By Christopher Cadelago
Jan. 21, 2013 – 12:44 p.m.
When Gov. Jerry Brown last year signed legislation to trim public pension costs, he signaled that he would build on the momentum.
“It’s not perfect because we don’t deal with perfection in politics. We deal with imperfection,” Brown said before signing the package, less ambitious than he originally proposed. “We’re taking as bold a step as the process would allow. And where more is needed down the road, then more will be proposed.”
The compromise law requires public employees hired this year to work longer before they retire with their full benefits. It caps benefits for the highest earners and requires workers to eventually contribute at least half toward their retirement plan.
But even the rosiest cost-saving estimates from the overhaul fall short of what’s needed to rein in mounting retirement costs, experts say.
The state’s public pension systems — for state workers, teachers, professors and judges — over the next three decades estimate that they’ll owe nearly $120 billion more in benefits than will be available to pay. The California Public Employees’ Retirement System pegs the savings from Brown’s package at up to $55 billion over 30 years. And the California State Teachers’ Retirement System projects the measure will close its funding gap by $23 billion.
Investment gurus and academics project the eventual tab for retirees as being much higher than the government’s tally — from $270 billion to surpassing $500 billion.
“My best estimate is the reforms that have been implemented might reduce that unfunded liability by about 10 percent,” said Joe Nation, a former Democratic assemblyman who now teaches public policy at Stanford University. “So, if you’re $400 billion underfunded, it’s probably around a $40-billion improvement.”
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