California has a surplus, but retirement liabilities remain

January 19, 2016

californiaA few years after California faced a $26 billion deficit, lawmakers are debating how to spend a budget surplus. However, state officials have not tackled California’s unfunded pension liabilities problem, which is continuing to grow. [Contra Costa Times]

The state has amassed $220 billion of unfunded pension and health care liabilities for future retirees. As of June 2014, California’s two main retirement systems had a combined total of $116 billion in unfunded liabilities. The state health care plan has about $70 billion of unfunded liabilities.

Gov. Jerry Brown is now asking workers to pay more to fund their retirement health benefits. Brown is requesting that employees pay into a fund through deductions in their paychecks. The state would pay an equal amount under the governor’s proposal.

Brown is also proposing $350 million in pay raises in the current budge. The pay increases may be used as a bargaining chip in labor negotiations.

Last year, the state reached a deal with its engineers’ union on health care contributions. The engineers agreed to relinquish an increasing amount of their pay, which would eventually reach 2 percent of their salary. But, they also received pay raises of 5 and 2 percent.

The state is currently negotiating with four of its 21 bargaining units, and talks with 15 others are due to begin this year.

California legislators passed pension reform in 2012, but the reductions in retirement payments primarily affect new employees. The unfunded liabilities have remained.

On Monday, the leaders of a state pension reform initiative announced they are postponing their campaign and seeking to qualify for the 2018 ballot, rather than the 2016 election. [LA Times]

Former San Diego Mayor Chuck Reed and former San Diego Councilman Carl DeMaio are aiming to get two separate measures on the ballot. One would require voter approval for defined-benefit pensions for new workers and the other would limit what the government can pay toward the retirement benefits of new employees.



  1. diamond says:

    Bigger boat for Parkinson’s navy

    (2) 2 Total Votes - 2 up - 0 down
  2. r0y says:

    CAUTION: In bureaucratese a “Budget Surplus” is but smoke. Because they massage some numbers on a spreadsheet and say, hey, I made it look like we’re going to be in the black!” does NOT mean there will be more money coming in than going out. The true meaning of “budget surplus” is: We’re going to spend more, but don’t want to crap on an already horrible financial outlook, so we have to lie for the time being and hope you all fall for it again!

    I’ve heard time and time again of “budget surpluses” but I have never seen one materialize in government. Why do people (reporters?) even remotely believe government numbers? Really?

    Usually, they just move something off books into another department or earmarked fund. It is really easy for government to get a “budget” surplus; near impossible for them to get an ACTUAL surplus.

    (1) 1 Total Votes - 1 up - 0 down
    • r0y says:

      Forgot to add: Why not report on Fiscal Year-End ACTUAL Budget performance? Never see a press release for those. Ever wonder why?

      (1) 1 Total Votes - 1 up - 0 down
  3. Jorge Estrada says:

    Let’s get real, retirement is only affordable for government employees. The remainder of us will have crappy medical and die. So get accustom to saying hale, correction, yes sir and get a government job. You will then have a life time pay check, so why die unless you have to. For the life of me, I still do not understand why government uses the term pension? If I got 75% or more of my gross to stay home, I wouldn’t call it anything, I’d try to keep it a secret.

    (1) 1 Total Votes - 1 up - 0 down
    • r0y says:

      The simple solution, albeit not as “free” as I’d like, would be to have all employees, public and private, to be 1099’d. Period.

      Everyone is responsible for their own taxes (withholding, etc) and retirement.

      You would see a change in the system overnight once people saw the complexity of it, or worse, had to write their weekly/bi-weekly/monthly checks to the IRS like they do a utility bill.

      Flat tax. 1099 everyone. Done. Or move to a consumption (VAT) tax in lieu of an earnings tax (and settle that constitutional legal debate regarding income vs. wages).

      Nope. Not gonna happen, because too many people profit from it politically and/or financially. It’s why we still have a broken and archaic banking and financial system. Too many thumbs in the pie, too much financial pain to do it right.

      (0) 2 Total Votes - 1 up - 1 down
  4. Kaiser Bill says:

    Enough with this Cuckservative talking point about whining about pensions.

    The problem is not some retird secretary getting a 40K a year pension.

    Yes there needs to be pension reform.

    Cops, firemen, and school superintendents are the pigs at the trough when it comes to their pensions.

    Pensions should be capped at a certain level. Say 100K a year.

    But pensions for retired people makes sense, despite what these idiot loser Establishment Republicans say.

    (-2) 14 Total Votes - 6 up - 8 down
    • achillesheal says:

      If you owned a business could you afford to pay people who no longer work for the rest of their lives?

      (5) 5 Total Votes - 5 up - 0 down
      • r0y says:

        Oh, snap!

        (2) 2 Total Votes - 2 up - 0 down
      • Kaiser Bill says:

        Companies used to provide pensions. It was understood that people helped a company while they worked, and the company would then help them in their old age.

        Now that has changed as jobs have been outsourced to China and Mexico where workers get pennies on the dollar and expectation of a pension.

        This critique of so called free trade as a zero sum game that has screwed over the American worker is part of the reason why Donald Trump is doing well.

        (0) 0 Total Votes - 0 up - 0 down
        • achillesheal says:

          Some companies still do have pension plans. People retired at 65 collected a pesnion for 5-10 years and died. Most companies dumped them and adopted 401ks for the same reasons government is now experiencing – the unfunded liabilities were wrecking their balance sheets (see government pensions and social security).
          Since many people now are retired for as many years as they ever worked, no one, including government, can afford to continue paying them a salary without getting work in return.

          (0) 0 Total Votes - 0 up - 0 down
    • r0y says:

      A lot more people than “idiot loser Establishment Republicans” are saying public pensions are out of control and unneeded. However, if calling a small group of people “idiots” and “losers” helps you wrap your mind around the problem, than so be it.

      Far be it from anyone to pull another’s head out of the sand.

      (1) 1 Total Votes - 1 up - 0 down
      • Kaiser Bill says:

        I guess people that worked all their life should just crawl into a corner and die.

        If you believe that, you are an idiot and loser.

        I said there needs to be some reform with public pensions.

        No Bureaucrat or Cop should be drawing a $150K a year pension.

        But depriving a worker of their modest pension is asinine and mean spirited.

        This is part of the reason why Establishment Republicans have been destroyed in elections.

        It is not a vote winner to tell people they suck and they haven’t earned their pension they worked for.

        (0) 0 Total Votes - 0 up - 0 down
  5. Mike says:

    And once again we find something that the govt isn’t good at – pensions. A 3rd grader can budget better than the leftists the run CA. Get the govt 100% out of the pension business NOW.

    (5) 7 Total Votes - 6 up - 1 down

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