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“The unthinkable just happened…. For the first time in its 85-year history, the California Public Employees Retirement System, CalPERS, is drastically cutting benefits for public retirees.”

Comment: Expect other states to similarly act to address their crises while Illinois does nothing.

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Jim Palermo

A regrettably sensational headline. Benefits were cut to retirees of a tiny municipality that sought to leave CalPERS and was socked with a huge exit charge. Not that benefit reduction don’t need to be considered as part of necessary pension reform, but this headline probably unnecessarily raised the hopes of many reformers.


More likely the canary in the coal mine than an anomaly. Who should pay when the taxpayers can’t or won’t? Part of the story’s significance is that CalPERS has apparently decided not to pursue legal measures to force the municipality to pay. It’s now up to the four retired citizens to try to collect what is owed to them. Litigation in the tiny municipality will dramatize what the few expect from the many.

Andrew Szakmary

There is a very big difference between can’t and won’t. People who can pay their contractual obligations, but refuse to do so, are denied bankruptcy relief and end up having their wages garnished by court order. I am not sure which of these is true in the case of Loyalton, CA, and what the ultimate resolution will be for the FOUR individuals (out of 1.8 million Calpers participants) that had their pensions slashed when the municipality withdrew from Calpers. Lets give the courts time to settle the matter before we jump to sensational conclusions.

I’m commenting on a different aspect. Individual taxpayers have no contractual obligation for public pensions. They may have an obligation to pay taxes but they also have a vote on whether to elect or recall candidates or legislators who want to increase taxes. Abdication by CalPERS via cutting pensions – to correspond to the amount previously set aside – sends the battle back to Loyalton, where the elected representatives of the people have already said they don’t want to pay these costs. (That is: these representatives decided to withdraw from CalPERS because it was unaffordable.) So now that the citizens of Loyalton are faced with parting with… Read more »