$3/4 Billion Giveaway (Posted in 1998, along with ads in Capitol Weekly, and led to SB 400 "equity adjustment" IN 1999) Remember that $1 billion lawsuit we won against the Wilson administration in 1997 for raiding CalPERS? Governor Wilson used it as an excuse for not giving state employees a pay raise (cost of living increase). Of course, it didn't stop him from accepting a whopping $34,000 pay raise and a $4,416 per year increase in his own pension. CalPERS paid over $500,000 for outside counsel to get our money back. Then the board voted to return it to the Wilson administration. According to the Sacramento Bee, they cut the state's contribution rate in half, reducing the state's payments by $750,000,000 each year! That's equivalent to an 8% pay raise for every state employee! The board has cut the state's contribution rate 8 times in the last 11 years. Has the contribution that comes out of your paycheck been reduced? Largest bull market in history; many state and university employees haven't benefited one dime. Federal law requires private pension plans to vest within 5 years. Pensions for state employees went from vesting in 5 years to vesting in 10 years. Leave state service after 9 years and get nothing. Tier 2 is a joke. Can you live on $650/month? That's what the average Tier 2 retiree earns. The fund has grown larger but fewer members get a pension. Less than 20% of state and university employees will ever collect a pension from CalPERS. CalPERS is moving, but we're going the wrong direction. Some board members have forgotten who got them elected. Yes, one of the duties of the CalPERS board is to minimize employer contributions. However, their duty to plan participants and their beneficiaries "shall take precedence over any other duty." No, the Board doesn't support the havoc brought on CalPERS members by the Wilson administration ...but their actions played right into the Governor's hand. Why did the Board turn back $3/4 billion? Some members appear to believe their hands were tied. They seemed to believe it was necessary so that CalPERS members could get a raise (whether at the bargaining table or through the Legislature). Jim McRitchie, won't be duped. Wilson has demonstrated over and over again that he has little regard for public employees or retirees. He is not about to change his stripes during the last six months of his administration. As a Board member, I would have done everything in my power to have kept that $3/4 billion at PERS until we have a new governor. I would have more closely scrutinized the actuarial assumptions. I would have argued the long term inflation rate should not have been lowered from 4.5% to 3.5%. The long term wage growth projection should not have been lowered from 4.5% to 3.75%. Yes inflation, has been low for a few years. Yes, some of us haven't gotten much if anything in the way of pay increases, but I expect that will change. In fact, private industry U.S. wage growth in 1997 was 3.9% and in the last quarter was running at an annualized rate of 4.8%. Doesn't Crist read the news? Why would the board agree with an actuarial assumption that estimates our wages will grow more than 1% less than the private sector rate? Are they expecting a third term for Wilson? That money is needed to fund additional benefits such as: Lower vesting requirements back down to 5 years, Make Tier 2 an option, not a mandate, Lower deductions coming out of state and university employee paychecks, Increase the cost of living allowance for retirees, Lower medical insurance premiums, and Keep the System solvent if the market takes a plunge. I'll avoid conflicts of interest like sitting on private investment boards, accepting gifts from contractors and other abuses reported by the LA Times and Sacramento Bee. Help me get elected and together we can move the priorities of the CalPERS board around so that members come first. Call 916-691-9722, write jm@PersWatch.net, and visit http://PersWatch.net on the internet. Contact: jm@perswatch.net