In the face of a budget shortfall of $12.5 million brought on by the economic slump, California Governor Gray Davis had previously planned to delay pension payments to teachers and public employees.
According to a report from Reuters, the administration’s director of finance, Tim Gage sent a letter to the state Legislature this week, noting that restructuring California’s general obligation debt would save just over $1 billion through fiscal year 2002-03.
The restructuring plan, an option which Department of Finance officials say would be less expensive in the long run, was initially proposed by state Treasurer Phil Angelides. The proposal seeks to revamp California’s debt strategy by deferring bond repayments and issuing variable-rate debt to take advantage of low interest rates, Reuters reports.
The restructuring plan provides about $200 million more than the proposal to delay payments to the California Public Employees’ Retirement System and the State Teachers’ Retirement System, officials say.