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SAN JOSE — The San Jose City Council voted 6-to-5 this week to place a pension reform measure on the June ballot that takes on what the Little Hoover Commission called “the elephant in the room,” a way to reduce the cost of pensions promised current workers.... by Ed Mendell

"As state and local governments face rising pension costs while a weak economy forces deep budget cuts, the San Jose council’s plan is the biggest and boldest proposal yet by elected officials to reduce pension costs widely believed to be legally untouchable.

Mayor Chuck Reed had talked about declaring a fiscal emergency to reduce pensions earned by current workers in the future. Now he is talking about the city charter specifying minimum benefits provided by the city’s two independent pension systems.

“We are way beyond the minimum since the charter was put in place,” Reed said before the vote Tuesday. “The benefits have been modified probably a dozen times or so. But the charter reserves the right to roll back those benefits, at least back to the charter minimum. So that’s a power that we have that many other cities don’t have. Certainly cities in CalPERS are all different than us.”

Under the plan, employees could continue to earn their current pensions if they help pay off half of the pension system’s huge debt. Their contributions could increase up to 5 percent of pay each year, capped at a total increase of 25 percent of pay.

Or current employees could choose to keep pension amounts earned so far and earn lower pensions in the future, working longer to receive the full amount. City officials predict workers in the new plan would pay less for their pensions than they do now.

The cost-of-living adjustment for retiree pensions, 3 percent, could be suspended in a fiscal emergency. New hires would receive a lower pension, pay at least half the total cost and the city contribution would be capped at 9 percent of pay.


Overflow room at San Jose City Council meeting

Tuesday, the council also voted to delay the declaration of a fiscal emergency. The city’s budget gap shrank after a new actuary estimate last week said police and firefighter pension costs will drop next year not increase, mainly due to layoffs and pay cuts.

Robert Sapien, president of the San Jose firefighters union, told the council the $55 million reduction in expected pension costs undercut their “months, even years” of “preparing to create an emergency.”

Instead of delaying a declaration of emergency to an unspecified date, Sapien said the council “should be dropping this piece of your political agenda that has done nothing but terrorize workers.”

The legal views of Reed, a Stanford law school graduate and long-time attorney, were questioned by one of the five council members opposed to the plan, Ash Kalra, a Lincoln Law School professor who worked in the county public defender’s office.

“It was already a horrible case legally,” Kalra said. “We really don’t have cases to back up our legal position, and now we don’t even have the fiscal emergency argument.”

He said a memo indicates the “reservation of rights clause, which you know is legally a very weak clause and is unlikely to withstand any challenge, is being held up as how we can go forward without impairment of contract. We know that’s not true.”

Kalra said he agreed with the view of a Silicon Valley Chamber of Commerce representative who told the council that the measure, needed to end years of budget cuts and the erosion of the “quality of life,” is likely to be approved by voters.

A new statewide Field Poll issued yesterday found that two-thirds of likely voters think pension reforms should apply to current workers as well as new hires. A plurality think state and local pensions are too generous.

Kalra suggested that voter approval of the San Jose measure would result in an expensive legal battle. He said Orange County spent $2 million on its legal fees and $1.3 million on union legal fees after losing a suit to overturn a retroactive pension increase.

His motion to have the city attorney estimate the cost of legal fees and potential damages was changed before approval. The council will decide in closed session what estimates to make public, protecting legal strategy and other attorney-client matters.

Like Kalra, several council members who opposed putting the measure on the June ballot said there is a need for pension reform. But they said an agreement should be bargained with unions before taking the measure to the voters.

Councilwoman Nancy Pyle suggested that a union-backed pension reform could be paired with a sales-tax increase. Others said voter approval of a contested measure could result in a lengthy court battle delaying pension savings for years.

As she made the motion to put the measure on the June ballot, Vice Mayor Madison Nguyen said she hopes the action will prompt unions to seek mediation. The measure can be changed until a deadline in early March.

Reed said the ballot measure has several changes that emerged during bargaining with unions. A plan to declare a fiscal emergency last June was delayed until this month to allow more time for talks.

The vote Tuesday was originally scheduled to meet a deadline for placing a measure on a March special election ballot. Pension savings were sought to help close a big budget gap in the new fiscal year beginning in July.

