Finally A Great Reason To Raise Taxes In CA!!!

Sacramento: California's three major public pension funds are collectively more than a half-trillion dollars underfunded if their projected investment earnings are adjusted downward to a "risk-free rate," a team of graduate students at Stanford University has calculated.

The report, conducted under the aegis of Stanford's Institute for Economic Policy Research,Arnold Schwarzenegger's case for an overhaul of the state's pension systems. bolsters Gov.

"The consequences are clear," Schwarzenegger said. "Increasingly large portions of state funding for programs Californians hold dear such as schools, parks and health care will be diverted to pay for this debt."

Schwarzenegger has proposed a broad pension overhaul, including shifting new employees to a new, lower-cost system and raising state employees' pension contributions. With opposition from public worker unions, his plan has gone nowhere.

CalPERS, CalSTRS and the UC retirement system now use a projected "discount rate" on their pension liabilities of 7.5 percent to 8 percent, the same rates as their projections of annual earnings on investments. Critics say those are too high in today's climate.

The Stanford team based its underfunding estimate on a "risk-free" discount rate of 4.14 percent, which results in higher projected liabilities than the systems now portray.

Read more: http://www.sacbee.com/2010/04/06/2657531/the-buzz-california-pension-funds.html#mi_rss=Capitol%20and%20California#ixzz0kOWqCxmO