A panoramic view of housing in an Anaheim neighborhood. (Photo: NAPA, via Shutterstock)OPINION: While we still do not know how all those impacts are going to affect us going forward, one thing we know won’t change is the need for housing in this state. While the housing market has slowed dramatically as Californians observe the state’s stay-at-home order, it will come to the fore again in our “new normal.”
The CalPERS headquarters in Sacramento. (Photo: Kit Leong)The annual payment to CalPERS for state worker pensions next fiscal year is expected to be $7 billion, a jump from $6.4 billion this year — and a quantum leap from $160 million when a pension increase, SB 400, was approved 20 years ago.
CalPERS' governing board during a 2013 meeting. (Photo: CalPERS board)Calpensions: A key committee yesterday approved a drop in the often-criticized CalPERS investment earnings forecast, gradually raising record rates already being paid by state and local governments, if approved as expected by the full board today.
The CalPERS' governing board during a meeting several years ago at the pension fund's headquarters. (Photo: CalPERS board)After a loss of $100 billion in the recent recession, the CalPERS funding level dropped from 100 percent in 2007 to 61 percent in 2009. It has not recovered, despite a major bull market in which the S&P 500 index of large stocks tripled. “Even with the dramatic returns we have seen over the past six years, because the demographics of plans in general have changed and plans are now by and large cash-flow negative, it’s been very challenging to dig out of that hole,” Andrew Junkin, a Wilshire consultant, told the CalPERS board last week.
The CalSTRS board was told this month that financial experts are forecasting investment earnings of 7 percent a year or less during the next decade, below the 7.5 percent assumed by the pension fund. If that’s correct, long-sought legislation in June that phases in a $5 billion CalSTRS rate increase over the next seven years could fall short of the goal of projecting full funding in three decades.
A view of downtown Stockton. (Photo: Wikimedia Commons)Calpensions: A federal judge ruled last week that Stockton’s CalPERS pensions can be cut in bankruptcy. But Stockton does not want to cut pensions, and the lone holdout creditor says it can be paid without cutting pensions. U.S. Bankruptcy Judge Christopher Klein may have clarified the legal issue of whether CalPERS pensions, widely regarded as untouchable, can be cut if any of the 1,581 local governments in the giant system take the drastic step of bankruptcy.
The Vallejo city council last week voted to close a $5.2 million gap in the current budget, showing no alarm that in a five-year forecast the gap reopens, mainly driven by rising pension costs. Moody’s, a Wall Street credit rating agency, said earlier that Vallejo and two California cities currently in bankruptcy, Stockton and San Bernardino, risk returning to insolvency without pension relief.
More money for the underfunded California State Teachers Retirement System may be considered by the Legislature next year, thanks to new attention from lawmakers and a state budget deficit narrowed by a voter-approved tax increase this month.
After years of ignoring pleas for a rate hike, the Legislature approved a resolution last August, SCR