Last week I calculated that CalPERS would increase its pension charges to cities, counties, and the state of California over 30% to regain massive investment losses over the last decade. My initial estimate was drawn from a presentation by Kung-pei Hwang, CalPERS Senior Actuary, which I recorded mid November. My report also detailed the gimmickry that CalPERS used to hide the 50% shortfall in their planned assets. However, it looks like my estimate was way low because we now have new video of the CalPERS board stating in their own words that the costs to cities, counties and the state will increase a GINORMOUS 55% by 2013 and the increased rate will need to be in place for at least the next 19 years.
And, this will only provide a 50/50 chance of getting to where they need to be to fulfill pension obligations for municipal and state workers. In aggregate for all municipalities and the state this could equal a $4 billion a year drag on the economy of cities and counties as each spends less for local government functions. Many cities and counties are already struggling to meet the current pension costs. The new rate threatens to put many governments into serious financial trouble. For the City of Los Angeles alone this means an increase of $340 million each year in payments to CalPERS!