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Monday, Feb. 08, 2010

Our View: CalPERS needs honesty with its 'facts'

So far, retirement system's 'facts' do far more to distort than clarify the issue.

The California Public Employee Retirement System has launched a public relations campaign intended to tone down the rhetoric in the increasingly raucous debate over public employee pensions.

Speaking at the first of two CalPERS sponsored "California Retirement Dialogue" forums, pension board President Robert Feckner said the goal is to "separate fact from fiction."

But the facts CalPERS has trotted out so far do more to distort than clarify the issue.

For example, CalPERS' official Web site says the average retirement of all fund retirees is $2,101 a month, or a modest $25,212 a year.

That's a dishonest figure.

It includes an unknown number of local, state and school district employees who worked as few as five years in public service, the minimum number of years required to be vested in the CalPERS system.

It also includes employees who retired before 1999, when the Legislature passed Senate Bill 400, the bill that substantially boosted benefit levels retroactively and prospectively for all state workers and pegged those benefits to a worker's single highest year's pay.

Local governments adopted similar enhancements. In many cases, those were even richer than the state benefits.

Any honest effort to separate "fact from fiction" would separate obligations for post-1999 retirees from pre-1999 retirees. It would also separate pensioners who worked full careers in public service -- that is, 30 years or more -- from those who worked just five or 10 years.

An honest appraisal would also separate the public safety retirees, police, firefighters and prison guards from all other other categories of workers.

Safety workers enjoy the most generous pensions available to almost any government workers in the country. Most retire in their early 50s with 90 percent of pay.

The average annual pension for all prison guard retirees is $36,000 per year, 40 percent higher than the average for all CalPERS pensioners. California Highway Patrol retirees collect $59,000 per year on average, more than twice the average.

An honest appraisal of public employee pensions would include a discussion of the actuarial assumptions, particularly the 7.75 percent rate of return on investments that CalPERS predicts.

David Crane, the governor's economic adviser, says that assumption is overly optimistic.

Speaking at a seminar last August, CalPERS chief actuary Ron Seeling said, "We are facing decades without signficant turnarounds in assets, decades of unsustainable pension costs."

Seeling was not among the panelists chosen to speak at the CalPERS forum. Why not?

Rob Feckner is right. It's time to separate fact from fiction but to do that, Cal-PERS needs to facilitate an honest dialogue with real numbers.