After the actuarial estimate dropped the budget gap to $20 million, the plan for a special election was dropped, saving an estimated $3 million. The council put the measure on the June ballot Tuesday to avoid delays under legislation taking effect Jan. 1.

Gov. Brown signed a union-backed bill in October, AB 646, that allows public employee unions to request a lengthy review by a special fact-finding panel if mediation fails after 30 days.

San Jose is spending more than 20 percent of its general fund on retirement costs. In the last decade the costs tripled, going from $73 million to $245 million this year and, before the new lower estimate, were expected to reach $432 million by 2015-16.

Even after adjusting for inflation, said a city fact sheet, the average annual pension benefit has increased during the last two decades by 75 percent for police and firefighter retirees and 54 percent for other retirees.

The city’s pension contribution for police next year is expected to be about 60 percent of pay, twice as much as the current state contribution for Highway Patrol pensions.

Though located in wealthy Silicon Valley, the state’s third largest city has had budget shortfalls for 11 years in a row, cut 2,000 staff positions, laid off 66 young police officers this year and given staff a 10 percent pay cut.

“Whether or not we declare it, we are in it,” Reed said Tuesday of a fiscal emergency. “The task is to figure out how to get out of it.”

The watchdog Little Hoover Commission said in a report last February “the elephant in the room” is the legal obstacles to reducing the pensions not yet earned by current workers, a cost control available to private pensions.

The nonpartisan Legislative Analyst is among those who think a series of court rulings generally mean that a pension promised a state or local government worker on the date of hire becomes a vested right, protected by contract law.

In San Diego, Mayor Jerry Sanders, Councilman Carl DeMaio and others placed a measure on the June ballot that would switch new city hires to a 401(k)-style investment plan and put a five-year freeze on the pay of current workers that counts toward pensions.

But unable to get even a one-vote majority on the council, they had to gather the voter signatures needed to place an initiative on the ballot.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at http://calpensions.com/ Posted 8

Long Beach Taxpayers Association will terminate our website at the end of December. We want to thank all of those who have read our many posts regarding local issues; pension reform; taxes, and the lack of will on part of local and state government to deal with important issues.

The problems we focused on took much time and energy, so we are dispensing with one of our tasks

Our purpose in starting Long Beach Taxpayers Association was to inform the public in Long Beach of the financial changes needed to return our City to prosperity. Finance is a very complex issue to tackle in Long Beach. It takes a lot of research to properly inform people, not to mention the many road blocks we encountered. We used our website and other news venues to provide information researched by others, as well as our own. Hopefully, we have opened your minds and instilled a hunger for information needed to judge candidates and to vote on issues which will affect your life and finances.

We are; however, dealing with politics and politicians, and that does complicate and compound efforts to accomplish our goals. We are hoping that each of you who have read our web-site have become more involved both actively and vocally in your local government.

It takes time to make substantial changes, so Tom and I will continue to work on behalf of you, the taxpayers, to make a difference. We, the citizens, can no longer rely on the decisions of veteran politicians who want to make a life time career in politics. These same politicians continue to represent those who help them with their own political goals, while forgetting what is best for their constituency.

For a better tomorrow, stay involved vocally and actively!

If you would like to contact us on political matters that concern you, please e-mail: kathyryan43@hotmail.com


Tom and Kathy

Long Beach Taxpayers Association will terminate our website at the end of December. We want to thank all of those who have read our many posts regarding local issues; pension reform; taxes, and the lack of will on part of local and state government to deal with important issues.

The problems we focused on took much time and energy, so we are dispensing with one of our tasks

Our purpose in starting Long Beach Taxpayers Association was to inform the public in Long Beach of the financial changes needed to return our City to prosperity. Finance is a very complex issue to tackle in Long Beach. It takes a lot of research to properly inform people, not to mention the many road blocks we encountered. We used our website and other news venues to provide information researched by others, as well as our own. Hopefully, we have opened your minds and instilled a hunger for information needed to judge candidates and to vote on issues which will affect your life and finances.

We are; however, dealing with politics and politicians, and that does complicate and compound efforts to accomplish our goals. We are hoping that each of you who have read our web-site have become more involved both actively and vocally in your local government.

