Judge Rules State Illegally Withheld Pension Funds

Gov. Pete Wilson and the Legislature illegally withheld $910 million in contributions to the Public Employees’ Retirement System to help balance the state budget, a Superior Court judge ruled this week.

Judge John Lewis ordered the state Wednesday to pay the overdue contributions plus interest, which could bring the total to more than $1 billion, state Finance Department spokesman H.D. Palmer said.

The Administration is deciding whether to appeal the ruling, which applies to the 1992-93 and 1993-94 state budgets, Palmer said.

The Legislature and the governor approved the payment delay to help balance the state’s books when the state was deep in the recession. The action was part of a number of cuts and budget shifts approved by the Republican governor and the Legislature, then controlled by Democrats.

The payment represented funds intended to go to CalPERS for government employees’ pensions.

“It (the withholding) did not affect the actuarial soundness of PERS and did not impair the state’s contractual obligation that it has with the members of PERS,” Palmer said.

CalPERS is the largest public pension fund in the nation, with $70 billion in assets.

“We are pleased the court agreed with our position,” said Yolanda Solari, president of the 130,000-member California State Employees Assn. “It is vital that the state adequately protect future retirees. This has far-reaching implications for other states.”