Public employee retirement systems in California are in much less solid financial condition than was the case just a few years ago, according to a recently published report by a taxpayer-activist organization. The report’s findings were strongly disputed by the California Public Employees’ Retirement System (CalPERS).
Rapidly rising pension benefit outlays are putting an increasing strain on the actuarial status of the state’s public employee retirement systems, The Howard Jarvis Taxpayers Foundation also asserts.
State and local government funding of pension systems nearly doubled over the five-year period beginning with fiscal year 1998, according to study, which looked at 130 public pension systems in California, their financial health, and the extent of taxpayer liability for current and future obligations.
By fiscal year 2004, the combined public employee retirement systems had an actuarial deficit of about $50.9 billion, according to the report. As a contrast, in fiscal 1998 the actuarial surplus was a little over $14.5 billion.
The study also found that the funded ratio for CalPERS declined from 128 percent in fiscal year 1999 to 87.3 percent in fiscal 2004.
CalPERS, however, shot back, calling the report “a highly contrived, biased study that fails to show the big picture,” according to Global Pensions. The pension giant also said the report’s conclusions hinged on a “snapshot” view of activity artificially constrained to a period of market downturn and the early stages of its recovery, according to the publication. A CalPERs representative reportedly said that the organization was “disappointed” that a more objective report was not provided.
CalPERS also asserted that the study begins its analysis of its pension plans’ unfunded liabilities when the system was most funded and finishes at its least funded point after a three-year downturn in the stock market, which was the worst slump since the Great Depression, according to the publication. The pension fund pointed out to Global Pensionsthat its funded status rose from 81 percent on June 30, 2003, to more than 90 percent.
In 1978, Jarvis led a successful push to enact Proposition 13, a cap on property taxes. Although Jarvis died in 1986 and his wife Estelle, who had joined in his activist efforts, died last year, the organization continues as a tax watchdog group.