It takes time to make substantial changes, so Tom and I will continue to work on behalf of you, the taxpayers, to make a difference. We, the citizens, can no longer rely on the decisions of veteran politicians who want to make a life time career in politics. These same politicians continue to represent those who help them with their own political goals, while forgetting what is best for their constituency.

For a better tomorrow, stay involved vocally and actively!

If you would like to contact us on political matters that concern you, please e-mail: kathyryan43@hotmail.com


Tom and Kathy

The worst and best run states in America.

No surprise...California is the worst!

For an analysis of all 50 states, see link below...

http://247wallst.com/2011/11/28/best-and-worst-run-states-in-america-an-analysis

AP

"Cuomo: Considering at least some measures to raise taxes on higher earners.


Municipal 'millionaires'
Tax hikes to fund gov’t 1%-ers
By LAWRENCE MONE

Last Updated: 3:38 AM, December 1, 2011

Posted: 10:27 PM, November 30, 2011

More Print Gov. Cuomo, under enormous pressure from public-employee unions and Democrats in the Legislature to extend New York’s “millionaires’ tax,” is considering at least some higher taxes on higher incomes. The big irony here is that much of the money raised from any “millionaire” tax hikes would go to fund the growing phenomenon of public-sector millionaires.

How’s that? Well, most dictionaries define a millionaire as someone with wealth (i.e., assets) of $1 million. By that definition, many New York teachers and the vast majority of police and firefighters are millionaires, because the “net present value” of their retirement benefits is well in excess of $1 million.

That is, if they had to fund their retirements from their own savings, they’d have to set aside seven figures today.

Few who don’t work for the government sector have comparable assets. Over the last several decades, the private sector has moved increasingly to the 401(k)-style “defined contribution” model, which yields a retirement nest egg based on what both employers and employees have contributed to individual accounts.

Public-sector workers, on the other hand, still rely on “defined benefit” pensions, which provide a guaranteed stream of income based on career longevity and late-career peak salaries.

A New York City public-school teacher earning $100,000 can retire at 55 with a pension of $60,000. A private-sector worker would need $1.2 million to buy an annuity with the same yield and starting at the same (relatively young) age, according to the online pension calculator developed by the Manhattan Institute’s Empire Center.

It would take an even larger nest egg to replicate the pension income of city police officers, who typically retire in their 40s. According to data posted at SeeThroughNY, an Empire Center Web site, the average newly retired city cop collects a pension of $58,563 — plus a $12,000 annual supplement.

(Of course, public-sector workers also receive lavish health-care retirement benefits.)

Few private-sector workers have anything close to $1 million socked away in their retirement accounts. According to the Federal Reserve, the average worker in his late 50s has a balance of $85,600 in his retirement account, and a net worth of $222,300 overall.

To be sure, most public employees do contribute a small portion of their salaries to their pension funds, but the state and city contribute many times more. By contrast, private employers and employees more commonly do a one-to-one match.

And private-sector workers assume all the risk of these investments, while public-sector workers enjoy generous rates of guaranteed return. As former New York City Schools Chancellor Joel Klein quipped when he discovered his city pension offers a guaranteed 8 percent annual return, “Who but Bernie Madoff guarantees” such a return “permanently?”

Let me be clear: Many public-sector employees — especially frontline employees like teachers, cops and firefighters — have difficult, important and often dangerous jobs. They deserve to be well-compensated. And, for the most part, they are. After six years, police and firefighters can earn more than $90,000, excluding overtime.

Another irony: Salaries for public employees — math and science teachers, for example — could be raised if so much of their compensation wasn’t backloaded in pension costs.

In the popular 1950s TV show “The Millionaire,” a fictional character would hand out checks for a million dollars. Over the last few decades, we’ve developed a public-sector retirement system that basically does the same. It’s a system New York’s beleaguered taxpayers can simply no longer afford.

City pension costs have jumped from about 4 percent of city tax revenues to 20 percent over the past decade, crowding out other vital public investments. If New York is to avoid the fate of cities like Central Falls, RI, which have been driven into bankruptcy and are slashing promised retiree benefits, we must begin to fix the system now. Ideally, for new employees, by switching to the same type of “defined-contribution” retirement system now used by virtually everyone in the private sector.

There simply aren’t enough private-sector “millionaires” to support all the new public-sector millionaires being created every day."

