City Journal Winter 2016

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Winter 2016
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Steven Greenhut
Fat Times Again? « Back to Story

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I have heard that a BIG piece of Prop 30 $ is going to teacher's pensions. But it was sold as saving the school system!
Any prospectives on how this will all pan out in regards to housing values? Being that I just retired should I seriously consider liquidating all real estate in California?
Does anybody know if they really reduced spending, or just the rate of growth? My reading the budget summaries at
I got the impression that spending really increase a few per cent, and, they skipped some pension fund payments.

Anybody know?
No discussions of the "need" for higher government worker pay touch on number one way one weighs if there really is a need -- supply and demand.

Two question should be asked, but seldom are:

1. How many qualified applicants does government get for each opening (in spite of the minimal publicity of the job openings)?

2. Once hired, how many quit? A low job turnover rate tells any employer that they are probably overcompensating their employees.

By such sensible criteria, CLEARLY government jobs provide much higher compensation than is needed to get the job done. Of course, one should never use "sensible" and "government" in the same sentence.
Mr. Greenhut, thank you for this excellent article.

One request, though: please refer to "revenues" by the more honest term, TAXES. (The Lefties would love for us all to call taxes "revenue.")

Things must be looking good in California
as Brown & Co just gave themselves a 5%
pay raise. Apparently they're comfortable with
the 100 plus billion debt.

If 100+ billion of debt is peanuts for these guys now that they are pretending California
is back, they're probably going to start the
new and wonderful high speed rail from
Visalia to Porterville.
Spot on, Mr. Greenhut. Spot on.

Correction to my comment below .... the "official" 66.1% funding ratio is the .."total state funding level", not specifically for the safety workers' Plan.
Food for thought ...

The last published funding ratio for the BETTER of CalPERS 2 Plans (the one for safety workers) is 66.1%.

That 66.1% is CalPERS “official” funding ratio. Under Moody’s new approach (staring this July) to evaluate the creditworthiness of States & cities, their Pension obligations are going to be valued more conservatively (closer to the methodology that the US Gov’t REQUIRES of Private Sector Plans).

Under Moody’s new policy, the DECREASE in the funding ratio is averaging about 20% from the “official” percentages, which means that 66.1% … under Moody’s MUCH more “appropriate” valuation methodology …. is 66.1% x 0.8 = 52.88%

To put that in perspective, when the funding ratio for a Private Sector Plans drops below 60%, it is consider SO POOR that the Plan is REQUIRED under Gov’t regulations to freeze further Plan accruals.
I am not so sure Fat Times, as a bit more "Lala" time. We in the West are broke, we default in one go, in bits and pieces, inflate or just borrow a bit more making it even worse and hope the butt stops on someone else's watch.
The chickens are not far from coming home to roost and it scares me a bit
California. The new Detroit.