In response to critics who have untruthfully claimed that I have only offered criticism and not proposed solutions to California’s pension problem:

  • In 2005, when serving on board of the State Teachers’ Retirement System (CalSTRS) I recommended discounting pension obligations at a rate reflecting obligor creditworthiness and assuming a 6.2 percent investment return assumption for funding contributions. In response the State Senate removed me from the board.
  • Thereafter I continued to press state pension funds to utilize appropriate rates.
  • Because pension funds made no adjustments and thereby created large unfunded liabilities, in 2012 I wrote governments would have to reduce un-accrued benefits and suspend cost-of-living increases.
  • More recently I proposed that California raise teacher pay by reducing unfunded retirement liabilities.

The unfunded pension problem was easy to address in 2005. Truth-suppression and obstruction by elected and pension fund officials prevented action. Now the problem will require much greater sacrifice — and leadership.

Written by

Lecturer at Stanford University and president of Govern For California

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