Lawrence Mone is president of the Manhattan Institute for Policy Research.


Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/municipal_millionaires_OHzCRTElTcSjryqSPVxR1J#ixzz1fJX6eYjj

The 'Occupiers' throughout California have a great place to start if they ever combine forces and have a coherent message that they can all agree on...a part time legislature for California is needed. Texas does, California can do it as well.

Comments by Kathy Ryan, Long Beach Taxpayers Association


By Jim Sanders
jsanders@sacbee.com
By Jim Sanders The Sacramento Bee
The Assembly is fattening paychecks for numerous employees this holiday season.

"Assembly Speaker John A. Pérez has authorized salary hikes ranging from 3.6 percent to 5 percent for aides who have not received a merit increase in three years or more.

The raise is not automatic – lawmakers employing those aides must request it and have ample funds in their individual budgets to support it, said Jon Waldie, Assembly administrator.

"These are people who have not had a merit raise, some of them for five-plus years, and they're being offered a very small increase," Waldie said.

Continues...

City wins ruling on pension legal fees
Tentative decision denies former board members nearly $5.5 million

"A Superior Court judge has issued a tentative ruling that the city of San Diego isn’t obligated to pay nearly $5.5 million in legal defense costs for six former pension board members who faced criminal charges that were later dismissed.

The case hinged on the scope of a 2002 resolution passed by the City Council to indemnify pension board members in exchange for their support of a plan that allowed the city to put less money into the pension system than required. That move spurred along a pension deficit that now sits at $2.1 billion.

Pension case legal billsCathy Lexin: $1,452,812.97

Ronald Saathoff: $989,527.75

John Torres: $751,277.49

Mary Vattimo: $806,821.91

Teresa Webster: $937,081.51

Sharon Wilkinson: $513,649.61

Total: $5,451,171.24
Judge William S. Dato ruled Nov. 18 the resolution didn’t give board members blanket protection from any and all future legal proceedings. He said state law gives a public entity the option to provide indemnity for criminal defense costs on a case-by-case basis, an evaluation San Diego officials never made because the resolution was approved three years before charges were filed.

“A contrary interpretation would lead to absurd results, allowing a public entity to indemnify an employee for criminal defense costs even if the criminal charges arose out of bad faith conduct or actions completely unrelated to the public employment,” Dato wrote.

The case isn’t over yet. The judge is allowing the plaintiffs to file additional briefings before the next hearing Jan. 27 after which a final ruling could be made.

City Attorney Jan Goldsmith said he’s happy with the tentative ruling.

“Given the significance of this case, however, we understand the reason for giving plaintiffs’ lawyers a continuance to try and find some argument,” he said. “Our goal in defending this case is to end the bleeding of yet more attorney fees, adding to many millions of dollars the city has unnecessarily paid during the past decade.”

Lawyers for the six former board members — Cathy Lexin, Ron Saathoff, John Torres, Mary Vattimo, Teresa Webster and Sharon Wilkinson — didn’t return calls for comment Tuesday. They have previously argued that the resolution had been found to cover legal costs for the board members in prior civil lawsuits.

In addition, the lawyers cited former City Attorney Michael Aguirre’s efforts to get the City Council to rescind the resolution in 2006 and 2007 because he believed it would require the city to pay for defense costs in the criminal case. The council didn’t follow his advice and the resolution remained in place.

In 2005, the board members were charged by District Attorney Bonnie Dumanis with violating the state conflict-of-interest law. Prosecutors said they approved the deal to underfund the pension system in return for enhanced retirement benefits.

Five years later, most of the charges were dropped after a state Supreme Court decision that said the board members’ actions were allowed under certain exemptions to the conflict-of-interest law. The court ruled that the prosecution could proceed against Saathoff, but Dumanis elected to dismiss the charges.

The fees at issue cover only the criminal case filed in state court. Webster, Saathoff and Lexin were also charged in a separate federal case that was also dismissed."

Unions cry ‘foul’ when the game is played using their own playbook?

