SIEPR report shows California's local pensions underfunded by $200 billion
The study by public policy lecturer and former state lawmaker Joe Nation follows an earlier report estimating the state's pension plans running deficits as high as $500 billion.
The employee pension funds of California's local governments and special districts are underfunded by $200 billion, according to Joe Nation, a former state lawmaker and public policy lecturer at the Stanford Institute for Economic Policy Research (SIEPR).
Nation's findings, issued by SIEPR on Thursday, follow a previous study conducted by four Stanford students who estimated that the three state employee pension plans – CalPERS, CalSTRS and the University of California Retirement System – could be underfunded to the tune of $500 billion.
The new study concludes that local governments are likely to spend about half their payroll over the next 18 years to meet unfunded pension obligations as well as other retirement and health care benefits.
Nation's new study – which shows that the local government pension plans are underfunded by almost 45 percent – has garnered the attention of Gov. Arnold Schwarzenegger, who has been pushing for pension reform since assuming office in 2003.
"Taxpayers are already suffering the consequences of billions of dollars in undisclosed pension debt, which is crowding out vital programs and services, and they are entitled to an honest accounting of the pension promises made by their elected officials," Schwarzenegger said in a statement issued Thursday.
Nation, a California assemblyman who represented Marin and Sonoma counties from 2000 to 2006, said some pension reform is likely thanks to agreements made in the current state budget.
"That reform is likely to include increased transparency, reductions in benefits, increased employee contributions and further restrictions on pension spiking," Nation wrote in the SIEPR report.