CalPERS needs to come clean about investments
The entire CalPERS house of cards rests on one foundational lie: that its pension assets will earn more than 6% per year on average.
For two decades, CalPERS and CalSTRS have told agencies they will earn 7% to 9%, and thus can save less money for pensions than they need to.
This gap, compounded annually, has built statewide pension deficits approaching $1 trillion and leading California toward fiscal ruin.
Imagine the good that $1 trillion could have done, invested in early childhood education, affordable housing or public health.
CalPERS now borrowing money to finance riskier investments, knowing the public must pay all losses, is unconscionable. In a different world, Bernie Madoff would have new roommates. The root evil is the investment-return lie.
Instead, CalPERS and Cal-STRS should simply be honest about their investment returns. That will stop California's unfunded liabilities from increasing; and with transparency, voters will drive governments toward fiscal prudence.
- Eric Filseth, member, Palo Alto City Council