"According to The Hill, unions and their Democrats in Congress are apoplectic over the fact that Brian Hayes, the lone Republican on Barack Obama’s National Labor Relations Board, has (allegedly) threatened to resign in protest over the union appointees at the NLRB deciding on Wednesday (Nov. 30th) to force ambush elections on companies and their employees. Due to a Supreme Court decision, where the high court ruled there must be a minimum three NLRB members to affect a quorum, with only three current members, a resignation at the NLRB would incapacitate the union-run agency.

Notwithstanding Democrats fleeing from their jobs in Wisconsin earlier this year, oddly, neither the union bosses nor their paid shills in Congress seem to realize (or if they do, they’re not publicly admitting it) that the idea of incapacitating the NLRB came from their own playbook."

For complete article including audio's, see link....

http://www.laborunionreport.com/portal/2011/11/its-time-to-close-the-nlrb-for-re

San Jose has it right by facing pension reform head on and including the Citys' unfunded pension liability in those reforms.

During the lack of budget negotiations in Long Beach, we saw nothing but capitulation by our elected and non-elected bureaucrats. We still have the $1.2Billion Dollar Unfunded Liability even though we got some budget reforms with some of the employees paying into their pension, but the big elephant in the room, the $1.2 Billion Dollar Pension Liability, will not go away, unless we have our city officials willing to take on the unions.

I applaud San Jose, but they will get little cooperation from our two liberal senators, Boxer and Feinstein. They need to realize to start the fight now, because waiting for help will only delay any progress they may accomplish on their own.

Look at Long Beach. We waited years for pension reform, and got nothing. CalPERS rates will rise next year wiping out any of the savings the unions and City Hall rave about. But City Hall and the Unions have never been good at divulging the whole truth.


Comments by Kathy Ryan, LBTA



Nov 28:
Daniel Borenstein: A bad market is just part of San Jose's pension


Daniel Borenstein: San Jose pension crisis tied up in legal quagmire

"California's senators and congressional delegation, especially from the Bay Area, need to help San Jose and other cities deal with the crisis in pension costs -- not by bailing them out, but by pressuring the Internal Revenue Service to rule on the tax status of optional, alternative pension plans. In fact, the Obama administration should intervene: One reason for the sluggish recovery is that, just as private companies are starting to hire, cities and counties are increasing layoffs, in part because they are so limited in ways to cut costs for current employees to keep more of them on the job.

Continues...

HAPPY THANKSGIVING TO ALL OF YOU WHO HAVE SUPPORTED US, AND WHO HAVE READ OUR BLOG.

ENJOY YOUR DAY WITH FAMILY OR FRIENDS, BUT MOST OF ALL BE SAFE IN YOUR TRAVELS!

Pension crisis accounting rule comments rigged by gluttons at the public trough
Posted on November 23, 2011
By Frank J. Keegan, The Franklin Center for Public Policy and Integrity

"Well Pilgrims, when we sit down to feast this Thanksgiving Day pray for God to suppress the insatiable appetite of governments, because their fiscal gluttony now surely will inflict future disease on us all.


Right now fiscal gluttons at the public trough not only gorge at the expense of future taxpayers and public workers who shall be left destitute, they fight any efforts to expose their lies about devouring America’s economy.

Think not? Then look at comments opposing Government Accounting Standards Board proposed rules for a tiny bit of honesty about municipal and state pensions.

Sheila Weinberg, founder of The Institute for Truth in Accounting, studied all 659 comments on rule changes that will affect whether politicians finally have to admit at least in small part the magnitude of our municipal and state pension crisis.

She said Tuesday, “95 percent of the comments came from people who have a direct vested interest in governments concealing the true costs.”

See link for more on this important article...

http://www.franklincenterhq.org/2814/commentary-pension-crisis-accounting-rule-c

As usual Mr. Miller writes a comprehensive column, no matter the subject. If you want a true comparison of pension plans that will be presented to the voters, take the time to read and be informed. The article is long, but when you finish, you will be prepared to vote on this very important issue, pension reform.

Comments by Kathy Ryan, LBTA

California’s pension hawks file a detailed, alternative plan to the governor's that builds on his proposals.
BY: Girard Miller | November 10, 2011

Girard Miller is the Public Money columnist for GOVERNING and a senior strategist at the PFM Group.

It's clear that the continuing economic downturn will require some modifications to public employee ...

