Monday, August 31, 2015

California Taxpayers are shelling out more than ever before, but it's billions short of covering the ballooning pension program...



CalPERS, the Golden State’s public employee retirement system, is seeking to shift the cost and risk of pensions to taxpayers after a $5 billion shortfall in 2014.

The reason? The state made unrealistic promises to its workers during the dot-com boom of the late 1990s, based on overly optimistic projections for returns on its investments.

The only way to fulfill those promises has been to make high-risk investments with greater potential for large returns.

But with memories of the the 2007-8 recession lingering, and fears of a new asset bubble, Gov. Jerry Brown and lawmakers in Sacramento want the pension system to shift to less risky bonds–and want taxpayers to cover more of the cost.

Supes working to pay off $220M pension liability - Times-Standard

The Humboldt County Board of Supervisors took a first step on Tuesday to repay the $220 million the county owes to the California Public Employees Retirement System, or CalPERS, by working to form a trust fund for that purpose.

“If we do nothing to set aside funding to address this unfunded liability, we will be laying off county employees the next time we face a recession,” county Administrative Officer Phillip Smith-Hanes said to the board. “That is the reality that we face.”

...The county now owes $220 million in unfunded liabilities and is obligated to contribute $28.5 million toward CalPERS costs during this fiscal year. Currently, the county can only afford to pay off 21 percent of what its obligated to, Smith-Hanes said.

Having discussed this issue earlier this year, the board had expressed interest in paying off the unfunded liability either through pension obligation bonds or creating a trust fund managed by the consulting firm Public Agency Retirement Services.

County Treasurer John Bartholomew recommended on Tuesday that the board use the trust fund due to the bond option requiring an inflexible financial commitment which would be further complicated by the county’s financial stresses.

The trust fund option would allow the county to contribute funds when it has the funding available and allow it to use the trust fund to pay CalPERS if the county’s revenue stream takes a hit, Bartholomew said.

“Just like any debt, the more you can pay down the less it’s going to cost you over time because of the interest that is attached to it,” he said....