Earlier today the Kersten Institute for Governance and Public Policy highlighted an updated pension study, released by the Stanford Institute for Economic Policy Research, which revealed some fairly startling realities about California's public pension underfunding levels. After averaging $77,700 per household in 2014, the amount of public pension underfunding for the state of California jumped to a staggering $92,748 per household in 2015. But don't worry, we're sure pension managers can grow their way out of the problem...hedge fund returns have been stellar recently, right?
Stanford University’s pension tracker database pegs the market value of California’s total pension debt at $1 trillion or $93,000 per California household in 2015.
In 2014, California’s total pension debt was calculated at $77,700 per household, but has increased dramatically in response to abysmal investment returns at California’s public pension funds that hover at or below zero percent annual returns.
The Pension Tracker database (www.pensiontracker.org) is maintained by the Stanford Institute for Economic Policy Research (SIEPR) and is intended to help localize pension data by providing the ability to look up the market value of pension debt in any locality in California.
Looking back to 2008, the underfunding levels of California's public pension have skyrocketed 157% on abysmal asset returns and growing liabilities resulting from lower discount rates.
Perhaps this helps shed some light on why CalPERS is having such a difficult time with what should have been an easy decision to lower their long-term return expectations to 6% from 7.5% (see "CalPERS Weighs Pros/Cons Of Setting Reasonable Return Targets Vs. Maintaining Ponzi Scheme")...$93k per household just seems so much more "manageable" than $150k.
Oddly enough, California isn't even the worst off when it comes to pension debt as Alaska leads the pack with just over $110,000 per household.
Of course, at this point the question isn't "if" these ponzi schemes will blow up but rather which one will go first? We have our money on Dallas Police and Fire...