"California Throws Down the Gauntlet for Pension Reform
Last week I discussed the primary features of California Gov. Jerry Brown’s thoughtful 12-point plan to reform the state’s unsustainable pension mess. The night before my column published, a group called California Pension Reform (or CPR, an artfully chosen name) filed two ballot proposals that called the governor’s bid and raised him two. Their plan is to test the waters with two proposals and pick one to begin collecting petition signatures. This is the long-awaited “Pension Prop 13” -- the pension-reform descendent of the legendary grassroots tax-limitation measure that swept through California and several other states three decades ago. It is the most comprehensive pension reform language ever filed in any state in the country, yet less severe than Rhode Island’s recent narrower, sharper proposals to actually freeze, modify and cut incumbents’ benefits.

Continues...

This is one of the best letters I have read in a long time. This is exactly who these Occupy Wallstreet crowd should be protesting. Until they understand who the real culprits are, there message will go unheard.

Comments by Kathy Ryan, LBTA

Letter: Protests aimed at wrong targets
Chico Enterprise-Record
Posted: 11/22/2011 12:17:10 AM PST


I am the 99 percent.
I am one of the 99 percent of taxpayers that are sick of firemen, police, teaching, and prison guard unions along with all the rest of the bloated and overpaid public employees, that seem to think that their salaries and pensions are sacred.

Just think of the unmitigated gall of the California State University faculty voting in favor of a strike last week for higher pay, while the rest of us suffer this economic downturn.

They reason that the presidents and the regents getting exorbitant raises justifies their own.

How about this: Use volunteer regents instead of what we have, which are people who vote on university policy and spend the rest of their time wallowing in conflict of interest as "business consultants" who use their influence to sway the policy of those same universities.

How about those fire captains, paid $96,000 per year while running up another $60,000 in overtime and pad their retirement accounts with wage spiking,earning three times the average in this community allowing them to have IRAS, rentals, and live like kings upon retirement.

How about Cal-PERS, the public retirement, Mafia-like system that has paid off our crooked politicians so they can, without any further vote by our Legislature, reach in to California's general fund and take money to make up for their bad investments, without regard for the taxpayer and the suffering public.

You want to go camp out, go camp at the college, fire station or
Cal-PERS.
— Garry Cooper, Durham

Government Worker Pensions ARE Wall Street
By Editor, on November 21st, 2011

"In an editorial posted in January 2011 entitled “Wall Street & Public Sector Unions,” we identified an irony still lost on the occupy movement’s rank and file – Wall Street is financed by the pension funds of unionized government workers. Every year, taxpayer funded government agencies pour hundreds of billions of dollars into Wall Street investment funds.

Occupy Wall Street? Why not “occupy” Wall Street’s union paymasters, the government employee pension funds?

Here’s a summary of the dynamics between Wall Street, unionized government workers, and the taxpayer:

(1) The government workers provide services vital to the taxpayer, and charge the taxpayer, on average, about 40% of their income (middle class worker, all taxes – state, federal, social security, medicare, property, sales) to receive these services.

(2) The government workers receive, in addition to their normal pay, funded by these taxes, pensions that are, on average, five times better than what taxpayers get from social security (the average government pension is $60K per year with an average retirement age of 55, the average social security benefit is $15K per year with an average retirement age of 65).

(3) The government workers tell the taxpayers – don’t worry – you don’t have to pay additional taxes for us to get these generous pensions, because we’ll invest the money on Wall Street, and Wall Street will earn 7.75% per year on these investments.

(4) Wall Street invests the taxpayer’s money, funneled through the government worker pension funds, demanding a return of 7.75%. To achieve this return, they invest in hedge funds and other manipulative, highly speculative investments. This increases the volatility of the markets, crowds out small investors, and drives down returns for small investors.

For complete article, see link below....

http://unionwatch.org/unionized-government-worker-pensions-are-wall-street/

Posted by Tom Stout: LBTA

How the revolutionary California labor movement became Wall Street’s biggest gambler

Posted on November 18, 2011 by willswaim
|
Like most social media profiles, the union’s “Repair Costa Mesa” page lists things the union leadership likes. On one recent night, the Top 3 likes were Occupy Irvine, Occupy Costa Mesa, and Occupy Orange County.

