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How Lower Earnings Will Impact California's Total Unfunded Pension Liability

"[If] the discount rate is lowered to 5.5%, and the actuarial accrued liability is revalued according to Moody's proposed criteria scheduled for adoption in 2014, it results in the estimated funding status of California's consolidated state and local government pension plans lowering from 82% funded to 64% funded.... If you increase the duration of the pension plan discounting to what is probably a more representative 17 years, ... the unfunded pension liability at 6.2% is $295 billion (67% funded), at 5.5% it rises to $401 billion (60% funded), and at 4.5% it rises to $576 billion (51% funded)."

Fixing California's Retiree Health Care Underfunding

"When OPEB is unfunded (which ... is the case in most California communities), costs in coming years are set to accelerate rapidly -- likely more rapidly than pension costs. When a worker retires and begins to draw benefits, his pension comes out of the pension fund, whereas his health benefits continue to come directly out of the operating budget. Thus, for as long as governments fund OPEB on a pay-as-you-go basis, they will experience the combined force of the baby-boom retirement wave and rising health-care costs. In a prefunded system, the effect is filtered."

How Much Do California State Government Pensions Really Cost?

The cost to Californians of paying government workers, on average, a pension that is literally triple what the average private sector worker collects from social security is compounded by the fact that the ratio of government workers to government retirees is on-track to be 1-1, i.e., one worker for each retiree[.]

Put Public Employees on Secure Choice and Social Security

"Why not freeze the employer contributions into California's state and local employee pension funds at 20% of salary (that's a two-to-one match on a 10% contribution via withholding), and then, constrained by those fixed percentages, lower all benefits, for all participants, on a pro-rata basis to restore solvency? Better yet, why not enroll every state and local government employee in the Secure Choice program?"

Calculating Public Employee Total Compensation

A study released late last year, sponsored by U.C. Berkeley's 'Institute for Research on Labor and Employment' entitled 'The Truth about Public Employees in California: They are Neither Overpaid nor Overcompensated,' contains its conclusion in its title, but whether or not this study is presenting the 'truth' or not is worthy of further discussion.

Evaluating Total Unfunded Public Employee Retirement Liabilities in 20 California Counties

"[T]hese 20 counties combined have a population of 29.3 million, constituting 77% of Californians. Their total unfunded pension liability ... is $37.2 billion. Their total unfunded retirement liabilities, ... including pension obligations bonds and unfunded healthcare liabilities, is $72.3 billion. As a percentage, their total funded ratio just for pensions (assets as a percent of liabilities) is 74%. Their total retirement funding percentage, taking into account pensions, healthcare, and pension obligation bonds, is only 60%. This total obligation, $7,369 per household vs. $3,932 if you only include pension funds, is a daunting amount."

Social Security is Healthy Compared to Public Sector Pensions

"Not only are the financial adjustments necessary to fix Social Security far easier to implement than what it's going to take to rescue public sector pensions, but the sheer size of the public sector pension liability is actually bigger than the total liability for the entire Social Security fund. It is imperative that American voters understand this fact."

Public Employee Compensation Reform is Vital

"Critics of public employee compensation reform can decry advocates of fairer contracts for public employees until they are blue in the face, but this won't change the essential reality: As a group, public employees work fewer hours in a week, fewer weeks in a year, and fewer years in a career, while receiving exceptional salaries and other benefits, and then retire at a younger age with incomparably better pensions than private-sector employees.... Fortunately, reform is on the way."

Public Funds Account for Over 70 Percent of Health Care Spending in California (PDF)

"[H]ealth care expenditures in 2016 are estimated to total more than $367 billion [in California] ... 71 percent of these expenditures will be paid for with public funds.... Private expenditures ... will comprise approximately 29 percent of total health care spending in California in 2016 ... [including] employer share of premiums (16 percent), employee share of premiums (6 percent), out-of-pocket expenditures for covered benefits (4 percent), and premium contributions for individually purchased insurance (3 percent)."

Moody's Changes Pension Solvency Assumptions from 7.5% to 5.5%

"Using these assumptions, at a rate of return of 7.5% per year, each employee must contribute an amount equivalent to 17.5% of their salary into their pension fund every year. At a rate of 5.5% per year, this contribution rate goes up to 30% of salary. Put another way, if you accept Moody's verdict that pension funds should not expect to earn more than 5.5% per year, and you want to keep pensions solvent, then every state and local employee in California just got a 12.5% raise. Or you might consider this: If there are 1.5 million state and local government workers in California who make, on average, $70,000 per year (again, these are conservative assumptions), then California's taxpayers will have to come up with another $13.1 billion per year."