What is CalPERS? We explain in one minute
Fewer Californians appear concerned about public spending on pensions than in past years, according to a Public Policy Institute of California poll.
Sixty-three percent of adults said the amount of money state and local governments are spending on public employee pensions is either a big problem or somewhat of a problem, according to poll results released Wednesday.
That’s the lowest percentage expressing that level of concern since 2005, and it’s down from a high of 83 percent in 2011, when pension benefits were often in the news amid the economic downturn.
In 2012, Gov. Jerry Brown signed a law that required newly hired public employees to kick in more money for their pensions, and capped how much they can earn in retirement.
Public perceptions of pensions are significant because they gauge whether voters would get behind a ballot initiative to further restrict public employee pensions. That idea surfaces from time to time in local governments, but has not yet made the statewide ballot.
CalPERS, the pension plan for most state and local government employees, is about 70 percent funded, meaning it has about 70 percent of the money it estimates it will need to pay for retirees’ benefits.
CalSTRS, the pension for teachers, is about 63 percent funded.
Each fund is in a decades-long process of increasing funding to get to 100 percent. State and local governments and school districts have to pay extra until the fund reaches 100 percent.
The League of California Cities, a lobbying organization for local governments, released a survey of about 170 cities last year that showed the cities’ estimates for their increasing costs.
The survey found cities expect to spend an average of about 15.8 percent of general fund budgets on pensions by 2024, up from an average of 8.3 percent when the survey was conducted. About 10 percent of cities expect to put more than 21 percent from their general funds toward pensions in 2024.
School districts are ramping up what they pay toward pensions and requiring teachers to kick in more.
When the funds don’t meet their annual targets for return-on-investment, governments have to make up the difference. CalPERS’ target rate is 7 percent. As of February, the actual rate so far for the fiscal year was 1.62 percent, the fund’s chief investment officer, Ben Meng, reported. The fund’s chance of closing the gap to meet the target by the end of the fiscal year on June 30 is about 30 percent, based on historical trends, Meng told the CalPERS board.
The PPIC poll asked this: “At this time, how much of a problem for state and local government budgets is the amount of money that is being spent on their public employee pension or retirement systems? Is this a big problem, somewhat of a problem, or not a problem in California today?”
Among all adults who responded, 29 percent said it was a big problem; 34 percent said it was somewhat of a problem; 22 percent said it was not a problem 14 percent said they didn’t know.
Gov. Gavin Newsom in his budget called for $5.3 billion in one-time spending by the state to help pay down pensions. Forty-seven percent of poll respondents supported the payment; 36 percent opposed it and 17 percent said they didn’t know.