The fuse on the pension bomb gets shorter and shorter. California is running out of accounting tricks and gimmicks, so contributions have to increase. From Tyler Durden at zerohedge.com:
In his latest budget proposal, California Governor Jerry Brown, who continues to vehemently pursue various multi-billion dollar pet projects like the high-speed rail and the so-called “Delta Water Fix” despite his state teetering on the brink of insolvency, has finally admitted that CalPERS, California’s public pension system, is a total disaster.
Apparently Brown finally came to the realization that a 65% funding ratio is slightly less than ideal, especially since we’re on the precipice of a massive wave of Baby Boomer retirements, and warned that the “state’s contributions to CalPERS are on track to nearly double by fiscal year 2023?24.”
As of June 30, 2016, CalPERS reported that the state plans’ unfunded liability totals $59.5 billion and is 65 percent funded, meaning that CalPERS only has 65 percent of the funding required to make pension payments to state retirees.
Without the supplemental payment, by 2023?24, the state’s contribution is estimated to reach $9.2 billion ($5.3 billion General Fund), due to anticipated payroll growth and the lower assumed investment rate of return.
But don’t worry, it’s nothing that a little extra taxpayer-funded bribe to organized labor can’t fix…how does an extra $6 billion sound?…is that sufficient to buy your votes for a few more election cycles?
The May Revision includes a one?time $6 billion supplemental payment to the California Public Employees Retirement System (CalPERS) in 2017?18. This action effectively doubles the state’s annual payment and will mitigate the impact of increasing pension contributions due to the state’s large unfunded liabilities and the CalPERS Board’s recent action to lower its assumed investment rate of return from 7.5 percent to 7 percent.
And for those who might be worried that a doubling of California’s annual pension contributions seems like a huge burden for taxpayers to absorb…fear not, because they’ve basically already doubled over the past 5 years…so Brown has experience in “managing” such catastrophes.
To continue reading; New Cali Budget Warns CalPERS Contributions “On Track To Double” In 6 Years