Cal pension

The California public education system is in trouble and is symptomatic of other states. For years instead of putting the proper amount into the teacher’s retirement plan they just assumed a higher rate of return on their investment. These higher rates did not materialize and thus the shortfall. Governor Brown has proposed an income tax on millionaires and an increase in the state sales tax. The money to be used for education and herein lies a little secret. The money will be used for education but it will all go to fund the teacher’s pension plan. This is a smart idea financially speaking but it is deceiving the way it is being presented. The finances work like this. Each year the pension fund remains underfunded the cost to fix it increases dramatically and estimated to double every nine years. This is unsustainable and must be fixed. This means that the best use of the money is to fund the pension but this is a very poor way to sell the idea of tax increases so it is not explained to the public. The experts feel it is too complicated to explain and so they just let people think the money is for schools. I guess we are just too dumb to understand and so we need to be misled to get things done. Coming soon to your state!