In 1999, one of the most irresponsible political acts occurred when the California Public Employees’ Retirement System (CALPERS) convinced our state legislature that generous salary and pension increases for state union workers could be financed from investment earnings and would have no effect on the taxpayers’ wallets. CALPERS actuaries were manipulated and full of holes, but the union-dominated board adopted the most optimistic scenario and it was sold to the state legislature and Democratic Gov. Gray Davis.
Cities that belong to CALPERS saw, after 30 years of service, their fire and police personnel receive 90% of their last year’s salary at age 50 as their pension for life, and management receiving 75% and general employees 60%.
CALPERS also convinced our politicians to have the taxpayers guarantee 7.5% return on their investments.
All the rosy predictions came to a screeching end with the Great Recession. Council members did band-aid fixes plus raised fees and created new fees on the taxpayers to pay for the failed investments of CALPERS. The 90%, 75% and 60% pension structure was never adjusted back to pre-1999 [rates]. About 16 years ago, 30% of the general fund paid for the salary and pension benefits of Glendale’s police and fire departments. Today, 80% is required.
Because of failed investments, CALPERS today is planning to eliminate risky investments and replace them with more secure investments and count on struggling families, through increases in fees and taxes, to pay even more of the generous CALPERS union employees’ salary and pension benefits.
[It’s] time for Glendale citizens to bite the bullet and pay CALPERS $1.4 billion and be rid of this irresponsible and corrupt pension benefit system. It will not be easy. Otherwise, we will continue to be held hostage by CALPERS for years to come.