SACRAMENTO (CBS13) — Gov. Jerry Brown warned that the state workers’ retirement system is in trouble during his State of the State address on Thursday.
Brown focused on a laundry list of challenges and accomplishments during his address.
“We raised our minimum wage to $10 dollars an hour and that’s 80 percent higher than the federal minimum,” he said.
Touting his climate change initiative and the state’s budget surplus, the one issue that has lawmakers concerned, with no solid answers, is California’s growing retirement liability.
“These liabilities are so massive that it’s tempting to ignore them. We can’t possibly pay them off in a year or two or even in 10,” he said.
The governor says it takes about $220 billion to cover the costs of pensions and health benefits for state and university workers.
“I’m worried about our financial integrity of our pension system,” said state Sen. Ted Gaines (R-Roseville).
He says the California Public Employees Retirement System is losing cash fast, because its investments aren’t keeping up with the growing retiree population.
“The challenge is how do you keep the system going that you can’t earn the rate of return that is assumed by PERS,” he said.
Elk Grove Assemblyman Jim Cooper believes the pension system is becoming too politically correct by divesting from money-making stocks.
“We are divesting from coal, firearms. A wide variety of things,” he said.
It’s the elephant in the room that’s not going away anytime soon.
“We’ve promised our workers these benefits in exchange for careers serving the public,” Brown said. “If we fail to acknowledge and pay these obligations we’ll unfairly burden future generations of Californians with these debts.”