By Gilbert Chan, The Sacramento Bee
Feb. 17, 2006

A constitutional amendment, proposed by Assemblyman Keith Richman, R-Northridge, would give future state and local government workers both a guaranteed pension benefit and a voluntary, employer-matched 401(k)-style account. The defined benefits would be less generous than those offered today.

Richman called the CalPERS move politically motivated and premature: "It is difficult for me to understand how they can vote on a proposal without an analysis of the adequacy of the benefit and the actuarial cost of the proposal. CalSTRS has delayed making a decision while they await further analysis."

Ten trustees voted against supporting ACA 23. Gov. Arnold Schwarzenegger's appointee, Marjorie Berte, and his Department of Personnel Administration representative abstained, and trustee Mike Quevedo Jr. was absent.

"This bill comes at the wrong time. We need to have strong, sound pension systems. This constant attack ... on pension security for the most valuable public servants needs to stop," said state Treasurer Phil Angelides, a trustee of CalPERS and the California State Teachers' Retirement System, the two largest public pension funds in the nation.

Two weeks ago, the teacher's retirement board postponed a decision on the bill because Richman had revised his measure. Officials have asked their outside actuary to update a financial analysis of the bill.

Richman criticized a CalPERS review, which included an analysis of his 2005 overhaul proposal. That plan is no longer on the table. "The CalPERS analysis did not include any projected costs for ACA 23."

CalPERS officials said they couldn't determine exact consequences because the defined benefit component of the Richman proposal lacked specifics.

"CalPERS, however, expects this bill would have a substantial financial impact, but additional information is needed to quantify the impact," the report said.

In opposing the measure, CalPERS argued the plan would create a two-tier benefit program and could hamper future investments and boost contribution rates for the state, cities and other public employers.

Richman and other advocates have lobbied for changing public pensions, asserting that rising costs have strained state and local government budgets and left unfunded liabilities.

While CalPERS leaders disagree and point to the system's record assets that topped $207 billion on Jan. 31, the pension plan is 87.5 percent funded in 2004, the most recent year for which figures were available.

Still, CalPERS was above the U.S. average of 83 percent, according to Wilshire Associates, a Los Angeles investment consulting firm. Because of stock market losses in the early 2000s, CalPERS has raised state and local government pension contributions to help keep the system whole.

In other action Thursday, trustees unanimously re-elected Rob Feckner as board president and Robert Carlson as vice president for 2006.

Feckner, a board member since 1999, is a glazing specialist with the Napa Unified School District and president of the California School Employees Association. Carlson, a retired chief counsel of the Department of Transportation, has been a trustee since 1971 and served as board president from 1976 to 1985.