I don’t think The Union’s editor/publisher reads his newspaper anymore – or cares. Or he wouldn’t let columns like the one by George Rebane run without more scrutiny.
Being an ideologue, George never lets facts get in the way of his “analysis.” This morning, on “On the sorry road to Stockton,” George puts too much blame on CALPERS for Stockton’s woes. Stockton ran into trouble, largely because the real estate bubble burst, damping needed tax receipts. Its excessive building binge is well documented.
Then George makes an unsubstantiated, snide swipe at our local county and city jurisdictions, suggesting our problems relating to public sector issues are being underestimated. It is needlessly alarmist and oversimplified.
To be sure, CALPERS and the costs of public sector worker contracts need to be addressed – and are. This includes our Governor. George’s column is incomplete. One example: there’s also an added cost that local governments will have to bear at an inopportune time.
Here’s some context that’s missing, provided by CALPERS:
The California Public Employees’ Retirement System (CalPERS) Board of Administration just voted to reduce the discount rate to 7.5 percent, affirming the recommendation made by its Pension and Health Benefits Committee.
CalPERS Board also directed its Chief Actuary to analyze and bring back an option for consideration to phase in the increased pension costs to employers over a 2-year period.
The discount rate for the Public Employees’ Retirement Fund was last changed 10 years ago when it was lowered to 7.75 percent from 8.25 percent. One year ago, the Board voted to keep the discount rate at 7.75 percent with the condition of another review in 2012.
“This was a difficult, but important, decision for the Board to make. We understand the impact this will have on our employers in meeting contribution requirements,” said Rob Feckner, Board President. “However, current economic conditions impelled us to make this change now, and our actuaries will continue to evaluate the discount rate in the coming years.”
The discount rate will impact members and employers as follows:
•State and schools employer contributions will increase by 1.2 to 1.6 percent for Miscellaneous plans and 2.2 to 2.4 percent for Safety plans beginning Fiscal Year 2012-13. According to staff estimates, the change in the discount rate is expected to cost the State $303 million, of which approximately $167 million would come from the State’s general fund. The school increase would be approximately $137 million.
•Public Agency contributions will increase by 1 to 2 percent for Miscellaneous plans and 2 to 3 percent for Safety plans beginning Fiscal Year 2013-14.
•The new discount rate will apply to new service credit purchase requests postmarked, faxed or delivered on or after March 15, 2012. Costs will increase between 5 and 13 percent depending on the individual circumstances of members. Members who have submitted a request prior to March 15 will be honored with the factors in effect as of the request date.
•Retirement applications with a retirement date on or after March 15, 2012 will have the amount of their benefits under any optional form be calculated with the new discount rate. Members who choose optional benefits – leaving some part of their benefit to a spouse or beneficiary after their death – will experience approximately a 2 percent increase in cost.
And as for blaming CALPERS for Stockton’s woes:
Anne Stausboll, Chief Executive Officer for the California Public Employees’ Retirement System (CalPERS), today issued the following statement on the City of Stockton’s mediation efforts: “As the City of Stockton announced, CalPERS is one of many interested parties participating in the mediation process. While we recognize the fiscal challenges that many cities and counties face, it is important to also recognize that employee pensions and benefits are just one of many factors that are involved in these tough budgetary and legal decisions.”