David Crane Breaks it Down in Layman’s Terms, Public Employee Pension Benefits, General Funds, Special Funds, Non-discretionary, Fiscally-protected and Discretionary

David Crane has a new piece cross posted today at Fox and Hounds Daily and on Advancing a New Society
The title, With Retirement Costs Consuming One-Fifth of Discretionary Spending, California Must Reduce Un-Accrued Pension Benefits makes the point plain and simple. Then Crane breaks it down, for those who don’t understand the distinctions of public finance funds, budgets, and projections.

He breaks public funds down into categories, and even provides a chart for those of us who love graphics to help drive a point home.

Pensions and other retirement costs will consume more than 23% of discretionary state spending in fiscal year 2012-13, according to the budget recently passed by the California State Legislature and signed by Governor Jerry Brown – nearly three times the share taken up by retirement costs just ten years ago.

For Californians, rapid growth in retirement costs has meant less money for universities, parks, courts and other services as well as a temporary tax increase in 2009 and another being proposed currently (one of three proposed tax increases on the November ballot – Propositions 30, 38 & 39). In the absence of reform, that share will grow, which means even more taxes and fewer services.

California’s general and special fund spending for 2012-13 is budgeted at $131 billion and effectively fits into three categories: Non-discretionary, Fiscally-protected and Discretionary.

Allow me to explain all three in layman’s terms:  (click here to go to Fox and Hound to read the full article)

California’s Legislators play fast and lose with taxpayer money, services, and resources they’re elected to protect

They make Wall St Shysters like JP Morgan’s Jaime Dimon look like alter boys.

In  California’s Bad Bet Makes JPMorgan’s Look Minor,  David Crane writes:

California legislators on Sept. 10, 1999. They decided that investment gains would cover 100 percent of the cost of retroactive pension increases they granted that day to hundreds of thousands of state workers.

The politicians made the wrong bet — and the result has been a penalty to California’s budget that has averaged $2 billion a year ever since and that will cost the state billions more for decades to come.

Promising that “no increase over current employer contributions is needed for these benefit improvements,” and that the state pension fund would “remain fully funded,” the proposal, known as SB 400, claimed that enhanced pensions wouldn’t cost taxpayers “a dime” because of healthy investment returns. The proposal went on to assert that it “fully expects” the state’s pension costs to remain below $766 million a year for “at least the next decade.”

Click here to read the article.

In “A Progressive’s Progress” Greenhut writes about what one authentic progressive is standing for in California

Steven Greenhut
A Progressive’s Progress
San Jose mayor Chuck Reed shows how Democrats can take the lead on public-pension reform.
30 May 2012

Skyrocketing compensation costs for public employees are forcing California municipalities to contemplate spending cuts and, in some cases, even bankruptcy. The question isn’t whether to rein in these pension and medical liabilities—that’s unavoidable—but precisely when and how to do so. Dominated by public-sector unions, the state legislature remains in deep denial, but some local leaders, acknowledging reality, are taking action on their own to control costs. “We’ll do this city by city a few times and that will help to move the state,” San Jose mayor Chuck Reed told me in a recent interview at City Hall. Eventually, Reed says, California will need a statewide pension-reform initiative to overcome the legislature’s intransigence. Reed, a progressive Democrat who has dragged along a slim majority of a 10-member city council, is leading the most impressive effort statewide.

Click here to read the article published in City Journal

Next Tuesday at 10 am on GadflyRadio, David Crane of Govern CA joins the crew.

David Crane is a lecturer in the Public Policy Program at Stanford University and president of Govern For California.

We’ll talk with David Crane about his newly formed group called Govern CA, it’s philosophy and intention, and its chances for success.

Check out his writing at DavidGCrane.org, showcasing a plethora of penned editorials.

