Friday, October 23, 2009

Can Calpers keep its promises?

A reader emails what appears to be a sidebar to the Reuters article we linked to in this morning's "CalPERS Playing with Fire". We missed it, sorry. From Reuters (and a sharp-eyed reader):
A letter earlier this year from the chief executive of Calpers, the biggest U.S. public pension fund, to local officials in California sent shock waves across the state.

Anne Stausboll opened by telling them contribution rates paid by local governments to Calpers, the California Public Employees' Retirement System, would largely be unchanged for the 2009-10 fiscal year, providing a bit of relief for local budgets thinned by the recession.

But due to the fund's steep losses -- eventually tallied at more than $56 billion in its most recent fiscal year -- Stausboll warned: "Rates for 2011-12 are less certain."

That means they will rise, according local officials, who expect to be in a financial bind as a result in coming months -- and well beyond.

"We're going to see our contributions increase significantly at a time when our revenues won't be bouncing back," said Rod Gould, city manager of Poway, California.

Calpers actuarial staff say the fund's losses leave only difficult choices into the distant future for local officials unless financial markets stage an epic comeback, said Dwight Stenbakken, deputy executive director of the League of California Cities....MORE