Retirement Security in California: An Update

March 1, 2018

Numerous media outlets are reporting on the issue of pensions, fueled by increases in outlays
for future pension payments by municipal governments as well as school districts. These stories
are reigniting the debate about the sustainability of California’s pension system. It comes
after multiple failed attempts over the past seven years to put a measure on the ballot and
break promises to public employees about their retirement security. These attacks were led by
failed former San Jose Mayor Chuck Reed, Enron billionaire John Arnold and extremist right
wing former San Diego Councilmember Carl DeMaio.
This comes just four years after Governor Jerry Brown’s signature on the Public Employee
Pension Reform Act, described in the Governor’s Office press release as “sweeping pension
reform…that saves billions of taxpayer dollars by capping benefits, increasing the retirement
age, stopping abusive practices and requiring state employees to pay at least half of their
pension costs.” CalPERS projects savings from this measure at $65 billion to 85 billion. More
than 200,000 employees now work under these reforms.
Contrary to the bleak picture painted by the media, Moody’s now rates CalPERS and CalSTRS at
“Aa2” – among its highest ratings. As the chart below shows, pensions are cyclical. CalPERS
projections show a period of pension cost increases, followed by leveling, followed by
reductions. This is a pattern that has repeated over decades.

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