PERS Poster Child
Wall Street Journal profiles Pacific Grove as a “precursor” to other cities dropping out of the state pension fund.
Friday, December 19, 2008
A Dec. 18 article in The Wall Street Journal examines the financial burden the California Public Employees Retirement System places on participating cities during the recession. The poster child for the CalPERS meltdown: Monterey County’s own Pacific Grove.
The article gives a short history of P.G.’s financial quagmire, which was bad enough without the rising obligations of the state pension system. “CalPERS could bankrupt us faster than anything else,” Mayor Dan Cort is quoted as saying.
P.G. is now six months into the 18-month process of terminating its CalPERS contract but, as we reported last week, the city may now owe the system as much as $20 million. In efforts to balance its budget and build up its reserve, P.G. has made severe service cuts and layoffs over the past two years.
The WSJ slideshow accompanying the article focuses on signs of neglect around P.G. – a crack in the downtown pavement, weeds around Jewell Park, construction cones at the Adult Education Center, a gutter drop-off in the road, and the unfinished fence bordering the rec trail.
In 2006, CalPERS gobbled up 15 percent of the city’s revenue. Most of that money goes to police and fire pensions, which are more generous than those of general employees.
CalPERS lost nearly one-third of its value this fall due to the housing market slump. The public pension fund had aggressively invested in real estate “near the peak of the housing bubble in some of the nation’s most overheated markets,” WSJ reports.