Yesterday, we noted proposed changes in public pension accounting rules by GASB, the Governmental Accounting Standards Board. An observation from Academic Council Chair Robert Anderson, added to that blog note, indicated that the GASB proposal would not have a direct impact on UCRP. However, the problem facing UCRP is partly political.
As prior blog posts have noted, the governor is planning some kind of pension proposals – apparently requiring a ballot proposition. Such a proposition, depending on how it is worded, could sweep UCRP into a statewide change, even though the Regents enacted their own pension modifications in December 2010.
There is a report today in the Sacramento Bee that the big CalSTRS fund covering schools, whose unfunded liability is already large under current accounting rules, would experience a big jump in its recorded liability:
…The California State Teachers' Retirement System already faces a funding gap of $56 billion – the difference between the money it expects to have on hand over the next 30 years and what it will need to pay out in benefits during the same period. The (GASB) proposal would triple the gap – on paper – to around $150 billion, said Ed Derman, deputy chief executive officer at CalSTRS…
Anything that raises the pension issue in the larger state pensions – CalSTRS and CalPERS – could lead indirectly to UCRP changes that go beyond what the Regents enacted. While CalPERS apparently would not be much affected by the GASB proposal, $150 billion at CalSTRS will surely stir things up.