I’m a huge fan of the Occupy Wall Street movement and its myriad spinoffs, in part because, like a lot of Americans, I can see the Bush Administration’s bank bailout—and the banking industry’s subsequent crackdown on the very taxpayers who supplied the cash that saved the banks—only through the prism of something like Jesus’ parable of the Unforgiving Servant.

You don’t have to be a Christian to appreciate the Kafkaesque irony of Matthew 18:21-35: a king who had loaned one of his best servants $10,000 (or its Roman-era equivalent) one day told that servant it was time to pay up. The servant begged the king for more time. “Sure,” the king said. Relieved, the servant went out into the public square—and ran straight into a ragged, fellow servant who owed the servant (let’s say) $10. “Pay up,” the first servant said to the second. The rest of the story is worth quoting:

So his fellow servant fell down at his feet and begged him, saying, “Have patience with me, and I will repay you!” He would not, but went and cast him into prison, until he should pay back that which was due. So when his fellow servants saw what was done, they were exceedingly sorry, and came and told to their lord all that was done. Then his lord called him in, and said to him, “You wicked servant! I forgave you all that debt, because you begged me. Shouldn’t you also have had mercy on your fellow servant, even as I had mercy on you?” His lord was angry, and delivered him to the tormentors, until he should pay all that was due to him. So my heavenly Father will also do to you, if you don’t each forgive your brother from your hearts for his misdeeds.

Like I say, we don’t have to be Christians—don’t have to be religious at all—to see that this story is about unfairness/hypocrisy/double standards. When we consider that Wall Street was saved from ruination by just massive amounts of government money, and that Wall Street returned the favor by driving Americans from their homes, well, it just makes you want to eat tofu cooked on a grill powered by a dreadlocked guy peddling a bike hooked up to a generator in Zucotti Park.

And so I understand why almost every American would feel some sympathy for the Occupy Wall Street movement—almost every American but those in Costa Mesa’s public employee unions. The members of the city’s unions must feel unsettling ambiguity, some sense of weird kinship with Jesus’ Unforgiving Servant, because their pensions, like the pensions of most public employees in California, are invested in Wall Street, via one of the nation’s maddest gambling institutions, the California Public Employees Retirement System, or CalPERS.

CalPERS is to Wall Street what a whale is to a Vegas Casino. A high roller. A player. The biggest swinging male appendage in the room. With $235.8 billion in assets, it is the nation’s largest pension fund, and among the biggest investors in the world. And it’s largely on the expected gains in its Wall Street investments that CalPERS has been able to persuade officials in many California cities and counties that they could pay rising pension benefits to their public employees.

It wasn’t always this way. For decades after its 1931 founding as a pension program for state workers, CalPERS—then called the State Employees Retirement System (SERS)—made stodgy, sure-thing bond investments. That changed in 1953 when the legislature allowed SERS to invest in real estate. Thirteen years later, there was another loosening of the restraints on the agency’s investments when state voters passed a union-backed proposition allowing CalPERS to invest a quarter of its portfolio in stocks. In 1984, high on the fumes of the Reagan Revolution, labor pushed Prop. 21, allowing CalPERS to invest anything/everything in Wall Street. CalPERS had become a whale.

But even then, you could see the specter that would come to haunt California’s cities, a kind of proto, financial Paranormal Activity. Prop. 21 “would have no direct fiscal effect on the state or local governments,” the state’s Legislative Analyst’s Office told voters before the 1984 election. But then it warned obliquely of an “indirect fiscal effect,” one that “would depend on the extent to which the rate of return on the investments of public retirement funds is higher or lower than what it would have been in the absence of the additional flexibility authorized by this measure.” If the rate of return rose? Everybody’s a winner! If it fell, the fine print read, taxpayers—not CalPERS, not public employees—would make up the difference in the pension fund.

For a long time, CalPERS’ rate of return was higher than it would have been without Wall Street. Following 1984 passage of Prop. 21, “The stock lid came off as the market began a long boom, allowing funds such as the University of California’s to go two decades without contributions from employers or employees,” reports the blog Calpensions. “Years of double-digit investment earnings led to the belief that generous pension benefits . . . could be paid for by investments with little or no need for increased contributions from employers or employees.”

