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The Day After Tomorrow: Managing the Retrenchment of Public Employee Retirement Systems

Kiewiet, D. Roderick (2010) The Day After Tomorrow: Managing the Retrenchment of Public Employee Retirement Systems. California Journal of Politics and Policy, 2 (3). pp. 1-30. ISSN 1944-4370.

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The Pew Center estimates that as of July 2008, state and local governments in the United States had promised current and future retirees $3.34 trillion in benefits but had only $2.35 trillion of projected assets to pay for them. The investment losses that public employee pension funds experienced during the market downturn of 2008-09 made the trillion dollar gap much larger. In this paper I discuss how the pension funding gap has developed, compare the situation in California with that of other states, and discuss the ways in which the state government and local governments in California are responding to the increasing strains pension obligations place on their finances. I recommend that the constitution of California be amended to forbid the state and all local governments from ever again issuing pension obligation bonds, and to forbid the state of California, as well as all local governments within the state, from ever again offering their employees defined benefit pension plans.

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Additional Information:Local Identifier: 1944-4370.1115. I would like to thank Mike Aguirre, Steve Erie, Craig Herron, Phil Hoffman, Vladimir Kogan, Thad Kousser, John Ledyard, Mat McCubbins, Amy Monahan, Robert Rasmussen, Matt Spitzer, and especially Roger Noll for helpful advice and comments.
Subject Keywords:public employee pensions, pension funding, defined benefit pension plans, pension obligation bonds
Issue or Number:3
Record Number:CaltechAUTHORS:20160216-155216827
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Official Citation:Kiewiet, Rod. (2010). The Day After Tomorrow: The Politics of Public Employee Benefits. California Journal of Politics and Policy, 2(3). doi: 10.5070/P2630X. 1944-4370.1115. Retrieved from:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:64519
Deposited By: Susan Vite
Deposited On:22 Feb 2016 22:40
Last Modified:03 Oct 2019 09:38

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