At the height of the property bubble, California's giant pension fund, Calpers, made a fateful decision: It aggressively poured money into real estate. As a result, today it's one of the biggest owners of undeveloped residential land in America.
Partly because of these investments, California Public Employees' Retirement System is struggling to avoid one of its worst annual declines since its 1932 inception. Calpers has lost almost a quarter of its assets since July 1, the start of the current fiscal year.
Calpers is now warning California's cities, towns and schools that they may have to cough up more money to cover the retirement and other benefits the fund provides for 1.6 million state workers. Some towns are already cutting municipal services, and at least one is partly blaming the Calpers fees.
This is just what cities like Chula Vista or Escondido need right now. (For the record, Chula Vista officials say they have been told they will have to deal with the full impact of this in two years).
Was it really that hard for governments to envision that things weren't always going to be so rosy? That they didn't have to prepare for a valley when things were peaking? You should look at any politician who's been in power over the last six years, and decide a simple thing: If they weren't part of the tiny tribe trying to get the government of which they were part to either temper its spending, save money or raise money that it could save then they should never, ever, be entrusted with public funds again. Ever. Perhaps we should make a list of who those politicians are.
If you haven't yet read Rob Davis' two-part series on the regions biggest water users, here's the first and here's the second. They are both excellent. You should call Caltrans (or visit the agency's majestic Old Town building) and state representatives and ask them why you are being asked to conserve water (and threatened with mandatory cutbacks) when they are wasting money dumping potable water all over the sides of highways. There are undoubtedly needs for erosion control and other uses, but Caltrans should have a very clear answer about why it must use so much water. It doesn't.
There were a couple of responses to my last post on Wild ERP I wanted to address briefly. In my original column and in subsequent discussions, I've tried to make clear that I understand the need for the new computer system at City Hall. I also get the efficiencies it will provide. And I think residents should be patient with the city when it makes an important investment like this.
But that doesn't mean something hasn't gone wrong. I have no reason to think it's nefarious or scandalous. However, it's costing a lot of money; it's driving employees crazy; and it's still kind of strange. First, the city fired or lost the four or five top managers who were supposed to deliver the new system. Second, the city fired the contractors it has spent millions on trying to implement it. Now, the city expects a long delay and there's really nothing to indicate they won't have further problems.
So, I understand the need to do it. But Jerry Sanders' one big argument about why he deserved to be mayor and why he would be successful was that he was going to bring management competence to the city and set it up, as a strong mayor, to be managed successfully for the long term. This project is not a validation of that promise.
Finally, some of you have already remarked that you heard about the grant we received from the Knight Foundation. Yes, it's very cool.
Knight is working very hard to shine a light at the end of this tunnel of trouble the news media is going through. The foundation seems to have embraced wholeheartedly the concept that providing information is, quite simply, a public service. And that if that service is to survive the tumult right now, we will have to treat it as a service that the community can be (and is) supporting.
Anyway, here's a cool skype interview I did with a Knight representative yesterday.
I read the entire Wall Street Journal story, and I can't believe it! The largest pension plan in the world speculating on raw land, timber and undeveloped parcels is totally irresponsible and to do it with leverage instead of cash is crazy. This isn't "mad money", it should be in the most secure, conservative investments possible. I once had the responsibility for managing a pension plan for a medium sized aerospace company, and was also on the managing committee that determined the general direction of the plan investments. We were never in less than 60% bonds, and the occasional real estate investment we made was in income-producing existing property and was made with cash. After reading this story, I have to tell you anyone who doesn't own gold is nuts!
Yes, we certainly should make a list of those politicians. Especially the ones who always try to spend less before raising taxes. Here are two: Ron Paul and Tom McClintock.
With world's financial difficulties this era, the people are finding many ways to meet the ends. There are too many problems our world and the people in it faces. The geniuses behind the Wall Street collapse are getting cash advances to make up for their failures. Who is footing the bill? The very people that they are causing to lose their jobs at an epic rate. A normal person conducts their finances at least somewhat responsibly. Many normal people are forced to get cash advances to pay off the credit cards and loans that they have through the very banks and credit companies that these supposedly highly qualified guys run. With these kinds of things happening, it is no wonder that middle class Americans are getting more
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Scott Lewis on Politics
The Scott Lewis on Politics blog, abbreviated cleverly as SLOP, is a collection of observations, insights and the occasional scoop on public affairs in San Diego. Please feel free to e-mail Scott at scott.lewis@voiceofsandiego.org.
Listen to voiceofsandiego.org's radio program on AM 600 KOGO: Latest Episode (November 8): Scott Lewis and Michael Zucchet talk about the city's budget
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