New CalPERS Investment Fund Possible
CalPERS is supporting legislation (SB 1729) by Sen. Nell Soto (D-Ontario) that would allow the pension agency to launch a new investment fund to help public agencies offset the cost of future retiree health care benefits, the Sacramento Bee reports.
New federal accounting rules require city and county governments to disclose the long-term cost of retiree health care benefits and how much they would need to contribute annually to fund the liability fully. The rules do not mandate that city and county governments allocate funds to offset the costs, but experts say governments likely will begin funding the liabilities because their credit ratings otherwise would be negatively affected.
The Legislative Analyst Office estimates that California governments will report unfunded liabilities totaling $40 billion to $70 billion.
The legislation would allow any public agency to invest money in a plan that CalPERS would manage. CalPERS trustees are debating options for the program, ranging from developing an actuarial consulting service to establishing a dedicated investment fund for future retiree health care liabilities.
An Assembly Appropriations Committee hearing on the bill is scheduled for Aug. 9 (Chan, Sacramento Bee, 7/9).