OT: Estimated state budget deficit reaches $25.4 billion

[CA renter]

[quote=pri_dk][quote=CA renter]You DO realize that the “financial crisis” (including the “pension crisis”) was caused by the financial industrty, and not public unions, right?[/quote]

Although they have some elements in common, the two “crises” are not the same.

The bulk of the pension crisis for government employees was caused by aggressive and sneaky union tactics.

One small example:

http://www.pe.com/localnews/stories/PE_News_Local_D_pension03.299e5be.html

This has nothing to do with the financial crisis. It has everything to do with public unions throwing big money behind legislation that will bankrupt the county.[/quote]

I’m not sure what was “aggressive” or “sneaky” about those propositions. What it pointed out was there was an ~$800 million deficit in lifetime pension benefits *at this point in time.*

Ultimately, that number could be much greater — if everyone lives well beyond what the actuaries have calculated, and if investment losses/lower returns are worse than what they’ve projected…OR, they could end up with a surplus if workers die earlier and/or investment returns outperform thier projected estimated returns.

Let me say this first (and I’ve said it many times before): the current pension benefits are too generous. They made some very irresponsible decisions over a decade ago, and we are now dealing with the consequences. However, those foolish decisions were based on a bubble mentality that has been with us now for over a decade. Those pensions were superfunded (over-funded) when those decisions were made, but it was entirely due to the stock/internet bubble.

One VERY important point: the pension funds have sustained very large losses because they were invested in precisely the types of investments that caused our financial crisis. They, and many other typically-conservative investment funds/entities, were forced into these riskier investments because the Fed held rates so low for so long that everyone had to move out on the risk curve in order to maintain their projected returns. I place that blame squarely on the Fed and the govt regulators who allowed the financial deregulation that enabled the **MASSIVE LEVERAGE** and those “innovative” products to come to market in the first place. We have been lacking good, solid regulation for too long. We need people like Elizabeth Warren, Ron Paul, Ralph Nader, Ross Perot, Dennis Kucinich, Bernie Sanders, etc. to lead this country — all of whom strike me as people who *actually care* about the United States and our citizens, and who have some understanding of economics and trade. (Note how they come from all across the political spectrum…it’s not a party issue.)

I believe the pension crisis will be fixed because the govt employers are already beginning to shift the pension contribution requirements from the employers to the employees. After that is done, I believe the formulas will be changed so that the projected investment returns will be lowered, and contribution requirements will rise. This will be borne by the employees, not the taxpayers. It could be an effective 20-30% cut in pay. Additionally, many employers have already moved toward a two-tiered system where the new employees are being put on the pre-pension-boost formula (2% vs. 3%). They cannot change the ones who are already vested, but the obligations going forward will be lower.

When we incentivize speculation/investment over labor, we get bubbles because “gambling” becomes more profitable than working. We have allowed the financial industry (the REIC, actually) to run this country into the ground. We need to turn away from the worshipping of the financial “gods” and corporate executives, dealmakers, etc., and get back to the business of creating and building things. We need to turn away from “free trade” with third-world countries when that “free trade” means all our jobs are being off-shored.

There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.

[EconProf]

CA renter, there is a lot in your post I agree with, especially our tendency to make decisions based only on short run considerations while ignoring the long term impact. “Short-termism” prompts bad behavior at the personal level (instant gratification, buying on credit, addictions, diet), and in politics. The choice by Republican and Democrat city council members a decade ago to massively increase pension benefits gained them momentary popularity with the far-thinking union members. The public, and most of the economists and accountants who slept on the job, ignored the long-run costs we are now about to pay.
Likewise our state politicians, of whatever stripe, are famous for budgetary ledgerdermain, annually kicking the can into the future. Their tricks to postpone or hide costs and accelerate revenue collections are legendary, and make us the butt of jokes.
You have correctly pointed to some of the remedies for these past decisions, and they will be painful and costly because we have been slow to wake up to short-termism. Better late than never.

