CalPERS Likely To Delay Rate Increase for Local Government Employers
Despite recent investment losses, CalPERS officials have signaled that they are unlikely to raise employer contribution rates for health care and pension benefits for local government agencies until mid-2011, Capitol Weekly reports.
Officials estimate that the economic downturn caused the pension fund to lose about 23.4% of its value during fiscal year 2008-2009. Since then, the fund's assets have grown gradually.
California is required by law to sustain retiree benefits for public workers. In order to make up for its recent losses, CalPERS likely will call on local government employers to contribute a larger share.
However, the fund did not raise employer contribution rates during the current fiscal year, and officials have signaled that the board will not raise rates for FY 2010-2011.
CalPERS CEO Anne Stausboll said the fund has postponed raising the employer share because of a recently adopted rate "smoothing policy" that aims to keep employer costs from changing dramatically in response to economic conditions (Howard, Capitol Weekly, 11/25).Gov. Arnold Schwarzenegger's (R) administration has said it opposes rate smoothing because the policy pushes back funding obligations to later years. The administration contends that postponing contribution hikes could add further strain to CalPERS and future state budgets (Mendel, Capitol Weekly, 11/25). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.