Alongside this ballooning confidence in the power and logic of Wall Street was a parallel optimism about what retirement ought to look like—a sense evolving over decades that California’s public employees could retire younger and younger, and rely on bigger and bigger pensions whilst buying second homes in Coeur d’Alene and sunning like gators on boats on the Snake River. In 1932, when SERS was still a mewling Depression-era babe, the pension promised to pay according to this simple formula: beginning at age 65, a retired state worker would receive 1/70 of salary times years of service; keep in mind that we died younger in those days—about age 60 versus nearly 80 today. As lives lengthened, the retirement-age paradoxically dropped for many state workers—to 60 in 1945 (thanks, Gov. Earl Warren!), and down to age 50 in 1970.

You can begin to see the confluence of forces that would generate a pension problem when you also consider that, with life-expectancy rising and retirement-age falling, California offered public workers more generous pension benefits. In 1932, that benefit was 1.4 percent per year of service; the percentage increased to 1.6 percent under Gov. Warren, and to 2 percent when Gov. Ronald Reagan took over the Governor’s Mansion in Sacramento. It’s between 2 percent and 3 percent today.

Now? “Now,” Calpensions summarizes, “a historic market crash has punched a big hole in pension funds. Government agencies face years of increased pension contributions to make up for the losses, threatening funding for other programs.”

AND SO THE UNION FINDS ITSELF split, its progressive heart inclined to the 99 percent of America that resents Wall Street’s influence in Washington, its pensions simultaneously dependent on an engorged and rampant Wall Street. That produces some weird bipolarity/split-personality disorders in organized labor and its supporters. The problem isn’t a pension system built on casino-style gaming, they say; the problem and its solution are in that gaming. They are gambling junkies.

“Let’s be clear,” wrote president of the American Federation of State, County and Municipal Employees Gerald W. McEntee, a man who is anything but clear:

Underfunded pension systems resulted from unprecedented losses of asset values caused by reckless behavior on Wall Street and the refusal of some politicians to make their required payments. As recently as 2007, pension funds had, collectively, 96 percent of the assets required to meet future expenditures. But Wall Street drove America’s economy and retirement security into a ditch. And now both pension and 401(k) accounts alike must be rebuilt.

Similarly, a pro-union reader on the liberal Orange Juice blog asserted that the Costa Mesa council majority’s goal in outsourcing city jobs isn’t a response to a real financial crisis. Its goal is to destroy the American working class and “to steer pension monies to Wall Street.”

Except, of course, that’s where those “pension monies” already are. And if you listen to other union backers, it’s where that money ought to stay.

THERE’S NO BIGGER BELIEVER in Wall Street miracles than the guy whose pension is invested in highly speculative stocks. Writing on the same Orange Juice blog, “Mayor Quimby” handed out stock advice to Costa Mesans, sounding more like Mad Money’s apoplectic host Jim Cramer than an advocate of Occupy Wall Street: Keep your money in stocks, the Mayor admonished Costa Mesa: “you might find out that outsourcing will create a fiscal crisis for the city, by locking the city into losses that were incurred during the Great Recession, and missing the gains from the recovery.” That pitch—don’t leave before the miracle happens!—is how Wall Street locks in the losers.

Orange County Employees Association spokesperson Jennifer Muir was equally bullish on the markets: The Orange County Employees Retirement System “just reported a 19 percent rate of return for this year,” Muir reported breathlessly last summer. “CALPERS and CALSTRS are even higher at close to 25 percent.” Bottom line: diversify—always diversify—but keep your retirement in high-performing stocks.

CalPERS has a reputation as an activist investor. The organization has insisted on quid pro quos: in exchange for investment cash, it has pushed for caps on executive pay and transparency; has led the way for human rights, environmental and labor standards in emerging markets; and participated in class-action lawsuits against major health insurance companies, including UnitedHealth Group.

Leveraging that tradition, the city’s workers could reform their union and its bloated pensions. They could start by demanding that CalPERS invest their pensions in solid/stolid/boring U.S. bonds rather than in the speculative junk that fueled Wall Street’s rapid, unprecedented rise through the 1990s and its post-scriptural crash in 2008. That might—might—mean more modest retirements, of course, but it would certainly end union members’ hypocritical reliance on Wall Street—their affection for gambling when Wall Street inflates their pensions, their hatred of the market when it shapes the contours of their daily work.