School districts, already bracing for record pension contributions for school employees, will face additional costs they hadn’t expected as a result of a decision Wednesday by the California Public Employees’ Retirement System.
The CalPERS board voted to lower the expected rate of return on its investments from 7.5 to 7 percent. That action will force local governments, school districts and the state to make up the difference by annually paying billions of dollars more into CalPERS to keep the nation’s largest public employee pension fund afloat.
The board acted because the pension fund remains underfunded and vulnerable to further erosion without more money. Since investments aren’t generating what the board had counted on and the board isn’t planning to revise its investment strategy for two years, it’s turning to employers and, to an extent, employees for larger contributions.
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