[EconProf]

CA renter, there is a lot in your post I agree with, especially our tendency to make decisions based only on short run considerations while ignoring the long term impact. “Short-termism” prompts bad behavior at the personal level (instant gratification, buying on credit, addictions, diet), and in politics. The choice by Republican and Democrat city council members a decade ago to massively increase pension benefits gained them momentary popularity with the far-thinking union members. The public, and most of the economists and accountants who slept on the job, ignored the long-run costs we are now about to pay.
Likewise our state politicians, of whatever stripe, are famous for budgetary ledgerdermain, annually kicking the can into the future. Their tricks to postpone or hide costs and accelerate revenue collections are legendary, and make us the butt of jokes.
You have correctly pointed to some of the remedies for these past decisions, and they will be painful and costly because we have been slow to wake up to short-termism. Better late than never.

[EconProf]

CA renter, there is a lot in your post I agree with, especially our tendency to make decisions based only on short run considerations while ignoring the long term impact. “Short-termism” prompts bad behavior at the personal level (instant gratification, buying on credit, addictions, diet), and in politics. The choice by Republican and Democrat city council members a decade ago to massively increase pension benefits gained them momentary popularity with the far-thinking union members. The public, and most of the economists and accountants who slept on the job, ignored the long-run costs we are now about to pay.
Likewise our state politicians, of whatever stripe, are famous for budgetary ledgerdermain, annually kicking the can into the future. Their tricks to postpone or hide costs and accelerate revenue collections are legendary, and make us the butt of jokes.
You have correctly pointed to some of the remedies for these past decisions, and they will be painful and costly because we have been slow to wake up to short-termism. Better late than never.

[EconProf]

CA renter, there is a lot in your post I agree with, especially our tendency to make decisions based only on short run considerations while ignoring the long term impact. “Short-termism” prompts bad behavior at the personal level (instant gratification, buying on credit, addictions, diet), and in politics. The choice by Republican and Democrat city council members a decade ago to massively increase pension benefits gained them momentary popularity with the far-thinking union members. The public, and most of the economists and accountants who slept on the job, ignored the long-run costs we are now about to pay.
Likewise our state politicians, of whatever stripe, are famous for budgetary ledgerdermain, annually kicking the can into the future. Their tricks to postpone or hide costs and accelerate revenue collections are legendary, and make us the butt of jokes.
You have correctly pointed to some of the remedies for these past decisions, and they will be painful and costly because we have been slow to wake up to short-termism. Better late than never.

[EconProf]

CA renter, there is a lot in your post I agree with, especially our tendency to make decisions based only on short run considerations while ignoring the long term impact. “Short-termism” prompts bad behavior at the personal level (instant gratification, buying on credit, addictions, diet), and in politics. The choice by Republican and Democrat city council members a decade ago to massively increase pension benefits gained them momentary popularity with the far-thinking union members. The public, and most of the economists and accountants who slept on the job, ignored the long-run costs we are now about to pay.
Likewise our state politicians, of whatever stripe, are famous for budgetary ledgerdermain, annually kicking the can into the future. Their tricks to postpone or hide costs and accelerate revenue collections are legendary, and make us the butt of jokes.
You have correctly pointed to some of the remedies for these past decisions, and they will be painful and costly because we have been slow to wake up to short-termism. Better late than never.

[no_such_reality]

[quote=CA renter]There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.[/quote]

I disagree. With the unions in place, the problems runs right through from the top to the roots. Many, probably the vast majority of public service workers, IMHO, *WANT* to do the right thing. The Union, combative management, and insane bureaucracy saddles them in an organization that tolerates mediocrity. saddles them carrying a subset of low-performers and systematic drains money out of core services and into the bureaucracy.

Teachers are in classrooms with 20-30+ students. The students are funded at nearly $10K a pupil yet the teachers lack basic supplies while districts like LAUSD spend hundreds of million on building a single school campus. Remember the furloughs last year and the expose captured of the DMVs in LA intentionally creating massive lines?

It’s a case of one bad apple, the question is is the one bad apple 1%, 10% or 20%? 80% percent, I assume, really want to work and do the right thing for the State. The other 20% are in it for themselves and unfortunately, between the union rules and general Government culture in place won’t let them be dealt with.

