Two people walked into a bank, somewhere in California. Both individuals needed to prepare financially for their retirement. Both of them earned about $80,000 per year.

The first individual, Mr. Jones, was presented by the banker with a contract called “Social Security.” The contract read as follows:For as long as you work, you will give us 12.4% of your gross earnings, and we will invest the money. When you retire, we will pay you an annuity for as long as you live. Your annuity will be based on a guaranteed rate of interest – depending on how long you live – of about 1.5% per year, compounded! When you die, you will have nothing left of your investment to pass on to your heirs.

The second individual, Mr. Smith, was presented with a very different contract, called “Collective Bargaining Agreement.” It read:For as long as you work, you will give us 5.0% of your gross earnings, and we will invest the money. When you retire, we will pay you an annuity for as long as you live.Your annuity will be based on a guaranteed rate of interest of exactly 7.5% per year, compounded. When you die, you too will have nothing left of your investment… Read More

When discussing the sensitive subject of public employee compensation, there are several important dimensions that must be considered – can we afford it, is it appropriate and fair, how does it compare to the private sector (if comparisons can even be made), what are the additional costs for employer paid benefits, and how do we estimate the annual employer payments required to fund future retirement pensions and healthcare?

When discussing public safety compensation, there is an additional layer of complexity – how do we adequately value the premium that public safety personnel deserve as compensation for the risks they take in the performance of their jobs? These are tough questions that have been explored here and elsewhere. These discussions are healthy and necessary. But there is another question that is worth exploring, for all public employees but especially with respect to public safety employees – if they are to be highly compensated, than what expectations may the public have regarding their professionalism, and how may they be held accountable for their conduct?

Before going any further, it is important to add the following points:… Read More

Suppose you pick up your typical California newspaper and see headlines like, “State Unemployment Far Below the National Average” and “State Running Healthy Surplus; Gov. to Return Money to Taxpayers.” You just might find yourself paraphrasing Dorothy in the Wizard of Oz, “Sutter Brown, I’ve got a feeling were not in California anymore.” (For those not acquainted with Sutter Brown, he is California’s charming First Dog, who sometimes joins Governor Brown at press… Read More

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Publisher’s Note: As part of an ongoing effort to bring original, thoughtful commentary to you here at the FlashReport, I am pleased to present this column from John Kabateck, Executive Director of the California NFIB – Flash]

California has some of the highest taxes. I’m sure you already feel it every time you open your wallet, every time you fill up your gas tank and when you see what’s left of your paycheck after government takes its share.

Once again, there’s a renewed effort at the Capitol to increase your taxes through an oil severance tax. Senate Bill 1017, by Sen. Noreen Evans, would add a 9.5% tax to every barrel of oil extracted in-state, effectively tripling our oil taxes and further cementing California’s status as the most taxed state. All of the oil drilled in California is used here, so any cost increase will only hurt consumers everywhere, particularly small businesses. A severance tax will also hurt production and jobs in California as small companies simply will not be able to compete in the marketplace.

Recently, business groups that include NFIB, taxpayers, and consumers have joined together to form a… Read More

“Pew’s relationship with the Arnold Foundation does not pass the smell test,” said Meredith Williams, Denver-based executive director of the National Council on Teacher Retirement. – ”Pension Funds Press Pew to Cut Arnold Foundation,” Philanthropy Today, March 4, 2014

If you’re looking for an example of how, increasingly, political debate in America is framed as a battle between tainted – and very powerful – special interests who harbor nefarious personal agendas, instead of a rational exchange of competing facts and logic aimed at finding optimal solutions, look no further.

Apparently, across the United States, any reputable nonprofit, from Pew and PBS to your underfunded start-up, now has to refuse gifts from major donors unless they happen to be (1) funded by public sector unions, or (2) originate from the pockets of left-wing billionaires. Everything else is tainted. Everything else fails the “smell test.”

Apart from the absurdity of tagging individuals and organizations with terms… Read More

“You can’t build a society on artificially inflated asset values, because that accelerates the class division.Immigrants know that even if they work in a low-paying job in a hotel in Houston the chances they can save and buy a house are infinitely better than in California. If you want to have an asset based economy then accept we’re going to have feudalism because the price of entry is just too high.” – Joel Kotkin,CPPC Interview, January 4, 2014

What Kotkin is referring to is the result of decades of increasing legislative restrictions on cost-effective land and energy development, combined with Federal Reserve policies designed to minimize the cost of borrowing. In the first case, prices for land and energy, the building blocks of a healthy economy, are artificially inflated through constraints on supply. In the second, the supply of borrowed money is artificially increased via ultra-low interest rates.

This so-called “asset economy” might also be called a “bubble economy,” because it cannot be sustained indefinitely. For… Read More

The economy is picking up steam. State, city and county employees have willingly accepted millions upon millions of dollars in cuts to their pensions. California’s largest pension fund has recouped every single investment penny it lost from the Great Recession.So I thought perhaps California police officers, teachers, firefighters, and other public employees could finally exhale. I hoped we could finally enjoy relief from daily attacks for the modest pensions we count on for retirement security. Buddy Magor, Peace Officers Research Association of California Public CEO, January 27, 2014, “Stop Blaming Public Employee Pensions for Problems”

Whether or not the economy is “picking up steam” at a rate sufficient to rescue California’s financially challenged public sector pension funds is a debate that is by no means over. But let’s consider Mr. Magor’s other point regarding the “modest pensions we count on for retirement security.”

By now everyone should be familiar with the so-called “three-at-fifty”… Read More

In light of the strong public policy supporting transparency in government, an individual’s expectation of privacy in a salary earned in public employment is significantly less than the privacy expectation regarding income earned in the private sector. – Excerpt from California Supreme Court Ruling, 8-27-2007, IFPTE v. Superior Court

This week theCalifornia Public Policy Centerlaunched what is the largest online payroll and pension database, searchable by name, downloadable via spreadsheet, ever compiled for active and retired employees of California’s state and local governments. Do you want to see just how much California’s public servants are costing taxpayers? Go towww.TransparentCalifornia.comand have a look.

The database, created in partnership with theNevada Policy Research Institute, has been nearly a year in the making and provides information not available anywhere else. For example, the database includes CalPERS pension records, including not only the participant’s name,… Read More