Going For Broke: Reforming California’s Public Employee Pension Systems
April 02, 2010 Filed in: Unions
Howard Bornstein, Stan Markuze, Cameron Percy, Lisha
Wang and Moritz Zander, Stanford Institute for Economic Policy
Research CalPERS, CalSTRS, and UCRS1 together
administer the pensions of approximately 2.6 million Californians.
Between June 2008 and June 2009, these three public pension funds
lost a combined $109.7 billion in portfolio value (see Table 1).
The ability of these three funds to meet their future obligations
has significant implications for the fiscal health of the state and
public employers, the effective underwriters of many public
pensions. In this policy brief, we ask two questions: (1) what is
the current funding shortfall of CalPERS, CalSTRS, and UCRS, and
(2) what policies would prevent a similar shortfall in the future?
… We conclude that California’s public pension liabilities are
substantially understated. Given the consequences of pension
underfunding, we believe every effort should be made in short order
to implement policy changes to reverse the current shortfall and to
prevent a similar shortfall in the future. Specifically, improved
long-term funding outcomes can be influenced through higher
contributions, investment in less risky assets, and lower benefit
levels…