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Published:July 18th, 2007 09:24 EST
Sacramento  pension plans in trouble

Sacramento pension plans in trouble

By SOP newswire

California's pension crisis has deepened over the past seven years as the average county fund has gone from being flush with cash to being at least 9percent underfunded, according to a new statewide survey.

From 1999 to 2005, the trend has meant the average county has only about 91 percent of the money it needs to pay pension benefits to its retirees in coming years, according to the report from the California Taxpayers' Association.

That means an increasing amount of money could be taken away from county services - such as law enforcement and road paving - to pay for the pensions of retired employees.

"Unfunded liabilities are going up and the funding ratio - which is a sign of how much money is being put toward future liabilities - is going down," said Cal-Tax spokesman David Kline. "Taken together, that's a bad equation."

The report comes amid several efforts to address the state's pension crisis. Gov. Arnold Schwarzenegger has convened a pension reform commission that is expected to issue recommendations by January.

Former Assemblyman Keith Richman also has authored a ballot measure to raise the state's retirement age for new public employees and limit the benefits they receive in retirement.

Last week, the governor's Public Employee Post-Employment Benefits Commission concluded that the state's pension systems have an obligation of $579 billion - with just $516 billion currently funded.

The Cal-Tax survey focused on the county level, determining that in 2004-05, the average county had an unfunded pension liability of $439 million.

Only five years earlier, counties had an average surplus of $88 million.

In 1999, Los Angeles County had a $751 million surplus. By 2004-05, it had an unfunded liability of $3.9 billion.

While data for last year was not available, Cal-Tax officials said they believe the trend will worsen. That's because most counties have also increased the benefits they offer retirees and current employees - including vacation and sick leave and bigger reimbursements for education and public transportation.

But Dave Low, assistant director of government relations for the California School Employees Association, said the Cal-Tax survey fails to consider that investment gains are bringing pension systems closer to full funding.

CalPERS, for example, he said, is approaching 100 percent funding this year.

While Low said he does not believe major changes are needed for the pension system, Richman disagrees and said broad shifts are neeeded.

And the former Assemblyman believes the public will be on his side as details continue to emerge on how much pensions and benefits will cost taxpayers.

"I think the public is becoming more aware of this issue every day," Richman said. "Every day throughout the state the public is learning about the abuses of the public employee pension system and the costs that this is going to have."

By Harrison Sheppard

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