Editor’s note: Thank you for your letter about our report on retirement debt for public employees. As we wrote in our post, “we encourage” feedback and will update our work as appropriate. Trust and the integrity of our work is at the core of all we do at CALmatters. We are committed to a fair and balanced report on California policy and politics, public pensions included, and welcome informed and civil discussion of all our reporting. In that spirit, we are publishing this letter. Our review did not find any factual errors in the piece in question, though we did clarify certain points. We have noted those changes in the text with an asterisk and a footnote. We thank the letter writers for that help. Our policy for disclosure of financial supporters is consistent with guidelines from the Institute for Nonprofit News. We greatly appreciate the contributions of individuals identified in this letter. However, they have accounted for less than 1 percent of CALmatters’ total funding. Donors of $5,000 or more must sign letters affirming the independence of our journalism. Our stories note whenever a donor is quoted. We encourage contributions from all individuals and organizations that care about quality journalism.
We are disappointed at the continued unbalanced coverage and attention of pension issues by CalMatters, exemplified by the latest article by reporter Judy Lin titled “Retirement Debt: What’s the problem and how does it affect you” as well as the promotional social media materials that accompany this piece.
Before detailing our particular concerns about this article, we would like to express our wonderment by the attention that CalMatters gives to this issue, particularly since it is not ranked on any statewide survey or poll as one of great concern to Californians when they are asked to name their top concerns. In fact, the most recent PPIC poll showed a slight decline in concern when asked compared to past years when respondents were asked specifically about pensions.
While we would agree that public opinion polls should not dictate editorial content, but the extent of coverage, the promotional resources devoted to it, and the type of coverage leaves us wondering about the real reasons behind CalMatters exhaustive focus on this issue.
While we understand and appreciate the publicized wall between funders of CalMatters and its writers and editors, we cannot help notice that many of the key funders of CalMatters are anti-pension activists and/or contribute heavily to anti-union candidates. Unfortunately, unlike other leading news nonprofits like The Texas Tribune and the Nevada Independent, CalMatters does not publish the specific amounts of funding received by these funders but rather broad categories including “$150,000 and above.” We believe readers deserve the transparency of knowing exactly how much these anti-union (and other) contributors fund an organization that is writing about issues of concern to Californians.
In addition, CalMatters does not – unlike most news organizations -include the fact that its leading funders are associated with these organizations to its readers when articles on these subjects appear.
For example, a recent article on Senator Steve Glazer and Assemblywoman Catherine Baker failed to note that top funders of CalMatters maxed out in political contributions to both candidates.
Nor does any article note the significant (and increased) contributions of anti pension activist and PAC founder David Crane to CalMatters. In Mr. Crane’s case, it’s even worse: he and another donor, Gerald Parsky, were interviewed for stories, and Mr. Crane’s associate at Stanford, Joe Nation, has had his work widely used as key components in or as the basis for several pension stories. (Since Mr. Nation is neither an economist or has any expertise on pension issues other than political knowledge, we question his being labeled as a “pension expert.”)
We believe readers deserve more transparency than is being provided by CalMatters. Pension stories should note the major contributions of anti-union funders. CalMatters must be scrupulous in disclosing funding relationships that might foster the perception that your financial supporters influence your reporting, and clearly there has been that perception.
We also note that several pension reporters writing for CalMatters and the LA Times on pension issues have attended the Ravitch Fiscal Reporting Program. That program is largely funded by Enron Texas billionaire John Arnold, the nation’s leading funder of anti-pension initiatives, including several here in California. No mention is made of that to readers.
As for pension coverage, let’s begin with CalMatters labeling pension issues as a “crisis.” There is no crisis. Every Californian eligible for a pension is receiving their payment. CalPERS and CalSTRS continue to receive strong ratings from financial rating services Moody’s and Fitch. Less than half of one percent of California municipalities and school districts have faced any problem situations, and those largely have been of their own making.
Yet Ca!Matters portrays this issue in the exact same terms as the anti-union proponents of pensions. It has dribbled out articles over the past year that are directly out of the anti-union playbook. And there has been little coverage of the REAL retirement crisis in California – that only a few Californians are able to retire with dignity. Articles about this have appeared in major national publications but have not merited any serious coverage from CalMatters.
CalMatters also appears to dwell on the current snapshot of pensions rather than the big picture. It ignores the positive economic benefits of pensions to the state more than $31 billion by CalPERS alone. It ignores its impact of pension payments on state and local taxes. It ignores the impact of pensions in promoting social and environmental values important to Californians. And it ignores the impact pensions in attracting and recruiting a quality public workforce in our state. Instead, its articles talk of potential negative impacts advanced by ideological opponents of pensions and little else.
In fact, the very first article in the series – produced in conjunction with the Los Angeles Times – focused on the SB 400 benefit. The one-year loss of $69 billion due to Wall Street abuses would have funded the SB 400 benefit for 138 years. Yet to read the CalMatters/LA Times article, as well as Ms. Lin’s recent piece, readers are led to believe this legislation is responsible for most of the unfunded liabilities of CalPERS, while the Wall Street banks that caused the Great Depression are given a pass.
The cherry-picking of pension data also is evident throughout your reports on pensions. For example, the most recent article focuses on pensions of $100,000 or more – just over 3 percent of all pensions. What about the other 97%? Where is the focus on long-time custodians, cafeteria workers or school bus drivers who are living on less than one-third of that in the state with the highest cost of living? They are nowhere to be found in CalMatters coverage.
