California city and county pensions in trouble, report says
Many of California's biggest local governments spend an average of 10 cents of every dollar covering pension costs, according to a study of the largest independent pension plans released Tuesday.
The study, by Stanford professor and former Assemblyman Joe Nation and a junior at the school who is a member of a nonprofit that studies California governance, examines plans for cities and counties that do not rely on the state's largest public pension group, CalPERS. They include the city and county of Los Angeles, the cities of Fresno, San Jose, San Francisco and San Diego, and other jurisdictions. The pension plan unveiled by Gov. Jerry Brown last year is intended to change these plans, as well as thousands of other local ones run by CalPERS.
The study found that pension spending grew by 11.4% over the past decade in the 24 largest independent pensions, larger than any other category of government spending. "That rapid growth," the report states, "is likely to accelerate over the foreseeable future, exerting pressure on spending in other categories."
The report pinned the debt of the plans at between $36 billion and $136 billion. The wide range stems from a disagreement over how well plans should assume their investments will pay off. The plans' optimistic estimates lead to the lower number, while the study's authors favor a more conservative rate of return that would lead to greater debt.
Though the report is sparse on political rhetoric, it follows two other ones from Nation that defenders of government pensions have contended are unduly alarmist about the health of the retirement systems.
"Ironic [that as] the Dow is reaching new heights and the economy continues to recover, they continue to crop the picture using data from the depths of the recession," said Steve Maviglio, a spokesman for public sector unions fighting pension changes, said in an email.
-- Nicholas Riccardi in Sacramento