By RSI Chair Chuck Reed
Special to The Sacramento Bee
California is great at making pension promises, but a dismal failure at properly funding them. The most recent annual report released by the California Public Employees’ Retirement System shows that, as of June 2016, CalPERS was more than $138 billion in debt. The teachers’ retirement system (CalSTRS) is nearly as bad, with $96 billion in debt. Even with a couple of really good years in the stock market, pension debts have grown.
The California system of overpromising and underfunding is failing taxpayers, public employees and retirees and wreaking havoc on California’s finances, including those of cities like Sacramento. And the giant CalPERS and CalSTRS pension debts ensure more of the same for decades to come.
The first pension domino fell in 1999, when the state Legislature granted retroactive pension benefits without paying for them. Since then, many factors have contributed to the pension debt, including chronic underfunding and relying on the stock market with unrealistic assumptions for investment returns. Quite simply, California has relied on kicking the can down the road for someone else to deal with at a later time.
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