California Gov. Jerry Brown’s disappointment over the CalPERS plans hints at a larger tug of war between him and the state employee unions. (Jeff Chiu / Associated Press)
November 19, 2015
- Jerry Brown disagrees with the new CalPERS pay-down plan
If there is one thing that Gov. Jerry Brown has made a calling card since returning to office in 2011, it’s a push toward paying down government debt.
And yet his reaction to Wednesday’s decision to do just that by directors of the California Public Employees’ Retirement System was an angry one.
“I am deeply disappointed that the CalPERS board reversed course,” Brown said in a written statement.
The nation’s largest pension fund voted to lower its estimate of future investment returns from 7.5% to 6.5% over 20 years. The move will increase payments by taxpayers, but CalPERS says it will more quickly pay down the $117-billion debt for pensions already owed to 1.7 million government workers and retirees.
Brown wanted it to happen even faster. His criticism hinted at a larger struggle, a political tug of war between Brown and public employee unions.
“The fight is interesting to watch between a Democratic governor and a Democratic constituency,” said Richard Costigan, a CalPERS director who pushed this week for a more aggressive policy that would have reduced the debt more quickly. “A Democratic governor wanted to take a more hard-line stance.”
For years, CalPERS critics have warned that the pension fund was using overly optimistic projections for its investment portfolio, projections that would leave taxpayers picking up an ever larger share of the obligations made to state and local government workers.
CalPERS directors partially relented on that front on Wednesday, agreeing to adjust the projections but on a more conservative course.
The decision will increase amounts paid to CalPERS for state government workers’ future retirement. As the employer, the state’s general fund already pays CalPERS $5 billion a year. And for a governor who preaches lower spending, it seems jarring to think Brown would actually push to increase the size of the state’s annual pension costs.
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