CalPERS, commonly characterized as the nation's largest public pension fund, has a problem: Its investment return for the fiscal year that ended in June was a scant 1 percent -- far short of the long-term growth it projected. That means more fiscal pressure looms for the state and local governments, because when CalPERS' contributions to employees pensions drops, the employer -- the government -- must make up the difference.
From the LAT's Marc Lifsher: "The performance came in well below the fund's target of 1.7% growth in its $234.3-billion portfolio, said Joseph Dear, CalPERS' chief investment officer. The return for fiscal 2012 also was way below CalPERS' long-term growth strategy, which calls for a 7.5% average annual rate of return to pay for retirement benefits for more than 1.3 million members."
"The last 12 months were a challenging period for all investors and the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns," said Dear."
CalPERS biggest losses were in public equity, down 7.2%, and private equity, down 5.4%. Fixed-income investments, mainly bonds, gained 12.7%, while real estate rose by 15.9% and infrastructure investments by 8.4%. No substantial turnaround in the markets is likely this year, Dear predicted."
Averaging the investment performance of CalPERS over a longer term paints a brighter picture, but one that is misleading.
From the Bee's Dan Walters: CalPERS officials tried to soften the bad news by noting that its earnings over the last 20 years had averaged 7.7 percent, but that begs the question."
"Earnings have fallen short of its 7.5 percent target in three of the last five years and its lackluster performance indicates that hitting it in the future may be just wishful thinking."
As pension funds' unfunded liabilities grow, state and local governments are being told to cough up more in contributions, and they must either swallow the increases or persuade their employees to pay more. It's not a coincidence that sharply increasing pension fund demands play large roles in the recent financial struggles of Stockton and San Bernardino."
Veteran California politician Bill Lockyer, the state treasurer and former attorney general, filed for divorce from his wife of nine years in the wake of a sex and drug scandal.
From the Chronicle's Justin Berton: "Bill Lockyer cited irreconcilable differences in the filing Friday in Alameda County Superior Court. He is seeking joint custody of the couple's 9-year-old son."
"His spokesman declined Monday to discuss the reasons that led the 71-year-old state treasurer to seek to end his marriage to Nadia Lockyer, who is 41."
"Bill's desire is that this matter be resolved as privately and amicably as possible," said spokesman Tom Dresslar, "and in a way that serves (son) Diego's best interest."
In an interview, Nadia Lockyer said the couple had long ago agreed to divorce, but that an argument last week over the "security of our family" hastened the decision. She declined to elaborate."
San Bernardino, the latest California city to slide toward bankruptcy, delayed a final vote on the proposal following an emotional hearing at which local government workers and members of the public urged the city council to try and work out the problem.
From Imran Ghori in the Press-Enterprise: 'City officials say they still see no alternative to seeking bankruptcy protection, which a council majority agreed to pursue last week. But as council members debated a fiscal crisis in which the city faces a $45 million deficit, they said more time was needed to get more answers."
“I think it’s not transparent and not representative of what the people want,” said Councilwoman Wendy McCammack who proposed the delay."
"The council meets against Wednesday, July 18, at 5 p.m. to vote on the fiscal emergency declaration and a formal resolution authorizing the filing of bankruptcy."
The city's fiscal woes may have caught many Californians by surprise, but at least one local official sounded the warning two years ago, noting that the city constantly tapped its redevelopment funds to meet other obligations.
From Andrew Edwards in The Sun: ""We have been getting by with borrowing money from other funds and other magic accounting tricks, but the fact of the matter is that (revenue) pool has shrunk by $40 million over the last three years," City Treasurer David Kennedy said during an Aug. 23, 2010, meeting."
"Kennedy, an elected official to the part-time job to oversee city investments, stood by that opinion on Monday and said the city's intractable fiscal problems became even worse with the end of redevelopment."
For many years, the council was "robbing Peter to pay Paul, and then they took away the piggy bank," Kennedy said. The city's Economic Development Agency existed to fight urban blight in San Bernardino and had its own budget. But the council repeatedly used agency's funds to offset shortfalls in the city's general fund."
California's Central Valley, one of the most fertile farm regions on earth, is known for its array of crops. But it also has something less enticing -- unhealthy drinking water.
From HealthyCal's Todd R. Brown: "But while the Central Valley’s produce grows hearty under the hot sun, the laborers who get the product from orchard to processing plant face an unpleasant runoff from their very livelihood: The local groundwater that provides well water for drinking is heavily contaminated with nitrates, a poisonous byproduct of fertilizers and other agricultural sources."
“When we moved to the area, my parents were forced to buy bottled water,” Herrera said. “Communities that only have access to one or two wells are more impacted than those that can blend water from different wells. These towns are pretty small. You may be driving through and not even realize it.”
"Today Herrera is the community outreach coordinator for the Visalia advocacy group Community Water Center. She said Orange Cove eventually turned to the Friant-Kern Canal for drinking water drawn from the Sierra foothills, but many similar towns don’t have access to surface sources and depend wholly on nitrate-fouled wells for what flows from their taps."