Gov. Jerry Brown's 12-point reform proposal for the financial health of California's pension funds is a step in the right direction but additional reforms will be required to reduce shortfalls, according to a report released Tuesday from the Stanford Institute for Economic Policy Research in association with California Common Sense.
The report, “Pension Math: How California's Retirement Spending is Squeezing the State Budget,” examined the funded status of the $225.5 billion California Public Employees' Retirement System, the $148.2 billion California State Teachers' Retirement System and the $41.9 billion University of California Retirement Plan. It projected future costs and identified “how pension spending is likely to crowd out spending in other categories.”
According to the report, the combined unfunded liability for the state's three major pension plans, assuming a discount rate of 6.2%, was $290.6 billion as of June 30.
The report said there is only an 18% likelihood that CalPERS assets will equal its liabilities through fiscal year 2028, and the system would need to have an annual average return of 9% to “even odds that its assets are greater than or equal to 80% of liabilities.”
The report is available from the Stanford website.
