California taxpayers have never paid more for public worker pensions, but it's still not enough to cover the rising number of retirement checks written by the state's largest pension plan.Encinitas' annual pension costs have more than doubled since 2005, and were more than $3.5 million (and rising) per year in 2013-14, so that city workers can have early retirement collecting more than median household income for life. But get ready to pay much, much more:
Even before the stock market's recent fall, staffers at the California Public Employees' Retirement System were worried about what they call "negative cash flows."
The shortfalls — which totaled $5 billion last year — are created when contributions from taxpayers and public employees who are still working aren't enough to cover monthly checks sent to retirees.
But even its staff acknowledges in a recent report that despite fast-rising contributions from taxpayers, the pension fund faces "a significant amount of risk."Despite Encinitas' skyrocketing pension costs, the City Council has in recent years voted repeatedly to expand the bureaucracy, making the problem even worse. The city now spends more money on pensions for workers' early retirement than it does on its underfunded road maintenance.
To reduce that financial risk, CalPERS has been working for months on a plan that could cause government pension funds across the country to rethink their investment strategies.
The plan would increase payments from taxpayers even more in coming years with the goal of mitigating the severe financial pain that would happen with another recession and stock market crash.
Under the proposal, CalPERS would begin slowly moving more money into safer investments such as bonds, which aren't usually subject to the severe losses that stocks face.
Because the more conservative investments are expected to reduce CalPERS' future financial returns, taxpayers would have to pick up even more of the cost of workers' pensions.