Wall Street Journal Piece Is Wrong About Public Pensions
April 15, 2014
Time to set the record straight in response to the Wall Street Journal's "Review & Outlook" column - California Math Test: The state pension fund has some unbelievable facts - which appeared online on April 11, 2014.
The tone of the piece was set early when the author claimed that the "California Public Employees' Retirement System has a well-deserved rap as a taxpayer drain." The author goes on to say that the recently released CalPERS Economic Impacts in California study purports "that public-worker pensions are California's biggest jobs generator." This takes 'reading between the lines' to a whole new level. Nowhere in the study does it say that public-worker pensions are California's biggest jobs generator. However, the study clearly indicates that jobs for Californians are supported by CalPERS benefits and our investment portfolio.
We did not arrive at these numbers by using a "crude economic calculation" devised by CalPERS, as the WSJ would lead you to believe. But rather we relied on IMPLAN, the most widely employed and accepted regional economic analysis software for predicting economic impacts. The software is used by more than 2,000 public and private institutions throughout the United States. We input our total benefits paid in California (more than $12.7 billion) into IMPLAN to arrive at a 2.39 economic multiplier and the 113,664 jobs created.
Other key findings of the study utilizing the IMPLAN software included:
- CalPERS benefits (retirees spending their pensions) returned $10.85 in economic activity to California for each taxpayer dollar (public funds) contributed to the system.
- The total economic revenue generated by CalPERS benefits was more than $30.4 billion.
- Investments in California accounted for $20.7 billion, or approximately 8.9 percent, of the CalPERS portfolio.
Although the headline of the column reads "California Math Test," the math used in our study extends far beyond the borders of the Golden State and is certainly more accurate than the 'fuzzy' math used by the author of this piece.
View the full CalPERS Economic Impacts in California report.