Further to my “truthiness” post about CalSTRS’s latest annual report, see here for a wonderful counter-example published this weekend. Among other things, notice how Berkshire’s CEO reports the all-important measure of book value from the most recent fiscal year that ended fewer than 60 days before his letter while CalSTRS’s CEO reports the all-important measure of the pension fund equivalent (unfunded liabilities) from a fiscal year that ended more than 500 days before that CEO’s letter! Also, contrast the discount rates and investment return assumptions each assumes for their pension liabilities and pension assets: In Berkshire’s case the discount rate is 4.1% and the investment return assumption is 6.5%. In CalSTRS’s case both are set at 7.5%. That allows CalSTRS to understate both the true size of pension liabilities and the future cost to the state and school districts of meeting those liabilities.

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Lecturer at Stanford University and president of Govern For California

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