California

Gotta love that place -- from the San Francisco Chronicle:

UC regents hand out raises after word of cuts
Finances are so dire at the University of California that it might have to turn away qualified students, but UC has still found a way to reward hundreds of employees with more than $4 million in incentive pay and raises.

At the regents meeting Thursday in San Diego, UC officials reported giving rewards of $150 to $41,205 to nearly 1,500 UCSF employees who met performance targets, raising the pay of some campus executives to above market rate, and providing 10 percent raises of about $20,000 a year to three executives at their Oakland headquarters.

The executives, who have various financial responsibilities for the UC system, will earn between $216,370 and $247,500 in base pay.

From the New York Times:

Bonus Payments to City Retirees Are Drawing Ire
As San Francisco struggles under ballooning pension and health care costs, the city�s retirees will receive unexpected cost-of-living bonuses totaling $170 million. The city�s anticipated budget deficit for the coming year is $360 million.

A political battle has raged over the city�s growing retirement obligations. In November, Proposition B, which would have required city workers to contribute more toward their pensions and benefits, was soundly defeated. The measure�s opponents � every major elected official and energetic public-employee unions � said fears about the pension fund were overblown.

Meanwhile, the fund�s fundamentals deteriorated as it gradually accounted for its huge losses in the stock market crash. It took in $414 million in contributions in 2010 but paid out $819 million.

On Jan. 4, an actuarial firm reported that the $13.1 billion San Francisco Employees� Retirement System now had an unfunded liability of $1.6 billion � triple its shortfall a year earlier. Gary A. Amelio, the system�s chief since January 2010, did not respond to questions.

Fine for thee but not for me... From CNBC:

California Declares Fiscal Emergency
Jerry Brown, California�s governor, declared a state of fiscal emergency on Thursday for the government of the most populous US state to press lawmakers to tackle its $25.4 billion budget gap.

The good solution from the New York Times:

A Path Is Sought for States to Escape Their Debt Burdens
Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government�s aid.

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state�s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

A painful solution to be sure but the only one that gets the states out from underneath their over-extended obligations. Unions may have had their day but they are now unneeded and they are certainly not serving their constituants...