CalPERS Recommends Increasing State, School Contributions
The full CalPERS board is expected to vote on the recommendations Wednesday.
As of last June, the state pension plan is about 72% funded, while the school plan is about 86% funded. According to Reuters, funding for both plans have increased about 6% since the last fiscal year (Respaut, Reuters, 4/14).
Details of Contribution Hikes
If approved, the proposed changes would increase:
- The state's annual contribution by $487 million -- or 11% -- to about $4.75 billion; and
- The state's school districts' annual contribution by $111 million -- or 9% -- to about $1.34 billion.
CalPERS officials said that the increases are smaller than previously estimated (Kasler, "Capitol Alert," Sacramento Bee, 4/14). The new contribution rates would take effect July 1.
The pension fund said the rate hikes were brought on by:
- Longer life spans of retirees;
- Payroll growth; and
- Salary increases (Reuters, 4/14).
Richard Costigan, chair of CalPERS' finance and administration committee, in a statement said, "As the fund matures, and the retired population grows, it's important that the rates reflect the changing demographics of our members."
Meanwhile, the CalPERS board this fall is expected to vote on rate increases for participating cities, counties and local governments that will take effect in July 2016 ("Capitol Alert," Sacramento Bee, 4/14).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.