[no_such_reality]

[quote=CA renter]There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.[/quote]

I disagree. With the unions in place, the problems runs right through from the top to the roots. Many, probably the vast majority of public service workers, IMHO, *WANT* to do the right thing. The Union, combative management, and insane bureaucracy saddles them in an organization that tolerates mediocrity. saddles them carrying a subset of low-performers and systematic drains money out of core services and into the bureaucracy.

Teachers are in classrooms with 20-30+ students. The students are funded at nearly $10K a pupil yet the teachers lack basic supplies while districts like LAUSD spend hundreds of million on building a single school campus. Remember the furloughs last year and the expose captured of the DMVs in LA intentionally creating massive lines?

It’s a case of one bad apple, the question is is the one bad apple 1%, 10% or 20%? 80% percent, I assume, really want to work and do the right thing for the State. The other 20% are in it for themselves and unfortunately, between the union rules and general Government culture in place won’t let them be dealt with.

[no_such_reality]

[quote=CA renter]There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.[/quote]

I disagree. With the unions in place, the problems runs right through from the top to the roots. Many, probably the vast majority of public service workers, IMHO, *WANT* to do the right thing. The Union, combative management, and insane bureaucracy saddles them in an organization that tolerates mediocrity. saddles them carrying a subset of low-performers and systematic drains money out of core services and into the bureaucracy.

Teachers are in classrooms with 20-30+ students. The students are funded at nearly $10K a pupil yet the teachers lack basic supplies while districts like LAUSD spend hundreds of million on building a single school campus. Remember the furloughs last year and the expose captured of the DMVs in LA intentionally creating massive lines?

It’s a case of one bad apple, the question is is the one bad apple 1%, 10% or 20%? 80% percent, I assume, really want to work and do the right thing for the State. The other 20% are in it for themselves and unfortunately, between the union rules and general Government culture in place won’t let them be dealt with.

[no_such_reality]

[quote=CA renter]There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.[/quote]

I disagree. With the unions in place, the problems runs right through from the top to the roots. Many, probably the vast majority of public service workers, IMHO, *WANT* to do the right thing. The Union, combative management, and insane bureaucracy saddles them in an organization that tolerates mediocrity. saddles them carrying a subset of low-performers and systematic drains money out of core services and into the bureaucracy.

Teachers are in classrooms with 20-30+ students. The students are funded at nearly $10K a pupil yet the teachers lack basic supplies while districts like LAUSD spend hundreds of million on building a single school campus. Remember the furloughs last year and the expose captured of the DMVs in LA intentionally creating massive lines?

It’s a case of one bad apple, the question is is the one bad apple 1%, 10% or 20%? 80% percent, I assume, really want to work and do the right thing for the State. The other 20% are in it for themselves and unfortunately, between the union rules and general Government culture in place won’t let them be dealt with.

[no_such_reality]

[quote=CA renter]There are many problems with our economy, and many possible solutions; but scapegoating public union workers totally ignores the root causes of our problems and prevents us from being able to establish workable, common-sense, solutions that acutally address the REAL causes of our economic distress. We need to move away from this nonsensical partisan bickering and focus on what will make this country strong and successful again. The problem is at the TOP, not the bottom.[/quote]

I disagree. With the unions in place, the problems runs right through from the top to the roots. Many, probably the vast majority of public service workers, IMHO, *WANT* to do the right thing. The Union, combative management, and insane bureaucracy saddles them in an organization that tolerates mediocrity. saddles them carrying a subset of low-performers and systematic drains money out of core services and into the bureaucracy.

Teachers are in classrooms with 20-30+ students. The students are funded at nearly $10K a pupil yet the teachers lack basic supplies while districts like LAUSD spend hundreds of million on building a single school campus. Remember the furloughs last year and the expose captured of the DMVs in LA intentionally creating massive lines?

It’s a case of one bad apple, the question is is the one bad apple 1%, 10% or 20%? 80% percent, I assume, really want to work and do the right thing for the State. The other 20% are in it for themselves and unfortunately, between the union rules and general Government culture in place won’t let them be dealt with.

