Tuesday, December 8, 2009

Governor Uses Market Numbers to Set CalPERS Contribution Rate

Extra $$$s for CalPERS from State; zero for UCRP!

Governor uses market numbers to set the CalPERS contribution rate!

Governor to give CalPERS more funds than it asked for.
Dale Kasler,
Sacramento Bee, Dec. 06, 2009

With the State facing a $20.7 billion deficit over the next year and a half, Governor Schwarzenegger is willing to raise the State’s annual CalPERS contribution to $4.8 billion in the next fiscal year, even though CalPERS officials only asked for $4.1 billion.

Why give more? Because the Governor thinks it is more prudent to pay the CalPERS tab as quickly as possible and not allow “smoothing”  of the numbers to mask the extent of the problem--a huge unfunded liability.

Gov.Schwarzenegger, who has been trying to overhaul employee pension systems in the State, does not believe in allowing a smoothing mechanism to lower the cost of contribution and thereby “pass the buck to our kids.” Instead, he is willing to pay what he owes now, but start the process of creating a more sustainable pension system for the future.