The Rose Institute of State and Local Government is pleased to present institute alumnus Gavin Landgraf’s (CMC ’14) senior thesis on California’s pension problems. The thesis identifies the sources of problems within California’s pension system and suggests possible solutions.
Gavin’s paper compiles data on various aspects of California’s pension system, including real estate investments and fund liabilities. The paper also examines different structural methods for operating pension funds, suggesting that those with an independent investment council may be more successful than those that place the control of the pensions system in the hands of the board of governors. It also identifies accounting tricks and manipulations that can misrepresent the health of a pension fund — and the problems that arise from doing so. Loose regulations from the Government Accounting Standards Board and the lack of enforcement capabilities from credit rating agencies make these misrepresentations possible. The paper then analyzes California specifically, using it as a case study for how pension systems can go wrong. Finally, it suggests concrete solutions for California to make the pension system more stable in both the short- and long-term.
Gavin graduated in May with a BA in Politics, Philosophy, and Economics (PPE), and is currently an Executive Fellow in the California Capital Fellows program. In November, he received the George J. Mitchell scholarship to study natural resource economics at the University of Ireland in Galway. Gavin worked under the guidance of Professor Ken Miller, Associate Director of the Rose Institute.