S. public pension funds' unfunded pension liabilities are expected to rise through 2020, even under positive investment return scenarios, said a report Tuesday from Moody's Investors Service.
In its report, Moody's ran a sample of 56 plans with $778 billion in aggregate reported net pension liabilities through three different investment return scenarios. Due to reporting lags, most 2019 pension results appear in governments' 2020 financial reporting, Moody's noted. The plans had $1.977 trillion in trillion assets.
Under the first scenario with a cumulative investment return of 25% for 2017-'19, aggregate net pension liabilities for the 56 plans fell by just 1%. Under the second scenario with a cumulative investment return of 19% for 2017-2019, net pension liabilities rose by 15%. Under the third scenario with a 7.2% return in 2017, -5% return in 2018 and zero return in 2019, net pension liabilities rose by 59%.
Assembly Speaker Anthony Rendon put the brakes on a sweeping plan to overhaul the health care market in California Friday, calling the bill “woefully incomplete.” Rendon announced plans to park the bill to create a government-run universal health care system in Assembly Rules Committee “until further notice” and give senators time to fill in holes that the bill does not currently address. “Even senators who voted for Senate Bill 562 noted there are potentially fatal flaws in the bill, including the fact it does not address many serious issues, such as financing, delivery of care, cost controls, or the realities of needed action by the Trump administration and voters to make SB 562 a genuine piece of legislation,” Rendon said.
Here’s a cynical view: Maybe the law’s stated goal wasn’t its real goal. Maybe influential teachers unions wanted to shower big districts with money to pave the way for teacher pay raises denied during the state’s long revenue recession. Want evidence?
On the micro level, consider what happened in Los Angeles Unified, the state’s largest district. In August 2014, the United Teachers Los Angeles issued a statement calling for a 17.6 pay increase and asserting the raise was affordable because of all the “extra dollars [that] have already flowed into the district as part of the state’s new funding formula.” In May 2015, the union ended up winning a 10 percent, two-year raise, and a year of retroactive higher pay. The following month, state Superintendent of Public Instruction Tom Torlakson overruled an underling and said that Local Control Funding Formula money could be used for teacher raises. As Assemblywoman Shirley Weber, D-San Diego, immediately pointed out, this is not what the Legislature intended when it passed the law.
On the macro level, consider what’s happened in Sacramento. The Brown administration has been implacably opposed to attempts led by Weber and Assemblyman Phil Ting, D-San Francisco, to determine how school districts have spent their Local Control funds. It doesn’t want the public to know.
A class-action lawsuit against CalPERS filed on behalf of more than 130,000 California government workers and retirees can move forward to trial, a Los Angeles judge has ruled. The lawsuit challenges a sharp increase in fees that the California Public Employees’ Retirement System levied on people who bought insurance for long-term health care through the pension fund. It argues that the rate hike was different in scale and purpose than any previous fee increase on those policy holders.
Two changes to the contract – added without bidding – swelled the deal to $8 million within a year. Then, the Employment Development Department submitted a request to add another $2 million worth of work to the arrangement without soliciting new bids from other companies. That project is one of nine that State Auditor Elaine Howle highlighted in a new report released on Tuesday that urges California government to be more cautious in awarding high-value contracts without seeking competitive bids.