Commentators have written reams of material about why this year’s state budget crisis is the worst upheaval facing Sacramento since the Great Depression. One reason involves the California Public Employees Retirement System, whose fiscal mismanagement is now taking its toll on local governments around the South Bay and beyond.

From 1995 through 2000, CalPERS raked in double-digit earnings on its investments. As a result, according to The Sacramento Bee, CalPERS concluded that it had much more money than it needed to finance workers’ retirements. So the pension fund lobbied the state lawmakers and the governor to increase benefits to retirees and to current workers.

According to the 2003-2004 Redondo Beach budget prepared by City Manager Lou Garcia, CalPERS’ projected growth assumption was 8.25 percent. Most investors can guess the rest of the story: CalPERS’ investments tanked after 2000.

In turn, California cities will have to ante up more money to pay to CalPERS for rising costs. In Redondo, for instance, CalPERS costs will rise by $450,000 in 2003-2004. Garcia also projects an increase of $6 million over the following two years.

Other cities in the region face similar burdens. For example, Hawthorne will have to pay about $1 million more in retirement medical benefits in next year’s budget as a result of CalPERS cost increases.

Things are just as bad at the state level. Next year, California will owe more than $3 billion to the CalPERS fund — twice what taxpayers paid in this year, according to Sacramento Bee columnist Daniel Weintraub.

Garcia reports that his city’s structural deficit is mostly related to personnel costs such as benefits. He concludes that rising costs to fund CalPERS would be the largest burden facing the city over the next three years.

Among Garcia’s recommendations to the mayor and City Council is to ask voters to approve a tax to fund CalPERS.

As a result of the pension fund’s problems, local government funds that should have gone to vital public services will be siphoned off for years to come. About the only thing city officials in the South Bay can do now is hold the line on employee pension benefits and lobby state lawmakers to reform CalPERS through increased oversight of its investment practices.