I Learned the Truth at 21

In October of 2005, I began working for the William S Hart Unified School District as an instructional assistant. I remember my disbelief at the amount of deductions I saw on my first pay check.  There was the usual Social Security and Medicare deductions. I learned that lesson at 16. I remember my father showing me his paycheck and how much was taken out of his check. He told me to get used to it and that it would "only get worse."

The two new deductions I saw were union duties and something called CALPERS. I never signed up for any union, and I was pretty pissed about the whole situation. I went to talk to the HR lady and told her I wanted to opt out of the union. She gave me this crazy look and asked, "Why would you want to do that when the union does so many great things for you?"  I told her that I didn't believe in unions and that I didn't want to be in it. She then told me that there was no way out of the union, that it was mandatory, and part of the agreement I signed by becoming an employee of the school district. So much for individual liberties.

I was now a part of something I despised, a big bloated corrupt public employee union. I had no say in how my union dues were spent. A ray of hope appeared with the 2005 ballot with several initiatives to limit the power of unions. One of them was a measure that would allow public employees to have a say and vote in how their union dues were spent on political campaigns. I thought it was a for sure win. I mean who wouldn't vote for that? Well, the union launched a big media blitz and portrayed anyone voting for the measure as hating teachers and firemen. The measure was defeated, and I was stuck.

CALPERS turned out to be the state public employee retirement fund. I was against Social Security and certainly against this fund. At 21 I needed my money to be liquid. I tried to opt out of CALPERS and couldn't. I even asked if I could set up my private retirement fund instead of CALPERS. I was once again stuck. The government knew better than I did.

Fast forward to today where CALPERS has lost over a 100 billion dollars. CALPERS had  investment losses of over 50 billion dollars for the fiscal year ended June 30th. The difference has to come from taxes, or in wother words, you. The state has already allocated 3.3 billion dollars from the general fund to make up for CALPERS  poor performance, and they're expected to cover fiscal losses in the next fiscal year. 

The investment losses didn't just come from stock market investments. They were extracurricular investments. CALPERS is about to lose a half a billion dollars on a New York real estate deal for an apartment complex. They purchased it for 5.5 billion and now its worth 2.5 billion. The whole deal went bust. Tax payers are of course on the hook to make up the difference. With pensions you always invest conservatively. By November 2006, the market was already looking flimsy. CALSTERS (the teacher equivalent of CALPERS) lost a billion dollars on one bad real estate investment on its own! CALSTERS real estate holdings lost 43% during the year.

All these public employee organizations bribed the legislature and governor Gray Davis years ago and all kind of other officials with campaign contributions and they won these huge pension benefit increases. You can't roll them back unless the union agrees to it. They're federally protected. So we're suppose to divert more and more tax dollars each yeah to make up for the losses of these greedy bozos. As what point do people blow their tops? They have to spend over 3 billion to prop up the state retirement system. The city of Fullerton has been told they have to pay 5.5 million more starting in 2011 to fund the city employees' retirements. Fullerton is already in the red and now they have been hot with another bill.

Al Villalobos, who was on the CALPERS board back on the 90's, acted as a middle man to steer CALPERS to invest in come companies (Arco Financial Ventures) which have had huge losses. Villalobos made over 50 million in fees for arranging these investments. He made his money so it doesn't matter if it collapses. So CALPERS will just ask for more money from the tax payers. Not ask, demand, since they're entitled. It's corrupt. Massive corruption for state employees.

In 2001 CALPERS decided it would allow local govs. to inflate the value of their pension investments by 1/3. They would allow the governments to arbitrarily say, "You know my pensions investments, They're worth a 1/3 more today than yesterday." The gov agencies could the turn to the employees and tell them that they could give them more benefits. In 1999 the state government was spending 160 million in pensions (with tax money) in 1999. They said that 10 years later they would be spending 350 million. Today, the state is spending 10 times the amount at 3.4 billion!!  It's likely to climb to 5 in the next couple of years. 10 years ago, the government hacks thought the stock market was going to explode forever. They took a pencil, erased the old numbers and said that everything was worth a 1/3 more.California employees have the most extravagant pension benefits of any state employee. People are retiring at 50 with more than their salary with annual cost of living raises and life time health benefits.

The retirement age should be raised back to age to 58 when police officers and firefighters retired before the 1999 legislation passed. For regular employees, set the age consistent with social security at 65-67.
The Wallstreet Journal had an article written by Stu Wu and Jim Carlton "The cost of shoring up CALPERS." "The troubled 200 billion dollar pension fund for California public employees will ultimately fall on the state's 38 million residents who are already dealing with increased tax increases and reduced public services." The state and local governments are contractually bound to increase their payments to CALPERS to make up for investment losses of more than 50 billion for the fiscal year ended June 30th. There is no market correction here. There are a lot of public employees willing to work for a $75,000 pensions instead of a $150,00 pension. They'd do a great job too. They should be replaced by people who are willing to earn less money. We can't do that though. There is no invisible hand. Governments destroy free markets. We have an irrational system that is going to collapse.