No Santa Claus From CalPERS

Steven Greenhut: California counties are getting a shocking Christmas gift from the California Public Employees’ Retirement System (CalPERS) in the form of an updated actuarial report for the retirement system. Of course, pension liabilities are soaring, which will further stress county budgets. In El Dorado County, where I live, the unfunded pension liability has increased $172 million in one year, to approximately $264 million. Those are big numbers in a county with only about 172,000 people.

El Dorado County Auditor-Controller Joe Harn, in a letter to the county board of supervisors, argued that “The Report is clear evidence that the current retirement benefits that have been contractually promised to our employees are unaffordable. … Obviously, your Board should work towards a two-tiered system so that employees hired in the future are promised dramatically lower retirement benefits. However, a two-tiered system will not be enough.” That’s the key point — even changes for new hires will not fix the mess for current employees and retirees. Although not specific, Harn called for the board to ask state officials to change the law “to reduce these unaffordable obligations.”

Meanwhile, the state Legislature and incoming governor are pushing us toward higher taxes to fix the budget hole. There’s no effort among state Democrats to even touch pensions for new hires despite efforts by some agencies, such as the University of California system, to do just that. Maybe pressure from counties — especially the bigger ones such as Los Angeles, Orange, Santa Clara, San Diego, etc. — will create impetus for reform. Hope springs eternal.

DEC. 14