The Sacramento Bee reports that Richman wants to ensure the fund faces “the same transparency that we have in public companies.” His proposal was spurred by questions about CalPERS estimates of state contributions when appealing to the Legislature in 1999 for improved retirement benefits.
In its analysis that year, CalPERS predicted the state’s contribution would be $395 million even with the benefit increases, according to the Bee. However, the stock market downturn in the early 2000s left CalPERS with steep losses and wiped out surpluses. As a result, CalPERS has been forced to boost pension contributions in recent years to cover liabilities. Richman said the state paid about $2.7 billion in pension contributions in 2004-05.
The bill, AB 1961, calls for the Bureau of State Audits to complete a performance review of CalPERS by the end of 2007. The audit would look at CalPERS actuarial practices to see if local government agencies covered by the pension plan are receiving enough information to determine the long-term cost and financial risks of increased employee benefits. CalPERS practices would be compared with those at other pension systems nationwide.
Richman is also promoting a measure to replace traditional, guaranteed pensions with a hybrid retirement plan for newly hired public employees.
CalPERS spokesman Brad Pacheco defended the fund’s financial and actuarial practices, saying they are regularly reviewed by outside firms.