To read what others are writing about David Crane, here are a few stories:

A nonpartisan group aims to elect “courageous” legislators in the Golden State.
Judith Miller

The importance of the first item – underreporting the size of debt – was illustrated when Lehman Brothers and AIG used aggressive but legal accounting techniques to underreport debt, thereby encouraging uninformed investors to enter into a web of transactions with them that later threatened the world financial system. A similar occasion took place in 1999, when California’s pension funds used aggressive but legal accounting techniques to underreport pension debt in order to show they were overfunded and thereby coax a huge and unfunded pension benefit increase from an uninformed state Legislature. But as Munnell illustrated in a 2010 report, California’s pension funds were actually underfunded in 1999. The cost of that unfunded pension increase has since diverted billions from education and social services, and bigger diversions are on the way.

Viewpoints: State finance officials should face the truth on pension promises
• The state’s pension debt is greater than the state reports.• The state is counting on unlikely investment returns to meet that debt.• Because those returns are unlikely, state pension costs are likely to soar. Read more here

Chapter 4: Bond Holders Seek Governmental Transparency
Taxpayers may be on the hook nationwide for more than $2.5 trillion in pensions, according to David Crane, an economic advisor to former Gov. Arnold Schwarzenegger, with perhaps $500 billion of that in California alone.

“State and local governments utilize a misleading method for reporting the size of public pension obligations,” said Crane, calling it “the Alice in Wonderland world of government pension accounting that allows governments to hide liabilities.”

“California wasn’t alone in this regard,” Crane told the SEC. “Unrealistic reporting of pension promises is a systemic problem. That’s why the SEC must require realistic accounting of public pension promises. For that to happen it must insist upon a realistic discount rate when reporting pension liabilities.”

Roberts is a contributing editor to Calwatchdog and a long-time Bay Area newspaper reporter.
Read more here.

“UC regent Crane ousted for telling hard truths about pensions
Posted on December 29, 2011 by admin

Editorial | San Francisco Chronicle — David Crane is not the most popular man in Sacramento. In fact, his determination to tell legislators what they don’t want to hear – yet need to hear – is about to cost him his position as a University of California regent.” Continue reading . . .

So Crane, a Democrat, and fellow big-time investors Ronald Conway, a Republican, and Gregory Penner, registered Decline-to-State, have set up an organization, Govern for California, to help finance candidates that they think will take the steps needed to confront California’s problems.
Crane insists that the plan is not to elect moderate or centrist candidates but rather “courageous” candidates. Depending how one defines those terms, some may find that is a distinction without a difference.

Crane explains the candidate his group is looking for. “Our number one priority is higher quality people who are intelligent, who are numerate.

“We’ll spend what it takes. These elections don’t cost as much as the power they get. The bang for the buck is really great. It’s like if you find a good company you like, you’ll buy more of the stock.”

Crane says his group’s successful involvement in only a few races will make a great difference in the way California is governed.  Click here to read more.

Former Schwarzenegger adviser renews call for pension reform
Posted on November 17, 2011 by admin

Hasta La Vista, Failure
By Joel Kotkin
Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University
Friday, December 17th, 2010
Traditionally California Republican governors focus on the hoary economic fundamentals. But Schwarzenegger’s main economic advisor, San Francisco investment banker David Crane, has clung to the notion that California’s creative skills would allow the state to flourish amid “creative destruction.”  Click here to read more

Gadfly Radio with Martha and Cal Watch Dog, Ben Boychuk and John Hrabe today at 1 PM PT

Click on the Gadfly Radio picture  to go to our temporary  Gadfly Radio with Martha and CalWatchDog page where you can listen to or download podcasts of previous shows, or to listen live.    

Click on the link below Gadfly Radio to listen live from this page. 
To call in to Gadfly Radio with Martha & CalWatchDog live, call  805 639 0008 during the program.

Today’s show, February 14th, 2012,  Gadfly Radio is now on 1400 AM KKZZ 

Today live with Martha, John Seiler of CalWatchDog.com  and Ben Boychuk of CA City Journal, we welcome back regular contributor to CalWatchDog, John Hrabe.   John’s written a couple of investigative reports on the recent Redistricting of CA and his take is not flattering in outcome, the process nor the actions of any of the players involved.   What does it mean for California’s  jobs, economy, growth, and future?
CA GOP ‘Idiots’ Lose State Senate | CalWatchDog 
11 More Ways to Fix Busted Redistricting | CalWatchDog 

We’ll also ask John Hrabe about his take on the Clint Eastwood Super Bowl Ad. 
John Hrabe: Eastwood Super Bowl Ad: Powerful, Inspirational and Dead Wrong 
and his most recent post, just in time for Valentine’s Day: 
Cal State Prez Salaries Top Facebook Exec | CalWatchDog  Feel the love!  But for whom? 

