CalPERS gets dreaded decision: Judge rules Stockton can sever its city pensions

[branford]

50. Fund the Pensions and Use a Reasonable Rate of Return on Investments

Not only should cities and towns have to fully fund their pension obligations, they should be required to use a rational rate of return to determine such obligations.

At budget time, states often not only under-fund their pensions and benefit plans, but use unreasonably high projected rates of return on the invested money to reduce the amounts invested even further. It's these and other budgetary accounting tricks that have allowed states, particularly New York, New Jersey and California, to balance their budgets. However, it has become little more than a pyramid scheme. As more municipal employees retire, and the obligations grow, the problem only gets worse. It's a bubble far worse than the sub-prime mortgage fiasco, and the victims will be the municipal retirees. Detroit will simply be a preview of what's to come.