Ed Mendel continues to break more juicy stories about CalPERS than the rest of the state media combined. Along with the Dans (Weintraub and Borenstein), he will be a first-ballot inductee in the Golden State Pension Coverage Hall of Fame. His latest scoop shows CalPERS officials being more honest than they’ve ever been, worrying that a big economic downturn could drive the giant pension agency down to just 40 percent of necessary funding. So why does CalPERS keep cranking out the happy talk and disinformation on its calpersresponds.com website? This, as the kids say, is wack.
My favorite “myth” cited by CalPERS is that “CalPERS is unsustainable.” This post indicates this “myth” was first addressed and allegedly debunked on Sept. 23, 2009, the week the website appears to have been activated. How was it allegedly debunked? With these two lame paragraphs:
Fact: As a percentage of payroll, employer contribution rates are returning to the levels of the 1980s. In fiscal years 1979-80, 1980-81, 1981-82, for example, pensions as a percent of payroll for miscellaneous State workers were 19 percent of payroll. View details of State Miscellaneous Tier 1 Rates.
Fact: Employer contribution rates have been very stable over the past six years, changing by less than 1 percent of payroll during the past six years, thanks to our rate-smoothing policy. The expected increase in employer rates due to the downturn will increase employer contributions by an average of 1 to 3.7 percent of payroll in 2011-12. View more information on projected increases in employer contribution rates for public agencies.
These “facts,” of course, don’t prove jack. Pensions are unsustainable for many, many of the local governments CalPERS so poorly serves, and this very narrow framing of sustainability as being about broad employer contribution rates is a complete red herring. These “facts” don’t change the fact that Stockton, San Jose, Los Angeles, etc., have real crises looming and can’t stay the course. But CalPERS follows the Maviglian tactic of focusing almost entirely on state pension problems, which are minor compared to those facing so many cities.
Of course, what makes the pension giant’s assertion that it’s a myth that “CalPERS is unsustainable” so downright hilarious is that the main person responsible for the “CalPERS is unsustainable” shorthand is …. you got it!
CalPERS’ own actuary!
As reported by, who else, Ed Mendel — and just six weeks before CalPERS declared the claim a myth. This is from a story Ed posted Aug. 12, 2009 about a pension seminar that took an unexpectedly candid turn, perhaps because those in attendance didn’t think a reporter was in the room:
Ron Seeling, the CalPERS chief actuary, described the process used to “smooth” the rate increases that will be imposed on the 1,500 local government agencies in CalPERS in 2011 in the wake of the stock market crash.
Instead of a rate increase of 4 to 20 percent of pay, the smoothing will reduce the rate hike to a more manageable 0.5 to 2 percent of pay.
“I don’t want to sugarcoat anything,” Seeling said as he neared the end of his comments. “We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We’ve got to find some other solutions.”
How priceless — CalPERS setting up a website with a primary goal of disavowing its actuary’s grim warning as a “myth.”
As for Ron Seeling, well, you can guess what happened to him. In March 2010, seven months after his declaration that CalPERS was on an “unsustainable” track, he retired. Did CalPERS put out a press release? Nope.
The appointment of Seeling’s successor three months later? That merited a press release of 413 words about how darn important the job of chief actuary was.
Where have you gone, Ron Seiling-o? A blogger turns his lonely eyes to you (woo woo woo). I’d love to hear the stories Seiling could tell if he were loaded up with sodium pentothal.
P.S., 9 p.m., March 24: Please read the comments, folks, so you can enjoy a truly hilarious attempt by a public employee to pretend CalPERS actually has a good investment record, and that only my stupidity prevents me from figuring this out. Just riotously stupid spinning. I guarantee plenty of laughs.