CalPERS' board adopted employer and member contribution rates for the fiscal year ended June 30, 2021.
Updated actuarial results show a funding ratio of 70% as of June 30, 2019, up from 69.5% as of June 30, 2018. The full actuarial report for the $375.7 billion California Public Employees' Retirement System, Sacramento, is expected to be completed later in 2020, according to a report to the finance and administration committee. The employer contributions for three of the five groups of state employees increased, while the rates of the other two decreased.
The most significant points included a 6.7% investment return for the year ended June 30, 2019, the implementation of a new 20-year amortization policy from 30 years and an additional $2.5 billion state contribution, said Nina Ramsey, associate pension actuary at CalPERS. The state's contribution came in after CalPERS' valuation date and will not be reflected in CalPERS' funded status until the June 30, 2020, actuarial review, she said.
The expected contribution rate for fiscal year 2021 is $7.3 billion, which is $374 million greater than fiscal year 2019. Among the reasons for the increase is the investment loss in the year ended June 30, Ms. Ramsey said. Since the investment return of about 6.7% before reduction for administrative expenses is lower than CalPERS' assumed return of 7%, an investment experience loss was added to the amortization schedule, she said.
Separately, the board at its Wednesday meeting adopted a one-page board member new code of conduct. The code includes a requirement that board members behave and speak respectfully and "zero tolerance for harassment, discrimination and/or retaliation of any kind." The code also states that any breach of CalPERS' confidential information "will be thoroughly investigated" and that disclosure of confidential information will not be permitted.
The board also amended the board election regulations to ask candidates to voluntarily provide additional relevant information in their candidate statements, including information regarding financial solvency, sexual harassment and any conflicts of interest that could affect their role as a board member. The change also requests candidates to state whether they would maintain the confidentiality of all CalPERS non-public information. The issue of sexual harassment came up in the last board election when former board member J.J. Jelencic ran for a board seat in 2019. Two female CalPERS staff members, Charity Bowman and Gabriela Urdaneta, both associate government program analysts, said they were advocates of the #MeToo movement and asked board members that supported Mr. Jelencic to rescind their endorsement. In 2009, Mr. Jelencic, who is also a retired CalPERS employee, had been found to have sexually harassed three co-workers by a state personnel board administrative law judge.
Separately, CEO Marcie Frost said that CalPERS' return was -0.4% for the year, 4.6% for the three-years, 4.7% for the five years, 7% for the 10 years and 5% for the 20 years ended March 31.
