Written by
Capitol Television News Service (CTNS)
SACRAMENTO, CA - The cries for pension reform got a little louder this week after the teachers' retirement fund lowered investment projections.
But critics argue that financial forecast wasn't dropped far enough.
Cal-STRS lowered its investment forecast from 7.75 percent to 7.5 percent, but pension reform advocates argue that number is still far too high.
Current law requires the state to make-up the difference between forecasts and actual earnings. Last year Cal-STRS stock earned just under 2.5 percent.
"It highlights what we've been saying all along and that's that the pension funds here are not being honest with what they can get from Wall Street," California Pension Reform critic Aaron Mclear said. "They're still assuming they can do better than Warren Buffet with their investment returns. They need to be much, much lower."
That would narrow the state's payout; but without pension reform, the tab is going to remain high.
In fact, some forecasts suggest the state could be on the hook for as much as $500 billion in pension liabilities.
The fallout often means less money for programs like education, parks and services for the poor.
"What we've seen the last few years is that we've had cuts in state and local government in virtually every single program; higher ed, parks, the social service net," Mclear said. "Everything is getting cut except pensions. We're cutting more and more every year to pay for pensions; and less and less for everything else."
CTNS