Monday, December 29, 2014

Fix to State retirement spending may be borrow from Prop 2

San Francisco Chronicle/Melody Gutierrez, 12/27/14.  "Jerry Brown plans to take on state's retiree health debt."

Not sustainable State/government
retirement system, who knew?
"SACRAMENTO — Gov. Jerry Brown plans to tackle the state’s unfunded retiree health costs in his budget proposal next month in hopes of reducing a fast-growing obligation that ballooned by $7 billion in just the past year, a spokesman for his finance department said. California has promised $72 billion more in health and dental benefits to current and retired state workers than the state has set aside, a liability that grew 11 percent from 2013, according to a recent report by the state controller’s office.   ....  Outgoing Controller John Chiang likened the state’s system to continually paying the minimum amount on a credit card as the balance and interest soar.

....  Some have speculated that Brown may turn to the recently passed Proposition 2, which sets aside money to reduce the state’s debt. Reducing retirement liabilities has been on Brown’s agenda lately, with the governor signing legislation two years ago that increased the retirement age and required employees to pay at least half of their pension costs. ....  In June, Brown and lawmakers approved a spending plan that stabilizes the teachers’ retirement fund by making up an estimated shortfall of $74 billion over the next three decades."  Read article.

Reference -  CA General Election 11/4/14, Proposition 2,"State Budget. Budget Stabilization Account. Legislative Constitutional Amendment. Put on the ballot by the Legislature." "Requires annual transfer of state general fund revenues to budget stabilization account."  "Requires half the revenues be used to repay state debts. Limits use of remaining funds to emergencies or budget deficits. Fiscal Impact: Long-term state savings from faster payment of existing debts. Different levels of state budget reserves, depending on economy and decisions by elected officials. Smaller local reserves for some school districts."  Ballotpedia:  "Election results, Yes, 4,831,045, 69.12%; No 2,158,004, 30.88%."

Related article San Jose Mercury News/Sharon Noguchi, 10/13/14. "Proposition 2 beefs up California budget reserve, but its effect on education funding is dubious."  Good work Sharon!

Note: graphic from Jezebel.

Posted by Kathy Meeh

1 comment:

Anonymous said...

State Controller's got it right. We've been making minimum payments on our credit card while the politicians and unions keep raising the limit. Age and legacy concerns and maybe a bit of that Jesuit education have made Brown a reformer. Maybe he'll actually put the brakes on.