California Lawmakers Are Ignoring History by Boosting Pension Benefits as the State's Economy Teeters |
California
California Lawmakers Are Ignoring History by Boosting Pension Benefits as the State's Economy Teeters
After California made this same mistake in 1999, it took 12 years to dig out of the hole. Taxpayers footed the bill.
Steven Greenhut | 5.1.2026 7:30 AM
Share on FacebookShare on XShare on RedditShare by emailPrint friendly versionCopy page URL Add Reason to Google
Media Contact & Reprint Requests
(Credit: Wellesenterprises/Dreamstime/Envato)
As Mark Twain wrote, "History doesn't repeat itself, but it often rhymes." Lately, I've been hearing a recurring rhythm—and getting the blues—as the legislature is about to repeat a grievous mistake. The issue involves public-employee pensions, as the legislature has advanced two bills that would exacerbate the state's pension problems in much the way it did 27 years ago.
First the requisite history lesson. In 1999, the Legislature passed Senate Bill 400. The stock market was booming, and the nation's largest pension fund, the California Public Employees' Retirement System, was awash in cash. "Investment earnings had averaged 13.5 percent for a decade, soaring in the two prior years to 20 percent," per Calpensions. The state's pension plans, it noted, were funded at 100 percent to 139 percent.
In private 401(k) plans, employees contribute a portion of their income to investment accounts. When the market soars, the employee's account goes up and vice versa. The employee owns what's in the account. With "defined benefit" accounts, the pension fund invests the contributions. Employees receive a........