[davelj]

Some budget stats to consider. Here’s the breakdown of the Big 4 for 2010/2011:

Education (K-12 & Higher Ed.): 40%
Health & Human Services: 28%
Bus., Transportation & Housing: 10%
Corrections & Rehab: 7%

That’s 85% of CA’s budget right there. So that’s where you have to cut. Everything else is just fiddling around at the edges.

The big whopper, of course, is education. Interestingly, according to the National Center for Education Statistics, instructional spending comprises just 54% of per-pupil spending in CA for K-12. The other 46% is administration. Per-pupil K-12 spending is going to be roughly $11,200 this year. That means that there’s about $6,000 of ADMINISTRATIVE expense for every K-12 student in CA. Sacramento, we have a problem. But I think I know where we can find some cuts for the budget. And it starts in the administrative bureaucracy that is the CA Dept. of Education.

I’m going to research this a bit, but I bet that the education budget for CA has increased over the last 12 years at a FAR higher rate than the sum of student population growth plus inflation. And I think I know where most of that ended up. And it ain’t in the classroom.

[davelj]

Some budget stats to consider. Here’s the breakdown of the Big 4 for 2010/2011:

Education (K-12 & Higher Ed.): 40%
Health & Human Services: 28%
Bus., Transportation & Housing: 10%
Corrections & Rehab: 7%

That’s 85% of CA’s budget right there. So that’s where you have to cut. Everything else is just fiddling around at the edges.

The big whopper, of course, is education. Interestingly, according to the National Center for Education Statistics, instructional spending comprises just 54% of per-pupil spending in CA for K-12. The other 46% is administration. Per-pupil K-12 spending is going to be roughly $11,200 this year. That means that there’s about $6,000 of ADMINISTRATIVE expense for every K-12 student in CA. Sacramento, we have a problem. But I think I know where we can find some cuts for the budget. And it starts in the administrative bureaucracy that is the CA Dept. of Education.

I’m going to research this a bit, but I bet that the education budget for CA has increased over the last 12 years at a FAR higher rate than the sum of student population growth plus inflation. And I think I know where most of that ended up. And it ain’t in the classroom.

[davelj]

Some budget stats to consider. Here’s the breakdown of the Big 4 for 2010/2011:

Education (K-12 & Higher Ed.): 40%
Health & Human Services: 28%
Bus., Transportation & Housing: 10%
Corrections & Rehab: 7%

That’s 85% of CA’s budget right there. So that’s where you have to cut. Everything else is just fiddling around at the edges.

The big whopper, of course, is education. Interestingly, according to the National Center for Education Statistics, instructional spending comprises just 54% of per-pupil spending in CA for K-12. The other 46% is administration. Per-pupil K-12 spending is going to be roughly $11,200 this year. That means that there’s about $6,000 of ADMINISTRATIVE expense for every K-12 student in CA. Sacramento, we have a problem. But I think I know where we can find some cuts for the budget. And it starts in the administrative bureaucracy that is the CA Dept. of Education.

I’m going to research this a bit, but I bet that the education budget for CA has increased over the last 12 years at a FAR higher rate than the sum of student population growth plus inflation. And I think I know where most of that ended up. And it ain’t in the classroom.

[davelj]

Some budget stats to consider. Here’s the breakdown of the Big 4 for 2010/2011:

Education (K-12 & Higher Ed.): 40%
Health & Human Services: 28%
Bus., Transportation & Housing: 10%
Corrections & Rehab: 7%

That’s 85% of CA’s budget right there. So that’s where you have to cut. Everything else is just fiddling around at the edges.

The big whopper, of course, is education. Interestingly, according to the National Center for Education Statistics, instructional spending comprises just 54% of per-pupil spending in CA for K-12. The other 46% is administration. Per-pupil K-12 spending is going to be roughly $11,200 this year. That means that there’s about $6,000 of ADMINISTRATIVE expense for every K-12 student in CA. Sacramento, we have a problem. But I think I know where we can find some cuts for the budget. And it starts in the administrative bureaucracy that is the CA Dept. of Education.

I’m going to research this a bit, but I bet that the education budget for CA has increased over the last 12 years at a FAR higher rate than the sum of student population growth plus inflation. And I think I know where most of that ended up. And it ain’t in the classroom.

[Author]

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