CalPERS approved another round of rate increases Wednesday, requiring higher contributions from state agencies and school districts for the 2016-17 fiscal year.
The state’s contribution will increase by an estimated $602 million, to $5.4 billion a year. School districts will be charged an additional $342 million, to a total of nearly $1.7 billion a year. While teachers are covered by CalSTRS, other school employees get their pensions from CalPERS.
It’s the latest in a series of rate hikes implemented by the California Public Employees’ Retirement System in recent years, primarily to cover longer retiree lifespans, salary increases and the growing pool of state and school district employees. CalPERS is also dealing with lingering financial fallout from the 2008 financial crash, which cost the pension fund tens of billions of dollars.
CalPERS is 76 percent funded, which means it has 76 cents on hand for every $1 of long-term obligations.
The latest rate increase is smaller than originally projected, CalPERS said. Pension fund officials said steps they’ve taken in the past few months to scale back investment risks should eventually pay off in terms of moderating rate hikes.
“Over the long term we anticipate that the costs will level out for our employers as our recent actions to reduce risk are implemented,” said Richard Costigan, chair of the CalPERS finance and administration committee, in a prepared statement.