More from CalWatchDog.com
Kamala Harris’ Totalitarianism | CalWatchDog
and related story:
Group suspends California public pension reform ballot effort – Sacramento Politics – California Politics | Sacramento Bee

And we’ll talk with Ben Boychuk on the latest posted over at California City Journal:
  David Crane’s California Quest by Judith Miller, City Journal Winter 2012, a different take on the recent Redistricting outcome and possibilities and

California’s Demographic Revolution by Heather Mac Donald, City Journal Winter 2012
If the upward mobility of the impending Hispanic majority doesn’t improve, the state’s economic future is in peril.   I found reading her piece a prescription for restless agitated sleep.  In my opinion she paints little  possibility other than to stop anymore of “those kinds of people” and  only tangentially touches on the role of the white Anglo Saxons who dominate all the powerful state public employee unions, including the 800 pound gorilla in the room–The almighty teachers union, the CTA and their definitive role in the impoverished level of education of the economically and socially impoverished Latino population of CA.    I’m sure Ben and John will have a different take.  What?  We’ll find out. 

Chat with me on FB instant chat or Twitter during the broadcast. 

I am a stand for liberty, integrity, empowerment, and prosperity for all people; a stand for vibrant and innovative small businesses that create jobs, that in the process of prospering, nurture and support creative and dynamic culture, in the work place, and in our personal lives.


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State Sponsored Thievery Continues in Plain Sight « Union Watch

“Teachers and other public employees use “air time” to pick your pocket. The California State Teachers Retirement System tries calming words. David Crane tells the truth and loses yet another job.” 

Saying that the state teachers’ retirement system is underfunded is the understatement of this or any year and now, CalSTRS is giving us specifics. On December 27th, it said,

“Recent media reports have suggested that to solve the unfunded liability the state will have to increase CalSTRS funding by $3.8 billion a year for 30 years for a total of more than $114 billion. Although this is an accurate statement based on current projections, achieving adequate funding can occur several ways that would be phased in over time. The CalSTRS $56 billion funding shortfall can be managed, but it will require gradual and predictable increases in contributions.”

Read more:
State Sponsored Thievery Continues in Plain Sight « Union Watch

Shout out to Reason for this post: Farewell, My Lovely How public pensions killed progressive California

by Tim Cavanaugh from the March 2011 issue

…“This year we’re spending 10 percent less on higher education than we did 10 years ago, parks and recreation 40 percent less, environmental protection 80 percent less,” Crane told me in the fall of 2010, “while spending on pensions is up 2,500 percent. So when Democrats realize what is happening and act in the interest of the people they represent, they will address the pension problem in California.” Like so many other reformers, Crane is a registered Democrat who supported Jerry Brown.

The Democratic Party has folded Sacramento into one of the tightest one-party grips in contemporary American politics. In November, bucking the national trend, Democrats in California won not just the governorship but 51 Assembly seats to Republicans’ 29, 24 state Senate seats to Republicans’ 14, and every statewide office. With the passage of a referendum lowering the number of legislative votes required to approve a state budget (from a two-thirds majority to a simple majority), California is that rarest of land masses for the 2011 Democratic Party: conquered territory. State Democrats have freedom to rule virtually unchallenged by the scattered, rusticated Republicans. Click here to read more.

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In California, Five Hundred and Fifty Billion Eye-Popping-Blood-Pressure-Raising Dollars of Unfunded Public Employee Pension Debt! OMG! David Crane lays it out Bold and Cold

On Dec 15th, 2010, David Crane, special economic advisor to Governor Arnold Schwarzenegger, breaks down the numbers in this Wall Street Journal video interview conducted by James Freeman. It’s mind blowing.

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