Few state governments are as in as much fiscal trouble as California’s, so it’s not surprising that few state pension funds have been as mismanaged as the California Public Employee Retirement System (CalPERS). But worse than that, CalPERS — along with its sister fund, the California State Teachers’ Retirement System — has led the nation in implementing shoddy investment and management practices that have exacerbated led to billions of dollars in losses and foregone revenue.
Now, as policy makers in other states consider ways to address their own pension deficits, CalPERS — the nation’s largest pension fund, with about $230 billion in assets under management — offers an example of exactly what not to do. They would do well to read “The Pension Fund that Ate California,” Steven Malanga’s article on the fund in the current issue of City Journal. Malanga, a senior fellow at the Manhattan Institute, recounts CalPERS’ history — which can be characterized as a fall from fiscal rectitude that only seems to get worse.
Even worse yet, CalPERS actively lobbied state lawmakers to implement many of the risky practices that have spelled so much trouble for it.