Here are some additional specific criticisms of the most recent article:
- There is a basic misunderstanding of the difference between unfunded liability and debt by the writer. The numbers used in the article are not due today; it is paid out over time (30 years). The figures used here do not factor in fluctuations in the market, economy, demographics and they are out of context. There are many other debts that are bigger, such as Social Security, Medicare, student debt, etc. Unlike these debts, as a percentage of budgets the liabilities for public employee pensions are relatively stable over time.
- In fact, state spending for pensions has grown slower than overall state spending. There is no mention of that.
- “Pension funds have not done a good job factoring increased life expectancy” is completely false. A CalPERS study a few years ago showed jumps in life expectancy for both men and women, and that has been factored that in by CalPERS. Its most recent one showed that trend had moderated, and CalPERS accounted for it.
- Ditto for the passage on Loyalton and other agencies that have seen benefit cuts. The writer ignores the complete mismanagement on the part of the agencies and suggests they stopped payments because of crushing pension debt. Nothing is mentioned about JPA funding and the responsibilities of founding agencies.
- While mentioning that some public employees don’t get Social Security, there’s no perspective on just how large that is. In the case of CalPERS, it’s close to 33 percent. No teacher receives Social Security. Yet little effort is explaining that.
- The article focuses recipients earning $100,000 a year – an arbitrary figure that has been the subject of the anti-union group Transparent California, which, ironically, refuses to reveal its dark money donors or note that is it located in Nevada. There is no mention of PEPRA that almost eliminates future retirees being able to collect $100,000.
- The author uses projections by Joe Nation of 3.25 that it infers better represents market realities and system liabilities. This is out of line with every expert in the field, with every pension system in the nation (probably the world) and not supported by any credible actuary.
- On the issue of health benefits, this is also a liability not due today. The actual amount due is the annual premium.
- We also question why is this any different from funding active employee health care? If everyone had to pay the unfunded liability for health care up front, nobody could afford health care.
- The headline about pension debt also a misleading title. Did it grow at all as a percentage of payroll or budget? Over what period? The writer doesn’t say – probably because that fact undermines the context of “debt.” In fact, pension debt is less today than 40 years ago.
- The article notes that pensions are growing faster than school budgets, but provide no evidence and don’t specify over what time period.
- The article doesn’t address total compensation growth. Total compensation, including pension costs, has been stable or even gone down as a percentage of budget.
- The article buries the key facts: just one sentence on the fact that CalPERS will pay off unfunded liability in 30 years and that CalSTRS will payoff in 2045.
- This means both plans have a plan and projection of 100% solvency within the next 30 years.
- On page 21, the article should note that half of school employees (classified and teachers) do not receive employer paid retiree health care.
- On page 26, there is specific focus on the Marin decision. Yet there’s no mention of the Alameda decision, where the court rebuts and rejects the Marin decision. Again, one-sided reporting.
- On page 28, the CalMatters suggestion for a solution is to cut employee benefits. But there’s no mention of the hundreds of agreements that are doing just that, including new cost-sharing agreements and reduction of benefits. And there’s little about the proposed solutions by CalPERS to pay off unfunded liability over the next 30 years.
- The comparison of public service employment to the “average California worker” is absurd. The only effective way to do that is similar job titles and education levels in both sectors, which CalMatters fails to do. Of course, total compensation is higher for public employees than the “average” California worker; the professional level of public employee workers is considerably higher than the private sector, as nearly all side by-side studies note.
- The accompanying “infogram” also cherry picks high-paying public sector jobs instead of focusing on the entire public sector workforce.
- In 2005, Gov. Schwarzenegger dropped his measure not for partisan reasons. It was because public safety groups, largely Republican in membership, attacked the measure – not “Democrats.”
- The passage of the SB400 benefit was bipartisan: 35-0 in the State Senate. The inference that this was a Democratic bill signed by a Democratic governor to reward labor unions has no foundation in fact given its overwhelming and bipartisan vote. (Current CA GOP Party Chair and Davis critic was among the “aye” votes).
- The article infers a favorable court ruling “could renew” a political campaign to tackle pensions. In fact, proponents of ballot initiatives have said no such thing. They are depending on the courts to do what voters have indicated they have no interest in doing – eliminating the promise of a secure retirement made to public employees.
Thank you for the opportunity to share our concerns. We look forward to corrections in the current story and a more balanced and accurate assessment of retirement security in your future endeavors.
Art Pulaski, Executive Secretary/Treasurer, California Labor Federation Dave Low, Chairman, Californians for Retirement Security/California School Employees Association
Lou Paulson, President, California Professional Firefighters
Afrack Vargas, California State Firefighters’ Association
Terry Brennand, SEIU California
Jonathan Lightman, Executive Director, Faculty Association of California Community Colleges
Shane Gusman, California Teamsters Public Affairs Council, The California
Conference of the Amalgamated Transit Union, IFPTE Local 21, AFL-CIO
Mike Lopez, President, Cal Fire Local 2881
George Linn, President, Retired Public Employees Association of California
Frank Ruffino, President, Association of California State Supervisors
Doug Villars, California Association of Highway Patrolmen
Ken Page, Research, Communications and Training Director, Professional and Technical Engineers, Local 21
Patrick Choi, Academic Professionals of California
Brian Ronan, President State Coalition of Probation Organizations