For too long, Californians have endured declines in the quality and quantity of government services even as public employee unions receive outsized pension and health care benefits. Despite concessions by some, these unions haven’t fully shared the burden of balancing state and local budgets. If they continue to act so irresponsibly, they face the populist backlash we recently saw in Wisconsin.
While hardworking employees are not to blame as individuals for this situation, three recent scandals involving state employee unions will only continue to diminish the standing of the unions in public opinion.
Administrators at CalPERS, the state public-employee retirement system and the largest institutional investment fund in the country, recently rolled out a new website that allows members to track contributions, health care coverage and retirement benefits. This would have been ordinary news, were it not for the fact that the website is a year late. And then there’s the little matter of how much it cost to develop: no less than $507 million.
Taxpayers around the state footed a huge portion of this outrageous bill through government contributions to the CalPERS fund. The retirement system’s computer networks have long been a patchwork of different, outmoded computer programs, and integrating them was never going to be easy. But according to the Los Angeles Times, the contractor ran up additional costs of $228 million. And the system is still barely functional; CalPERS representatives warned that it may take some time before the bugs are worked out.
The CalPERS investment fund lost 4.8 percent of its value over the past fiscal year, significantly underperforming with its benchmarks. The fund lost almost $12 billion in bad investments. The fund performed slightly less well than most quasi-public pension funds, and considerably worse than the S&P 500, which actually posted a modest gain. If this trend continues, CalPERS will be well short of the cash it needs to meet its retirement obligations, and the state may well have to kick in yet more money.
Lavish hotel stays
Trustees overseeing the pension funds of Contra Costa, Alameda and San Mateo counties have spent $60,000 since 2008 to spend the night at fancy San Francisco hotels such as the Hyatt Regency and the Westin St. Francis, according to The Bay Citizen. These trustees live a few miles down U.S. Highway 101 or a few BART stops away, but they decided instead to crash on silk sheets and dine at the finest establishments, with the bills sent to their retirement funds.
It is deplorable what Wisconsin Gov. Scott Walker did to his state’s public-employees unions. His naked attempt at union-busting was despicable. But if these sorts of scandals continue, especially at a time when retirement obligations threaten to drain yet more money out of the state’s coffers, don’t be surprised if right-wing organizations in California start a referendum campaign to do just what Walker did. And if they do, the recent public-pension scandals have provided ammunition to gather more support than the state’s union leaders think.