5 ms·
If this sounds irresponsible, you really, really do not want to hear about pension financing. This is "In return for $1 in the present day, we will pay you $10
by patio11 14y ago
If this sounds irresponsible, you really, really do not want to hear about pension financing. This is "In return for $1 in the present day, we will pay you $10 in 30 years." Californian state employee pensions are "In return for $1 in the present day, 30 years from now we will reward you with a non-callable perpetuity bond with a $10 a year coupon. Oh, here's your dollar back."
- nekojima 14y agoIf the pension funds invest in the CAB issues, that might help solve the pension funding shortfall. :-/
- wildgift 14y agoLOL. The liability is something like 56 billion, and at least Brown is addressing it, or starting to address it. Give Cali some credit.
- spoiledtechie 14y agoIt the same way in most states. They can no longer afford pensions. I know in Florida its just as bad if not worse.
- gwern 14y agoAt least with pensions, funds are being invested in assets with direct value that can be recaptured in 30 years; even in the optimistic case where new schools really add value, that value may well just get up and leave if taxes are raised in 30 years to pay for the loan.
- lmm 14y agoThe "force multiplier" from education is better than anything else; labour is the greatest single cost to almost all businesses, and the amount of education needed is high and will only increase in the future. Alongside healthcare it's pretty much the best possible use of government money. Whether these new schools improve education is of course an open question.
- sethg 14y agoOn a national level, yes. But on a district level, what proportion of the children who were educated in a given school district end up working there and paying taxes after they grow up?
- bmm6o 14y agoBut as the adage goes, the only thing worse than training your employees and having them leave is not training them and having them stay.
- friism 14y agoIf you're interested, Russ Roberts did a great podcast on unfunded pension liailities a few weeks ago: http://www.econtalk.org/archives/2012/11/joshua_rauh_on.html http://www.econtalk.org/archives/2012/11/joshua_rauh_on.html California is pretty deep in...
- pathy 14y agoThank you for the link, interesting yet scary podcast. I have a feeling I will have to fund my own private pension in the future, and I am from Northern Europe.
- dylanvee 14y agoKhan Academy video that uses Illinois as an example of what happens when pension obligations are underfunded: http://www.khanacademy.org/humanities/american-civics/v/illinois-pension-obligations http://www.khanacademy.org/humanities/american-civics/v/illi...
- toomuchtodo 14y agoGod damn it Illinois, can't we get our shit together? /Illinois resident
- sageikosa 14y agoEvery so often, when you kick the can down the road, you have to face the possibility that the road will end.