Public Comment

Changes in CalPERS Policy Will Affect Berkeley City Finances

By Barbara Gilbert
Thursday April 18, 2013 - 05:42:00 PM

Yesterday CalPERS shortened the rate smoothing period. This has major implications for Berkeley's budget. Employers' rates will go up by about 50 percent. This will mean even larger cuts to the city services and higher taxes unless there are substantial changes to employee compensation and employee contribution to benefits. How are we going to fix this as well as our decaying infrastructure? 

See quote below from the SacBee article and link below. 

"CalPERS will shorten the "smoothing" period over which it spreads investment gains and losses from 15 years to five years and amortize them over a fixed 30-year period. Currently, it rolls them over annually, which avoids committing to fully funding the system by a specific date. 

Those changes will trigger an increase in employers' rates of up to 50 percent over five years starting in 2015-16. The state's payments from the general fund, for example, will climb from $2.3 billion this year to more than $3.4 billion in 2019-20."