Unfunded public employee pensions and city bankruptcy filings are daily news.
Why do cities make headlines when our local Orange County schools are at risk to the tune of $6.2 billion? If you don't believe me, check out http://www.calpers.ca.gov and http://www.calstrs.com for the latest Comprehensive Annual Financial Reports (CAFRs).
CalSTRS is California State Teachers' Retirement System. Milliman, CalSTRS' actuary, certified that CalSTRS is financially unsound.
California's Legislative Analyst Office estimated in March that CalSTRS' unfunded liability is $73 billion and needs an additional influx of $4.5 billion [per year] for 30 years.
This is in spite of the fact that teachers have a modest 2% at age 60 retirement plan formula, contribute 8% of their pay, their districts contribute 8.25% of pay and the state contributes 5% of pay.
CalSTRS' $73-billion shortfall translates to $173,000 per teacher. That works out to $4.2 billion for Orange County's 29 K-12 and four community college districts.
Schools also employ support staff covered by CalPERS, California Public Employees' Retirement System. Employees have a relatively modest 2% at age 55 retirement plan.
Employees and their districts contribute to their plan. The unfunded liability is $43,000 per employee, or another $1 billion for Orange County schools.
Orange County school districts also offer a variety of retiree health plans, whose unfunded liabilities total another $1 billion. That's a total of $6.2 billion, or $2,000 for every O.C. man, woman and child.
You don't need to look far to find unfunded public employee pension problems. They are in your backyard. And it's not just in cities and in schools; don't forget about the trash, water, vector and other special districts on your property tax bill.
JEFF ARTHUR, a retired chief financial officer, lives in Costa Mesa.