California’s state and local agencies are in fiscal crisis and face an unsustainable future, not because of the recession but because of the need for pension reform. The legislature made modest reforms last year but more action must be taken to stem the problem. It is imperative to make meaningful statewide reform of public employee pensions in a manner that protects workers, taxpayers and future generations of Californians.
Estimates vary broadly on just how large California’s unfunded pension liabilities actually are. Whether it is as high as $737 billion as some analysts say or a lower amount of $384 billion, the number is staggering and growing rapidly. At the local level, it is estimated 20 percent or more of budgets are spent on retirement costs in some cities and counties, and with CalPERS’ expected rate of return lowered to 7.5%, taxpayers are liable for even more. In addition, “Other Post-Employment Benefit” (OPEB) debt which is mostly retiree healthcare – those for the State of California itself, 53 counties, 352 cities, the state trial court system, 282 school districts, and the University of California system totals over $150 billion. These liabilities mean less money for our social safety net, our schools and universities, and infrastructure investments that are so critical to a successful economic recovery.
With several municipalities in bankruptcy and many more on the brink, and governments still reeling from the recession and budget cuts, it becomes increasingly apparent that significant reforms are needed to rein in these spiraling costs. It is urgent that reforms are put in place quickly.
WHAT WE SEEK
Meaningful statewide pension reform that addresses the structural issues that lay at the heart of the unfunded liability we now face, including:
Diversifying the CalPERS Board to be more accountable, transparent and representative