California's unfunded pension obligations — the elephant in the room — are estimated to run as high as $425 billion. While the Democrats ignore the issue, the pension obligations threaten to obliterate the state budget for years to come and jeopardize all state spending.
Last year, state budget obligations for public employee pension benefits were $2.1 billion. This year, they are projected at $2.4 billion. This obligation will continue to grow in future years unless substantial changes are made. The details speak for themselves:
• The amount of unfunded liability at CalPERS alone may be as much as $240 billion.
• In San Diego, the top 10 public retirees are positioned to receive $61 million in pension payouts over the next 25 years.
• The University of California has the state's highest paid executives, yet they contribute less to their pensions than anyone else. While they are threatening legal action to recover additional benefits, their retirement system has $600 million in unfunded pension liability.
• Seventy-five percent more California state employees retired and collected pensions in January than expected. That means a flood of unanticipated payouts.
• And then there is the city of Bell. Even if former Bell City Administrator Robert Rizzo is convicted of dozens of felonies, he will still be able to collect huge pension checks based on his pay.
Obviously the projected general fund obligation for public employee pensions will continue to rise for the foreseeable future.
General fund obligations have increased partly due to the declining market value of the assets in these pension systems. Some of this is attributable to the volatility of investment markets. However, fraud and abuse are also part of the equation. The Legislature has a duty to make reasonable efforts to improve oversight and accountability of these pension funds.
In an effort to bring transparency and accountability to the system, I am introducing legislation that would require public employee pension systems to file a pension disclosure report annually to the Legislature for retirees earning more than $100,000 annually. This mandate will apply jointly to California's embattled public pension funds, including the CalPERS, State Teachers' Retirement System, and the University of California Retirement System.
While this legislation is sensitive to the privacy needs of public retirees, it will also promote the transparency and disclosure taxpayers of California expect and deserve.
With this information, the legislature and public will have the ability to pinpoint departments and agencies with particularly high numbers of $100,000 pensioners and address potential abuses early. In addition, this information will provide cogent pension information for departments and agencies to use in bargaining for labor agreements — which could, in the long run, save taxpayers money. Currently, there are no reporting requirements for the embattled state public pension funds to disclose information regarding these costly pension payouts.
Without addressing the state's rising pension obligations, there is no real budget solution, despite what the governor hopes. Reduced spending is an excellent start, but without structural reforms to address pensions, government spending and tax equity, there is no end in sight to our budget woes.
TOM HARMAN represents the 35th District in the state Senate. The district encompasses Costa Mesa and Newport Beach. Harman, a Republican, lives in Huntington Beach.