Facing Downgrade to Junk, California Tries Pension Reform

Jerry Brown, California’s quirky Governor, has made a credible first step on the road to reforming the State’s insolvent public pension plans. The state is the global leader for financially irresponsible government by racking-up $350 billion in unfunded pension liabilities. But with the threat of California’s credit rating being cut to the same “junk” level that is destroying Greece; the Governor has offered a 12 step recovery program to begin the long journey back to solvency.

The new urgency to reform California’s public pensions is being driven by the Government Accounting Standards Board (GASB) new public sector accounting rules that will require the State of California and local governments to triple their annual pension contributions. There is no law that can force California to comply with GASB; but failure to do so will result in the State’s auditor issuing a “qualified opinion” regarding the reliability of the state’s financials. Eighteen months ago Greece’s auditors issued this type of opinion. The credit rating agencies downgraded Greece’s debt; causing borrowing costs rise above to 20% and destroy the nation.

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via » Facing Downgrade to Junk, California Tries Pension Reform – Big Government.

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