Although CalPERS' CEO Marcia Frost and CalSTRS spokesperson Vanessa Garcia are downplaying the effect that the recent market collapse will have on their funding capabilities, this one paragraph from the article explains why their optimistic views are unsubstantiated:
CalPERS Board of Administration lacks authority to change public
workers’ benefits, and California’s constitution protects the benefits. A
set of legal precedents known as the California Rule prevents reductions to public pensions without offsetting benefits."
If only they did have that authority. Instead, they will look - as always - to local governments to raise taxes and cut services in order to cover the funding. We have recently witnessed that taxpayers are finally saying 'no' to new and extended taxes. What then?
this current crisis will lead to a statewide discussion on The
California Rule and the critical need to reform the public retiree
system -- for the benefit of all.