California will contribute $5.3 billion to CalPERS for the fiscal year starting July 1, up 11% from the current fiscal year, shows a proposed budget by Gov. Edmund G. Brown Jr.
The state contribution increase is $524 million, which includes $172 million as a result of the CalPERS board’s decision in December to reduce the $305.5 billion pension fund’s assumed rate of return to 7.375% from 7.5%, beginning in July.
The state contribution increase to CalPERS will ultimately go up by $2 billion in the 2019-‘20 fiscal year, when the final phase of a rate-of-return reduction goes into effect, lowering to 7%.
Total state contributions to the California Public Employees’ Retirement System, Sacramento, are expected to reach $9.7 billion in the 2023-‘24 budget year due to a variety of factors, including state contribution increases and payroll growth, the budget proposal shows.
California Controller Betty T. Yee said in a statement she was pleased with the higher state contribution. Ms Yee also holds a seat on the CalPERS board. “This will help to stabilize the pension fund as the board continues to work judiciously to secure public employees’ earned benefits,” she said.
Overall, Mr. Brown has unveiled a $179.5 billion budget for the fiscal year, up 5% from the current year. The budget must be approved by the state Senate and Assembly. But the CalPERS contributions cannot be changed because the state contributions are set by the CalPERS board and cannot be changed by the Legislature.