Out-year budgeting became a bit more complicated on Wednesday as CalPERS formally approved a reduction in its assumption rate. The drop, from 7.75 percent to 7.5 percent, will impact the State by about $167 million per year. Local government impacts aren’t yet known.
However, at two separate meetings at the CalPERS headquarters, local government officials implored that the pension system not reduce its assumption rate. A drop of the assumption rate will mean some measure of an increase in the amount that municipalities will have to contribute.
The quarter point drop in the assumption rate was lower than its staff and consultants recommended. However, the full half-point reduction would have meant even greater impacts on government agencies.
From the Sacramento Bee:
CalPERS gave final approval today to a quarter-point reduction in its investment forecast, but will look at softening the fiscal impact on government budgets.
The lowered forecast will cost the state an extra $167 million a year, and will also raise costs for the school districts and municipalities that belong to the California Public Employees’ Retirement System.
Read the full article here.