California's Unfunded Retirement Liability Equals $10,386 Per Taxpayeror / $5,650 for Every Man, Woman and Child in the State

California Public Employee Retirement System - CalPERS*

The 2014 budget includes $4.6 billion for state contributions to the California Public Employees Retirement System (CalPERS), a 24 percent increase from the 2013-14 level of $3.7 billion. Annual contributions will continue to rise, with another nine percent increase in 2015-16, 12 percent increase expected in 2016-17 and a six percent increase anticipated in 2017-18. Contributions are projected to reach $5.9 billion in 2017-18, a 60 percent growth in state General Fund contributions since 2013-14.

The fast-paced increases are mainly due to steps CalPERS has taken over the last few months aimed at returning the pension fund to fully-funded status in 30 years, phasing in additional contributions beginning in 2014-15. In October 2013, CalPERS began a review of mortality rate projections, which has led to the Board adopting changes to economic (discount rate, price inflation, and wage inflation) and demographic assumptions (retirement rates, employment trends, disability rates, salary rate projections and mortality rate projections).

　

For example, the impact of the new assumptions on rates for state employees would be as follows:

	Employee Group	2013-14 Contribution Rate	2014-15 Contribution Rate	2017-18 Contribution Rate
	State Miscellaneous	21.30%	24.28%	32%
	Schools	11.50%	11.70%	20.50%
	State Industrial	16.40%	18.10%	21.50%
	State Safety	17.90%	19.40%	20.50%
	State PO/FF	31.30%	36.80%	45%
	CHP	35.90%	43.50%	56%

Pension Reform of 2013.
The budget includes $102.7 million General Fund redirected from savings achieved as a result of pension reform (AB 340, Statutes of 2012) towards the state’s unfunded pension liability. This, however, is a very small step toward eliminating the unfunded liability, which is currently about $46 billion just for state employees. Total state unfunded retirement liabilities (e.g. including health benefits and STRS) are estimated to be about $193 billion.  

*Senate Minority Fiscal Office