7.75% return = 74% funded => $86B unfunded = $7K per household debt

7.1% return = 67% funded => $118B unfunded = $9.7K per household debt

6.2% return = 58% funded =>$170B unfunded = $14K per household debt

4.5% return = 45% funded => $289B unfunded = $24K per household debt

(from page 19 of the "Nation Report")

For comparison, Governor Brown's proposed 2012 CA state budget is $92.6B.

To have even a 75% chance of fully meeting its obligations, CalPERS would have to make

**12.5%****return on investments**

**Every Year**for the

*. This is absolutely inconceivable. Not going to happen. Beyond the realm of possibility. In the last 30 years CalPERS has averaged 7.1% - slightly less than the S&P500, with dividends reinvested.*

**next 16 years**CalPERS widely publicized their 21% return for one year but to see how pathetically inadequate this is, you need to consider how compound interest works against you if you have a loss.

Consider the great crash of 2008. For every $100 invested, CalPERS was supposed to end up with $107.75 had they made their 7.75% annual return. Instead, CalPERS

__lost__23% and that $100 ended up as $77. Just to get that $100 back to its original value of $100 they had to grow that $77 by 30% (!)

But it was actually worse - much worse. The year after that 23% loss, they were supposed to have grown that $107.75 (that they

__make but were__

**didn't***to) to $116.10 (1.0775 * $107.75). To get that $116.10 from $77 they needed a 1 year return of*

**supposed***(!!??). CalPERS has never,*

__*51%*__*ever*, made 51% return on their investments in a year and they never will.

They are so deep in the hole now they will never get out and the question is only how much will taxpayers get stuck with to make up CalPERS unfunded liability.

(to be continued)

Dr. Nation's report is available here:

http://siepr.stanford.edu/system/files/shared/Nation%20Statewide%20Report%20v081.pdf

Governor Brown's 2012 Budget summary is here:

http://www.ebudget.ca.gov/pdf/BudgetSummary/FullBudgetSummary.pdf