More (scandalous) facts emerge:
The pension system’s board assumes a 7.75 percent return on the millions it has invested. For many years, it met and even exceeded that rate of return. But the 2008 stock market crash ended up reducing the pension system’s returns in fiscal year 2009 by 18.7 percent and 11.1 percent the next year.
It was, said Low, “a shock to the system,” and because there’s a limited number of years to smooth out that shock, the state now has to basically double up its payments to comply with the constitutional mandate.
While the 7.75 return rate is near the same number all the other states’ pension systems used (and some were as much as a half-point higher), Monks, a founding trustee of the federal employees retirement system, said, “Any damn fool should have realized there would be a bump in the road in the seemingly upper hypotenuse of equity returns.” How Did State Pension Debt Happen?, BDN, 7/28/10
Seems like sort of a punk’s mistake, doesn’t it, figuring on that rate of return, on into infinity?
The upper hypotenuse?!?