

[Anon21456]

Re: more bad news from California

I'm gonna go with c1ue on this. This is how this thread went:

c1ue: "CalPERS is having problems"

reggie: link to CalPERS data, with no commentary either positive or negative

c1ue: "reggie, what are you trying to say? What is your opinion based on the data that you just posted? Based on [x] and [y], it looks like CalPERS could...[insert contradicting opinion based on analysis of the data posted]. So again, reggie what are you trying to say??"

reggie: "WHY ARE YOU ATTACKING ME FOR POSTING DATA?!? You should go read a book"

c1ue: 'Uhhh...??? I was just trying to get your opinion on something"

Re-reading your post it seems that you think CALPERs is doing quite fine. However, you provide no explanation for why CALPERs is literally asking for the loan. If CalPERS is not unfunded as the 2nd article states, then why would they be asking for more money? The data and links you posted are completely contradicted by actual current events...

hahaha
A clear point of view is always refreshing.

[ricket]

Re: more bad news from California

Because events that make-up reality have been de-linked.


Is it possible that the "actual current events" are manufactured propaganda? Isn't that also a possible explanation here?

We can talk about Calpers' disappointing performance all we want, but the narrative that is being put forward is that Calpers now needs to bill the California taxpayer to meet expenditures. So tell me, if one reviews the CAFR, which is the best data set available for Calpers financial state, can one show that Calpers requires the "extra $700-million" that the LA Times claims?

As of yet, I'm not coming down on any side of this discussion, but I am trying to see if any other perspectives and explanations are possible. I am not discounting anything, and I'm not going to bend to group dynamics or flame thrown slogans and labels.

Haha, thank you! You should have said this when you posted the data!