The noose is tightening around California’s cities and counties. At least one-third of local and state budgets now go toward public employee pensions. And that number is expected to climb much higher, putting a number of municipalities at risk of bankruptcy.
Public pensions are “the albatross around the necks of cities and counties,” Stanford Professor of Public Policy Joe Nation told attendees at a university workshop on public retirement last month. “Unless we do something the system may not survive.”
The nation’s largest public pension system, CalPERS, is short by as much as $1 trillion by some estimates, though unrealistic investment projections conceal the true extent of the problem. But the lower the projected rate of return, the more cities and counties -- and their taxpayers -- are forced to foot the bill. That puts everyone in a seemingly untenable position.
CBS San Francisco reporter Melissa Griffin recently sat down with Joe Nation to discuss the issue further.
“This is absolutely the most challenging issue facing state and local government, not just in California but across the country,” Nation told her. No one is safe. No municipality should feel comfortable with the retirement system the way things are.
Nation talked about the need for leadership from both the state legislature and the public employees unions. He also discussed some of the legal aspects, including the fate of the so-called ‘California rule.’
Watch the interview here.