Despite this impending tsunami, however, the CalPERS board seems more concerned with containing the political fallout from the coming crisis than resolving it.
CalPERS today moved toward reducing its investment forecast by a quarter percentage point, a move that would cost the state's general fund $167 million a year.
The pension fund's pension and health benefits committee voted 6-2 to reduce the forecast to 7.5 percent. The committee ignored a staff recommendation to cut the forecast by a half point, to 7.25 percent. That more dramatic move would have cost the state's budget $425 million a year and likely would have created a huge political tempest.
This is the depths to which willful delusion has sunk in the Golden State. The real crisis is the yawning gap between what CalPERS has promised and what CalPERS is capable of delivering. Yet the body's management is more concerned with making its projections politically palatable -- even if they will inevitably be proven delusional by the market. With leadership like that, is it any surprise that the state's finances continue to circle the drain?