Thursday, March 15, 2012

Stanford: California's local public pensions $135.7 billion short

The 24 largest independent pension systems in California, including Sacramento County's, are facing a combined $135.7 billion in long-term obligations that they won't have the assets to cover, a new Stanford University report says.

Sacramento County is carrying $4.75 billion in unfunded liabilities, according to the report, with a funded ratio of 57.5 percent. Those numbers are based on an assumed rate of investment return of 5 percent used by the university's Institute for Economic Policy Research.

Generally, experts consider an 80 percent funding ratio for public pensions' financial health, but that figure is greatly affected by what the funds -- or in this case, Stanford researchers -- assume its investments will return. Many pension systems assume they'll earn 7.5 percent or more.

The average funded ratio of all 24 systems outside of CalPERS is 53.6 percent, using the lower Stanford investment return assumption. The research covers Alameda, Contra Costa, Fresno, Kern, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Joaquin, San Mateo, Santa Barbara, Sonoma, Stanislaus and Ventura counties. The cities whose pensions were examined include Fresno, Los Angeles, San Jose, and San Diego. The 24 systems account for more than 99 percent of independent system assets, Stanford says. Read More