Mon 25 January 2010 | -- (permalink)
...over the past decade pension costs for [California] public employees increased 2,000%. State revenues increased only 24% over the same period.
Part of the problem is retiring baby boomers. A bigger part is the excessive generosity of the retirement benefits, and the fact that they're structured in a way that can be gamed by juicing up the retiree's income in the last year before retirement. What's not reported is that the union's retirement agreements are themselves the result of a game between politicians and unions. As I learned in my Local Government Law class a few years ago, if a government faces a tight budget when it goes into negotiations on a new union contract, it's much more likely to agree to increased retirement benefits than increased wages, because the retirement benefits won't show up in that year's budget. Repeat this over enough years and you get the situation we have today.