Employee Relations 10/15/2010
Budget Trailer Bill Includes New Reporting Requirements for CalPERS
SB 867, authored by Senator Dennis Hollingsworth and part of the 2010-11 state budget trailer bill package, reflects state efforts to increase the transparency and oversight of public pension systems. The measure requires the California Public Employees’ Retirement System (CalPERS) Board of Administration (Board), whenever it adopts new contribution rates, including those rates for counties contracting with CalPERS, to provide an actuarial report to the Legislature, Governor and Treasurer. The report must contain:
- The investment return assumptions, discount rates and amortization periods it uses any time it adopts contribution rates; and,
- The recalculations of those rates using specified alternative and lower discount rates (almost always which will demonstrate higher unfunded liabilities).
SB 867 also includes requirements for the State Treasurer, instructing him or her, within 30 days of receiving the report from the Board, to present to the Legislature a report that:
- Explains the role played by investment return assumptions and amortization periods in contribution rate calculations;
- Outlines the consequences for future state budgets if investment return assumptions aren’t realized;
- Determines whether the Board’s amortization period exceeds the estimated average remaining service periods of employees who are covered by the contributions; and,
- Includes the Treasurer’s opinion of the reasonableness of the Board’s calculation of contribution rates.
This bill was approved by the Legislature on October 7 and is currently awaiting action from the Governor.