This is Essential Politics, our daily look at California political and government news. Here's what we're watching right now:
- California Atty. Gen. Xavier Becerra said Wednesday that he intends to open a satellite attorney general's office in Washington, D.C., as he prepares to fight the Trump administration.
- The results from California's latest cap-and-trade auction are in, and revenue from the sale of pollution credits was weak.
- A bill that would set up a state-funded legal aid system for immigrants will be amended by its author to allow those with criminal records to apply for assistance.
Leaders of California's pension fund for teachers lowered their official investment expectations on Wednesday, a shift that will raise costs for both state taxpayers and many teachers.
Directors of the California State Teachers Retirement Fund, CalSTRS, took action to cut the investment assumption by half a percentage point by the summer of 2018. The decision follows a similar move by the state's largest pension fund, CalPERS, to lower its investment projection last December .
Board members, faced with a widening gap between investment returns and expectations, said they took action to lessen the likelihood that existing retirement promises made to teachers won't be kept.
"I fear that waiting may put us, the fund, in a more precarious situation," board member Joy Higa said during a public meeting in San Diego.
CalSTRS had previously assumed a 7.5% rate of return on its $196-billion portfolio. That rate will now be cut in two stages — first to 7.25%, then to a more conservative 7% assumption in 2018.
The teachers' pension fund, unlike CalPERS, historically has had very little power to cut rates, given it needed legislation to increase pension costs covered by state government. But a 2014 pension overhaul championed by Gov. Jerry Brown gave CalSTRS additional leeway in making adjustments to shore up the pension fund's long-term viability.
An analysis by CalSTRS staff concludes the rate change will increase the contribution by taxpayers, through the state budget, by $153 million in the coming fiscal year. The contributions paid by many teachers will also rise under the new investment assumption, and the 2014 overhaul legislation also raises annual payments made by local school districts .