Wall Street caused pension crisis, not cops and firefighters

If there’s one thing the debate over public employees’ pensions has taught us, it’s that California needs to invest more in mathematics instruction. When The Sacramento Bee editorial board (“The pension nightmare for California’s cities is getting scarier,” Feb. 13) and city officials wag their fingers of blame at firefighters, teachers, police officers and state pension systems that have yielded 7 percent returns in the long run, it’s clear there’s a fundamental misunderstanding of the numbers.

In 1999, when Senate Bill 400 was passed with strong bipartisan support, CalPERS was 137 percent funded and the state was in the midst of an economic boom. Contributions by state and public agencies had dropped to near zero, while taxpayers saved billions of dollars by making lower or no contributions, while public employees continued to make full contributions towards their retirement.

Then, due to the fraud and abuse by Wall Street bankers, the worst recession since the Great Depression hit and investors across the globe watched as trillions of dollars in asset values were wiped out. CalPERS lost $69 billion in the first year; over the next two years, its funded status dropped by 40 percent.

If it weren’t for the Great Recession, SB 400 benefits would have been funded for 138 years. That’s why it is unfair to criticize hard-working public employees and their pensions, while union critics give Wall Street a free pass.

Also, the editorial board forgets that pensions keep good people on the job who benefit our communities. Whether it’s when a police officer gets shot at, or a firefighter battles a wildfire, pensions offer peace of mind in case of disability or early retirement.

As a public employee, I can assure you I’m not sailing on yachts in the Caribbean and drinking expensive champagne. Retired public employees are in our communities, where our pensions support the local economy and jobs to the tune of more than $35 billion.