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Civic Circus with Ankur Patel breaks down local politics, with a weekly report on city, county, and state bureaucracies.

If you want to follow the money, you have to look at pensions. The largest public pension fund in the United States of America is the California Public Employee Retirement System (CALPERS), valued at $235,800,000,000 as of July 2011. California is also home to the second largest public pension fund in the United States, the California State Teachers’ Retirement System (CALSTRS), valued at $146,600,000,000 as of August 2011. Both are in the top ten globally. For comparison, Los Angeles City’s Employee Retirement System (LACERS) is valued at $9,900,000,000, while the Los Angeles Fire and Police Pension is a separate $11,400,000,000 fund. That ranks both of those pension funds in the top 300 globally. Regardless of size, pension funds are generally governed the same way. A board of directors at the top (some elected and some appointed), full time staff, and a turnstile of investment bankers and fund managers deciding where to invest the pension’s money. CALPERS, CALSTRS, and LACERS are all severely underfunded. Partly because of pension spiking and generous benefits, partyly because of the increase in life expectancy, and partly because of questionable investments. CALPERS, for example, lost nearly a billion dollars in the Newhall Ranch Development, when LandSource, the company through which the pension investd in the real estate, went bankrupt. The executive director and head of real estate for CALPERS conveniently retired after that fiasco, while the funding partner was removed from participation with the fund. But even more curious was the fact that freedom of information act requests for the due dillegence and contracts made on the Newhall Ranch project were denied by CALPERS. The CalPERS board recently approved $4,500,000 in bonuses to their top managers in a closed-door meeting last month. CalSTRS CEO Jack Ehnes, in their last board meeting, said a contribution hike as high as 14% from the teachers of California will be needed to keep that system afloat. CALSTRS has a funding gap of about $56,000,000,000. At the city level, In 2002, Los Angeles taxpayers contributed just under $100,000,000 to LACERS, and it was fully funded. Today, taxpayers contribute more than $400,000,000, and the system is underfunded by more than $2,300,000,000 billion. A report released by the Little Hoover Commission on Los Angeles’ public pension system says the city’s retirement contributions are projected to double by 2015, without a miraculous return on investments. The investments that these pensions funds make take the form of stocks, United States Treasuries, foreign currency, mortgage backed securities, real estate, corporate bonds, and a wide variety of financial instruments created and traded on Wall Street. Looking through the investments of these funds, companies like Exxon Mobil, General Electric, JPMorgan Chase, IBM, and AT&T are easy to find, but just as prominent are the billions of dollars distributed to obscure financial and legal companies that can make contributions to political campaigns in confidentiality. With pension fund board members regularly appointed by politicians, our public pension system has turned into a fun house, for Wall Street.