Sense on Cents

How does one define a “racket?”

Well, in a takeoff of a similar question regarding pornography, I am not sure exactly how I might define a “racket” but I believe I would know one when I see it.

So, where should we look to see a racket at work? California and specifically the public pension system in the Golden State. A few weeks back I highlighted what I believe will be “civil wars” over public pension reforms in our country.

A primary battleground on this front will be the hard left-leaning people’s republic on our left coast. Is there any real surprise that California finds itself in such a fiscal mess? Not really.

How bad is the situation in California?

For taxpayers in California, the public pension hand in your pocket is reaching ever deeper. KCRA in Sacramento reports that over the last two years those receiving pensions of $100k or more increased by more than 31% and the total dollars distributed increased by 73%.

Tennis anyone?

As reported by KCRA, California Six-Figure Pension Club Grows Exponentially:

KCRA 3 has obtained new numbers showing California’s list of retired government workers collecting six-figure pensions is growing exponentially.

Marcia Fritz, a pension reform advocate and a Democrat, has compiled data from CalPERS, CalSTRS and UC Retirement System, showing the $100,000 pension club has grown from 16,000 names two years ago to more than 21,000 names today.

“Two years ago, the payouts were $1.5 billion,” Fritz told KCRA. The president of California Foundation for Fiscal Responsibility, headquartered in Orangevale, added, “Today there are over $2.6 billion.”

That’s an increase of 73 percent in just two years.

Where did a large number of these recipients work? Higher education. I’ll say it is higher, all right, as in higher payouts. Think all that easy money from government student loans was not traveling right through the system and out the back door in the form of these ridiculous pension payouts? Come on.

Former Sacramento State University President Donald Gerth is now the fourth highest name on the list, collecting a pension of $295,086, according to records released by the California Public Employees Retirement System.

Sacramento State University has a total of 34 names in the $100,000 club. UC Davis has 223 names on the list, including those working for the UCD Medical Center.

What else stands out? How about the city of Stockton. Yes, that fiscally destitute entity that is now preparing to declare bankruptcy.

The city of Stockton may be facing bankruptcy, but has 98 retired government workers with six-figure pensions.

What do people think of this? Stealing from future generations is not exactly an admirable quality. I would go further than that, though. The public pension system in California and many other cities, states, and towns across America has been little more than legalized theft, also known as a “racket.”

How should these egregious payouts be addressed?

Many legitimate contracts have been overrun during our current crisis. Shouldn’t the highly questionable public pension systems in our nation prepare for a dose of similar medicine? No doubt. What is this medicine called?

Renegotiation.

Game. Set. Match.

Time to put the “rackets” away, boys and girls.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

This entry was posted on Thursday, June 21st, 2012 at 8:54 AM and is filed under General, pension obligations. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.