Tag: David Crane

Our Most Expensive Failure

Mary Pat Campbell

Link: https://www.governforcalifornia.org/news/2023/12/1/our-most-expensive-failure

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Excerpt:

When launching GFC in 2011 it was my hope that we would see meaningful pension reform by 2020, but we have failed to achieve that objective and the negative consequences for public services and taxpayers have been enormous. As evidence, just look at the four-fold explosion in annual pension spending by the Los Angeles Unified School District this year compared to ten years ago:

Pension spending will keep exploding. That’s because California’s public pension funds still have inadequate ratios of assets to liabilities despite more than $200 billion of pension contributions and a doubling of the stock market since 2013-14.

Pension reform is not the only thing I got wrong. I thought it would be even easier to terminate California’s unnecessary spending on other post-employment benefits (OPEB), especially after the creation of Obamacare and that program’s generous federal healthcare subsidies, but LAUSD alone is spending $365 million on OPEB this school year. Together, pensions and OPEB consume one of every six LAUSD dollars, leaving that much less for classrooms and salaries. 

Author(s): David Crane

Publication Date: 1 Dec 2023

Publication Site: Govern for California

Stress Testing in Sacramento

Mary Pat Campbell

Link:https://mailchi.mp/5ac903164813/stress-testing-in-sacramento-6602594

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Excerpt:

In January the Department Of Finance will issue the Governor’s Budget for 2022-23. No section will be more important than the Stress Test, which forecasts revenue losses in the event of a stock market decline such as in 2001-3 and 2008-9.

Last January, the Governor’s Budget forecast revenue losses of $100 billion. Just two years earlier, the 2019-20 Governor’s Budget forecast losses of $50 billion. That makes sense because, as DOF explains, “the higher levels and valuations in the stock market increase the risk of a large stock market drop leading to a large decline in capital gains revenues” on which California is extraordinarily dependent.

….

Schools and other services need predictable annual funding. You should build reserves to the levels predicted by stress tests.

Author(s): David Crane

Publication Date: 5 Dec 2021

Publication Site: Govern for California (Mail Chimp)

Bipartisan Opportunism Is to Blame for California’s High Tax Rate

Mary Pat Campbell

Link: https://www.hoover.org/research/bipartisan-opportunism-blame-californias-high-tax-rate

Excerpt:

A current example of California’s bipartisan capitulation to public employees is OPEB—formally, “Other Post-Employment Benefits”—chiefly, health insurance for retired employees and their dependents costing the state $10 billion per year. Those benefits are provided even when the retiree or dependent has another job that offers insurance, is covered by Medicare, or is entitled to premium support from the Affordable Care Act.

No other state in America showers such subsidies on retired employees, who are already entitled to the highest pensions in the land. But both parties have been obstacles to OPEB reform because both fear retribution from government employee unions. If you have any doubt about that, check out donations to legislators on both sides of the aisle.

Author(s): David Crane

Publication Date: 12 March 2021

Publication Site: Hoover Institution at Stanford University