From: Aaron McLear
Sent: Wednesday, August 19, 2009 4:08 PM
To: Ortiz, Jon - Sacramento
Subject: RE: SAC BEE STATE WORKER BLOG: CalPERS Board Candidate Blasts 'Attacks' On Pensions

Response from David Crane, Senior Advisor for Jobs and Economic Growth:


"It appears that Mr. Jelincic doesn't understand the governor's proposal or the impact on government programs from unfunded pension promises. But he is correct about one thing: No pension reform proposal can do anything about all the existing and massive unfunded pension liabilities already in place. Unfortunately, those massive costs were set in stone in 1999 when legislators passed legislation (SB400) that retroactively and prospectively increased pension benefits by tens of billions of dollars and compounded through decades of underfunding because of the use by CalPERS of GM-style pension accounting designed to understate the real cost of pension promises. Unfortunately we're seeing the terrible consequences of these actions today as billions are slashed from domestic violence shelters, health and human services, parks and recreation and more programs in order to pay off past unfunded pension promises. We're just at the tip of that iceberg, as hundreds of billions of unfunded pension promises will keep coming due and taking money from those programs for decades to come.  But while we can't do anything about those past promises -- they are contractual and must be paid -- or their habitual under-funding, we CAN do something to help protect future government programs from even greater devastation. That's why the single most important steps we can take to protect them are (I) to reduce the size of pension promises made to new non-public-safety employees and (ii) to require honest, non-GM-style, funding of pension promises as and when made. The governor's proposal does both and will lead to billions of dollars being available for government programs rather than pensions."