Three public funds administer the pensions of 2.6 million Californians. Between June 2008 and June 2009, these three pension funds lost a combined $109.7 billion in portfolio value. In their policy brief, IPS students estimated the current funding shortfall of CalPERS, CalSTRS, and UCRS at $525 billion over the next 16 years. To help reverse the current trend and prevent future shortfalls, the students recommended a combination of higher contributions, investment in less risky assets, and lower benefit levels. Data was drawn primarily from the financial reports of each fund. Experts from Stanford University and other institutions were consulted to support the students’ analysis and conclusions.
Following the report’s release in April 2010, then California Governor Arnold Schwarzenegger commented, “This study reinforces the immediate need to address our staggering pension debt. According to the study, California taxpayers are on the hook for over a half trillion dollars. We cannot wait any longer. I look forward to working with the legislature on a solution that will stop the growth of pension debt, increase transparency, enforce strict funding rules, and protect California’s budget priorities.”
Our students’ analysis was covered in the New York Times, Wall Street Journal, and other news media. In May 2010, the students testified before the California State Senate, and in July they joined the Governor’s roundtable discussion on public pension reform.
