The Washington Examiner recently published a story showing that 150 unions had endangered pension systems, writing “Another 85 funds are listed as being ‘endangered,’ meaning they lack the assets to meet at least 80 percent of their future obligations.”
Based on the federal criteria, both CalPERS and CalSTRS, the two major California government systems, are “endangered.” CalPERS reports they are 77 percent funded, yet at the same time mandated a 50 percent increase in the contribution from member agencies. If the system is growing so well, why the massive increase?
The report says “An estimated funding level of 77 percent for the Public Employees’ Retirement Fund–a positive growth of more than 7 percentage points. The PERF was funded at 69.8 percent as of June 30, 2013 based on the most recent actuarial value of assets. The PERF is the main pension trust fund that pays retirement benefits.”
CalSTRS, is also under 80 percent and is more than doubling the contributions to try to reach the 80 percent non-endangered level. The report says “Employer contributions will increase from 8.25 percent to a total of 19.1 percent of payroll, phased in over the next seven years.” For the teachers this is a pay cut. For the students this means less equipment and a squeezing of resources. For parents, this means more votes for bonds and fees.
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