CalPERS Board Delays Vote on $600M Contribution Increase

On Wednesday, the governing board of the California Public Employees Retirement System postponed a vote to increase the state's contribution to public employee retirement benefits by $600 million in the next fiscal year, Bloomberg/BusinessWeek reports (Marois, Bloomberg/BusinessWeek, 5/19).

CalPERS manages retirement and health benefits for 1.6 million public employees in California.

On Tuesday, CalPERS' Benefits and Program Administration Committee unanimously voted to impose an 18% hike on annual state contributions to the pension system, bringing the state's total share to $3.88 billion annually.

California law requires the state to pay the contribution amount set by the pension system (California Healthline, 5/19).

Reasons for Delay

The CalPERS board said concerns about California's $19 billion budget deficit prompted it to delay a vote on the contribution increase until a meeting next month.

State Treasurer Bill Lockyer, a CalPERS board member, called the proposed rate hike "imprudent" in light of the state's budget strain.

He said state actuaries would analyze the potential effects of delaying the contribution increase for a year and report their findings at CalPERS' June meeting.

Renewed Calls for Pension Reform

Gov. Arnold Schwarzenegger's (R) administration criticized the board's decision, saying the rate hike delay could create greater budget strain in the future.

David Crane, an economic adviser to Schwarzenegger, said the decision would "compound that pressure on future state budgets and take even more money from education, parks, health and public safety programs" (AP/San Jose Mercury News, 5/19).

The governor has called for large-scale reforms to the pension system and has expressed support for legislation (SB 919) by Sen. Dennis Hollingsworth (R-Murrieta) that would lower pension benefits for newly hired state workers.

Democratic lawmakers oppose Hollingsworth's bill (Kasler, Sacramento Bee, 5/20).