By Dale Kasler
Published: Friday, Apr. 26, 2013 – 6:21 pm
Last Modified: Friday, Apr. 26, 2013 – 11:45 pm

CalPERS is back – sort of.

Slowly, sometimes painfully, America’s largest public pension fund has erased the nearly $97 billion worth of investment losses it suffered in the market crash. Its portfolio swelled to a record $261.7 billion Friday, surpassing the pre-crash high in 2007.

But the California Public Employees’ Retirement System is nowhere near back to full financial health. Once fully funded, CalPERS is now about $100 billion in the hole, and it’s putting increased pressure on state and local governments to pay more into the system.

The problem is that CalPERS’ pension liabilities – the dollars it will have to pay retirees in decades to come – have soared in recent years as government payrolls grew. With a smaller pool of available money to invest following the crash, CalPERS hasn’t been able to earn enough profits to keep up.

“Our liabilities never took a vacation,” CalPERS spokesman Brad Pacheco said. “They continued to grow based on higher payroll. That means we have to pay out higher pensions.”

Pension reform advocates attached little significance to the fact that CalPERS’ assets have reached their pre-crash levels.

“It’s no reason to break out the party hats,” said Dan Pellissier, a former legislative aide who is president of California Pension Reform. “You’ve hit this marker, but it’s completely meaningless … unless you view it in the context of the liabilities.”

Top CalPERS officials have been careful not to brag about the new record.

Speaking to the fund’s investment committee last week, when the portfolio was just under $260 billion, chief investment officer Joe Dear said the asset record “does not account for the liabilities and where they stand. We should keep that in mind.”

The funding shortfall isn’t an immediate cash crisis. CalPERS has plenty of money to pay retirement claims now and for the foreseeable future. But the unfunded liability means CalPERS doesn’t have enough in hand to cover all its long-term pension obligations.

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