CA Governor Establishes Public Pension Commission

December 29, 2006 ( - California Governor Arnold Schwarzenegger issued an executive order on Thursday establishing the Public Employee Post-Employment Benefits Commission to propose ways for addressing growing pension and retiree health care obligations.

A press release on the governor’s Web site said the twelve-member commission will identify the extent of unfunded liabilities, review and analyze options for addressing them, and recommend a plan to the legislature and governor by January 1, 2008. Six members of the commission will be appointed by Schwarzenegger, three members will be appointed by the Assembly Speaker and three members will be appointed by the Senate President pro Tem.

According to the press release, by January 1, 2008, the new Commission must send a report to the governor and legislature that will:

  • Identify the full amount of post-employment health care and dental benefits for which California governments are liable and which remain unfunded,
  • Evaluate and compare various approaches for addressing governments’ unfunded retirement health care and pension obligations, and
  • Propose a plan to address governments’ unfunded retirement health care and pension obligations.

Unfunded pension liabilities for CalPERS and CalSTRS are $49 billion and a February 2006 Legislative Analyst Office (LAO) report estimated the state’s unfunded liabilities for retiree health care benefits and their dependents is between $40 billion and $70 billion. The LAO recommended up to $6 billion per year be set aside to retire that unfunded liability – a recommendation approved by the California Public Employees Retirement System (See CalPERS Approves Plan for Pre-funding Health Benefits ). The press release said the unfunded liability for retiree health benefits at local governments and school districts is also expected to be in the billions.

In April 2005, Schwarzenegger backed down from an earlier pension system overhaul proposal after facing opposition from public workers and a group with representatives from other states (See Schwarzenegger Pulls Back on Pension Reform ).