The CalPers $100 Billion Disaster
In 1996, then Assemblyman Howard Kaloogian introduced a bill that would give public employees the option of moving from the current "defined benefit" pension system to a "defined contribution" system. The major difference between the two system is that under a defined benefit system, the contributions are made to a fund, managed by someone else (in Californias case, a union elected board, with a couple of Governor appointees and appointees by the Controller and Treasurer, both union controlled Democrats), and the payment that is made to the retiree is defined by the state. A defined contribution system is a 401(k) system. It allows the investments to be controlled by the employee, and the benefit the employee receives depends on how smart the employee was in making the investment.
Kaloogians bill passed the Republican controlled Assembly at the time, and ended up in the Democrat controlled Public Employee Retirement Committee, of which I was the Vice Chair. A whole host of government employee union lobbyists (a group I used to refer to as the "Red Brigade") showed up in the committee to oppose the bill. What was most interesting… Read More
