California’s state and local governments face billions of dollars in debt – the official term is “unfunded liabilities” – for employee pensions not now covered by pension fund assets.
But how many billions?
It could be about $300 billion, according to new calculations by Stanford University researchers, but that assumes that projections of future investment earnings used by pension trust funds, around 7.5 percent a year, are accurate.
Or the debt could be three-plus times as much, close to $1 trillion, if the earnings assumptions track federal treasury notes, according to Pension Tracker, a research project headed by former Democratic Assemblyman Joe Nation.
If nothing else, the newly released Pension Tracker data demonstrate that an earnings assumption – the “discount rate” – is the most important factor in judging whether pension debt can be reasonably managed, or a crisis that could drive government agencies into insolvency.
Three cities have been forced into bankruptcy, largely due to soaring pension costs, and others are feeling the pinch as costs rise.
Read more here:
http://www.fresnobee.com/news/politics-government/article77313237.html#storylink=cpyRead more:
http://www.fresnobee.com/news/politics-government/article77313237.html