Topic: Wages
News
July 10, 2017

CalPERS may soon report investment earnings for the fiscal year ending June 30 that are near or even above its long-term target of 7 percent, up from a return of 0.61 percent the previous year. But the nation’s largest public pension system will still be seriously underfunded. . . . Despite a lengthy bull market that followed a stock market crash in 2008, CalPERS recently was only 65 percent funded. Now CalPERS is worried about a downturn that might drop funding below 50 percent, a red line actuaries think makes recovery very difficult.

News
July 10, 2017

The board that oversees the Los Angeles City Employees’ Retirement System will meet Tuesday to consider cutting its “assumed rate of return,” the yearly expected earnings for its investment portfolio, from 7.5% to 7.25%. The move is expected to shift about $38 million in retirement costs onto the city’s general fund, which pays for police patrols, firefighter staffing and other basic services, in mid-2018. The pension board also has the option to pursue a more dramatic step: taking the investment assumption to 7%, which would add $93 million to the city’s yearly pension burden, officials said.

News
July 10, 2017

Despite historic revenue gains, California’s public schools are in financial trouble. While California’s public schools often suffer financial distress during recessions, their current plight is alarmingly taking place during an economic recovery and after a large tax increase. The principal cause is exploding spending on pension and retiree health care obligations.

News
July 2, 2017

Six years later, the state is no longer projecting massive deficits and the governor’s metaphorical wall is now more like a short fence. Tax increases approved by voters in 2012 and in 2016 have played a major role in making that happen. There’s broad agreement that a smaller “wall of debt” is good news. The problem, though, is that Brown’s original definition left out billions of dollars in obligations that someone will have to pay. And it’s unclear who that will be or when it will happen. . . . When he took office, Brown’s budget team identified 10 short-term government debts as a threat to California’s chances of recovery — debts that totaled $34.7 billion. . . By the close of the fiscal year that ended on Friday night, the state had paid off some $32 billion of the “wall of debt” identified by Brown in 2011. . . . Looming larger than anything now are the retirement promises made to state employees — totaling at least $242 billion, according to the governor’s finance team. Some insist that projection is too low, that taxpayers will have to hand over much more to fully pay off obligations to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS). Add those pension debts to other chronic obligations — transportation loans and borrowing from special budget funds during lean years — and the state Department of Finance puts the total size of existing budget debt at more than $283.3 billion.

News
July 2, 2017

Last month, a Civil Grand Jury report concluded that most of the debt of the San Francisco Employees Retirement System, which has been underfunded for more than a decade, was approved by the voters who in theory are a safeguard. . . . The grand jury suggests voters may have been misled by official ballot pamphlet cost information on two of the three “significant” pension increases described in the report. A dozen retroactive retirement benefit increases between 1996 and 2008 are listed in a report appendix. Voters were told that even with a retroactive pension increase for most employees (Proposition C in 2000) the city is not expected to make an annual payment to the retirement system “for at least the next 15 years.”

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