San Francisco Finally Gets An Analyst!

San Francisco has a $10 billion budget yet — until now — the only professional financial analysts covering the city have been rating agencies like Moody’s. But because rating agencies care only about San Francisco’s ability to service debt, the payment of which is senior to public services, that means no one has been looking out for the public.

Read More

NY Times: Is the Long-Looming Pension Crisis Already Here?

David Crane, a lecturer at Stanford and a former adviser to Gov. Arnold Schwarzenegger, is the bringer of bad news. For more than a decade, Mr. Crane, a San Francisco Democrat and former investment banker, has been forecasting a disaster in California’s pension system. He was removed from the board of directors that oversees benefits paid to California’s teachers after repeatedly warning that the fund’s investment assumptions were too rosy, and since then has continued to scream about a coming financial reckoning.
Read More

Coverup At SFUSD

In June San Francisco’s school board wants voters to approve a new “parcel tax” of $298 per parcel of real property. They claim the money — $50 million per year — is needed to provide teachers with living wages. That’s a worthy objective but it’s not the real reason behind the proposed tax. The real reason is buried deep in SFUSD financial reports from 2012 and 2017:

Read More

Sunlight Peeks Into Palo Alto

City takes two steps towards transparency.

On February 26 the Palo Alto City Council voted 9–0 in favor of a proposal to uncloak negotiations with the city’s public employees. The next step is to meet and confer with public employee unions, which is required under current state law. (You read that right. As explained here, under current state law the taxpayers of Palo Alto are not permitted to observe negotiations about their largest expenditures without the consent of the recipients of those expenditures.) Stay tuned.

Read More

Tony Thurmond Hits The Wrong Target

Still not walking his talk.

State Assembly Member Tony Thurmond has proposed legislation imposing a tax on private prisons in California to help fund early education. Early education is great but levying a tax on private prisons would generate next to no money for it. That’s because only 1.5% — less than $200 million — of California’s $12 billion of prison spending goes to private prison facility owners or operators.

Read More

Cowardly Resistance In California

Attacking easy targets, cowering before tough ones.

Every day the California Democratic Party (of which I am a member) proudly reminds the world that it is leading the “resistance.” But every day it fails to resist the most powerful forces affecting the everyday lives of Californians.

Read More

Sunlight In Palo Alto?

Transparency gets a chance.

In 1968 California Governor Ronald Reagan signed legislation granting collective bargaining rights to local and county public employees and enabling confidentiality of collective bargaining negotiations. A decade later Governor Jerry Brown signed legislation extending those rights to K-12, state and higher education employees.

Read More

Elites Donate But Masses Pay The Price

The disgrace of uninformed political giving in California.

Every day at Govern For California we review public records of political donations. What we’ve found is deeply disturbing. Donors who label themselves as “progressive” have given to candidates who as elected officials have suppressed civil rights. “Free-market” donors have given to candidates who as officials have supported crony capitalism. “Fiscal conservatives” have given to candidates who as officials have created unfunded obligations crushing classrooms. “Social justice advocates” have given to candidates who as officials voted to enrich prison interests at the expense of social services.

Read More

More Pension Math

It’s the lie that gets you.

Recently the California Public Employees’ Retirement System (CalPERS) reported that its investments in 2017 outperformed its “benchmark” by 0.25 percent. But whether CalPERS beats or lags its benchmark has little impact on pension costs, which are exploding because of explosive growth in pension liabilities. See for yourself...

Read More


But who has hurt California kids more?

Apparently the board of the California State Teachers’ Retirement System (CalSTRS) worries that Apple’s smartphones negatively impact child development. Presumably there will now be a lot of research on that subject. But no research is needed to prove this point: Child development in California is being negatively impacted by exploding pension costs that prevent school districts from hiring enough teachers and paying them sufficient wages. Look what has happened to the San Francisco Unified School District...

Read More

California’s OPEB Crisis

Jerry Brown and Betty Yee aren’t telling you the whole story.

Everyone has heard about pension costs but few have heard about the other retirement cost that’s burdening California governments and schools. “OPEB” — “Other Post-Employment Benefits” — are a form of deferred compensation, just like pensions. The principal OPEB benefit is a promise to cover post-retirement health costs. Because government employees in California may retire before they are covered by Medicare and often receive benefits on top of Medicare, OPEB promises in California add up to hundreds of billions of dollars.

Read More

Hoover Institution, Area 45 Podcast: The State Of The Golden State

California, the land of anti-Trump “resistance”, has its own problems both irresistible and intractable – mounting public pension debt, underfunded schools, and a revenue stream too dependent upon capital gains. David Crane, a Stanford lecturer, past economic aide to Governor Arnold Schwarzenegger and co-founder of Govern for California, weighs the health of the state so bitterly opposed to Trump.

Read More

California Should Address Licensing Reform – And Stop Adding Violins To The String Section

In 1850 California passed its first professional licensing law requiring foreigners to buy a monthly license to mine gold. During  the next hundred years the state so dramatically expanded its licensing regime that by 1950 one in every twenty workers required a license. Today one in five working Californians requires a license from the state government; a recent study found that California is the most broadly licensed state in the nation.

Read More

California’s Own Shutdown

Schools are open but shelves are barren.

Everyone can see the federal shutdown is reducing some public services but California legislators are turning a blind eye to their state’s own shutdown. Public schools in Los Angeles, Oakland, San Francisco, San Diego, San Jose and other urban centers are providing just a fraction of full services, resulting in understaffed classrooms, underpaid teachers, and fewer arts, science, math, and other classroom offerings. One result is that the poor and minority students that make up a large share of those urban districts underperform poor and minority students in other states that spend much less per student.

Read More

Governor Brown Is 100 Percent Correct

But California needs 500 percent.

Governor Jerry Brown’s 2018–19 budget proposal prudently calls for filling the state’s Rainy Day Fund to its constitutional capacity of $13.5 billion. Doing so will “soften the magnitude and length” of budget cuts occasioned by the next recession, of which Brown reminds us there have been ten since World War II.

Read More Thanks to Rising Benefit Costs, San Diego Needs Your Help Cutting Its School Budget

This afternoon, I spotted a tweet from a San Diego parent: 

There's something particularly wrenching about being asked what services should be cut at your kid's school to pay for increased employee pension & healthcare costs, when most working parents don't have pensions. cc @sdschools

— Ashley Lewis (@AshleyJPL) January 12, 2018

I followed the link to the survey, and a message from the San Diego Unified School District said it was seeking input on how to resolve a growing budget shortfall due to "increases in costs outside of the district’s immediate control, such as healthcare costs, utilities expenses, and state retirement contributions that are all expected to rise for the foreseeable future." 

Read More