California faces $325 billion in unfunded pension obligations
April 23, 2010
A top pension consultant warned Thursday that state and local governments currently face $325 billion in unfunded pension liabilities, amounting to $22,000 for every working adult in California. [Los Angeles Times]
Consultant Girard Miller issued the warning before California’s Little Hoover Commission, an independent state oversight agency. Miller’s comments echo growing concerns that the burden for funding government employee pensions will eventually fall to state taxpayers.
Just this week, Gov. Arnold Schwarzenegger said that solving the pension crisis needs to be the state’s top priority.
Many elected officials at both the city and county level are advocating reduced benefits for new hires in lieu of raising taxes, putting them on a collision course with powerful labor unions.
Critics contend that the typical pensions enjoyed by the public sector have become too expensive and have been largely abandoned by the private sector in favor of 401(k)-type plans. A recent Field Poll found that a majority of Californians favor such a strategy.
Meanwhile, the current shortfall at the California State Teachers’ Retirement System has mushroomed up to $42.6 billion.
In Los Angeles, current projections show that the city will soon be spending 1 of every 4 social service dollars for pension obligations to close a $1 billion deficit.
In San Diego, city officials have only 66.5 percent of the money needed to cover its retirement obligations, the lowest level in six years.
In Ventura, a citizens task force has been formed to work with budget officials on studying pension solutions.