Pension panelists selected
Sacramento Bee 2/21/07
Gerald Parsky, an investment executive and former chair of the University of California Board of Regents, will head the 12-member panel, the Governor's Office said.
The governor's other appointees, all Republicans, will join union leaders and pension experts appointed by Democratic legislative leaders.
Schwarzenegger's Finance Department estimates the state would need to invest an additional $44 billion to meet its pension obligations to all current state employees.
Anne Sheehan, chief deputy director of the Finance Department, said that's not an emergency: The state has enough money invested in pensions to cover about 86 or 87 percent of the total obligation.
"I like being closer to at least 90 percent," said Sheehan, who will serve as executive director of the commission, which the governor created by executive order at the end of last year.
But in addition to pension obligations, the state and local governments also face a significant shortfall in the amount they must put aside to cover the rising costs of providing health care to employees.
The Legislature's nonpartisan budget adviser last year said it would cost the state about $5 billion more annually than it is currently spending to cover the price of health care for future and current retired state workers over the next three decades.
New national accounting standards that take effect this year require local and state governments to calculate and disclose future health care costs. Those costs are rising rapidly because retirees are living longer and health care prices are outpacing general inflation.
State employee unions have questioned whether the state and local governments are facing a real fiscal crisis. Union leaders have suggested that the issue is being manufactured so that the state has an excuse to cut back on benefits to retirees.
"We are hoping it doesn't become just a public-employee bashing issue," said J.J. Jelincic, president of the California State Employees' Association.
Union leaders said Tuesday that they were pleased they would be represented on the new panel.
"We believe that the makeup of the commission -- as was announced today -- is relatively balanced, with both management and labor interests represented," said commission member Dave Low of the CSEA.
Parsky said the commission would not recommend cutting benefits that had already been promised. But at the same time, he said, the governor and legislative leaders "recognize that the rising obligations of this type remains one of the biggest problems facing governments everywhere. And as these costs rise and are met, it means that less money is available to other programs."