Union officials are cheering the news that California's two big retirement systems --CalPERS and CalSTRS -- reported earnings of 20 percent for the past fiscal year. They are now saying that there is no need for pension reform and using this news to derail the growing reform movement. But one year of great returns cannot make up for many years of subpar returns. The systems are only funded at 70 percent. As the Sacramento Bee reported: "Yet the two systems, like many public pensions around the country, remain underfunded and are still feeling the effects of the market crash of 2008.
Officials said it will be difficult to duplicate the latest investment results in the coming years, and both funds are likely to continue looking to taxpayers for higher contributions." In addition, the number of six-figure retirees is growing dramatically and increases in pay for retirees is straining the system, per recent Bee articles. So the system is still far underfunded, there's little likelihood the systems can maintain similar growth and the fairness issue continues to surface as greater numbers of public employees retire with what are essentially millionaires' pensions. One final thought: The unions have blamed Wall Street for the current mess. Are they going to thank Wall Street, which seems to be offering them their only glimmer of hope for sustainability?
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