At the July 10th Upcountry Community Council meeting, Chuck Iley, Amador County’s CAO/Chief Administrative Officer,
gave an excellent presentation about our county budget. It is now difficult to
budget for our county worker’s pension contributions, because whatever cash
CalPERS demands, the county must surrender. I asked about the informal
discussions from a few years ago, about leaving CalPERS and possibly joining
with Calaveras County in an independent pension fund. He responded by saying that it’s impossible
now because we would have to donate about $50 million to their unfunded
liability.
We can debate endlessly about CalPERS' good
and bad deals, but the simple fact remains that they are just too big. Unless
the law of large numbers is magically repealed, they can never do better than
the market as a whole. Although leaving CalPERS is now impossible, it was even a
difficult decision back then. The rate
of return could be much higher. But with overhead costs rising the actual
bottom line could be unpredictable.
I was a pension board trustee for about eight years for a government agency that had left CalPERS. I watched Federal
encroachment increase and regulatory expenditures expand. While the
Constitutionality seemed questionable, the power grab wasn’t. One of those new
regulations was for accounting and actuarial assumptions. While absolutely nothing changed with the
assets or internals of a pension fund, the publicly announced calculation of
unfunded liabilities soared. Some could argue that this was better disclosure, while others assert that it was an unnecessary pressing of the panic button.
But the intent, or pre-programmed outcome, worked to serve its purpose.
Was more Federal control of state and
local pensions now shown to be necessary? Would this reduce local control as
the freezing of independence from CalPERS just indicated? Would further
regulation govern possible investment choices and therefore affect capital
flows? Certainly a transition to Federal control is the next step toward global
control. Is this what is really going on? Is Amador County being colonized, or
did we get the royal screw just by coincidence?
Copyright 2017, Mark L. Bennett
