California Gov. Brown: CalPERS Discount Rate Change Doesn’t Go Far Enough

On Wednesday, the CalPERS board approved a measure that aims to draw down the pension fund’s discount rate from 7.5 percent to 6.5 percent over a period of 20 years.

But California Gov. Jerry Brown, who had been pushing for a more conservative projection, said this week that CalPERS didn’t go far enough.

More from the LA Times:

“I am deeply disappointed that the CalPERS board reversed course,” Brown said in a written statement.

Brown wanted [the discount rate decrease] to happen even faster. His criticism hinted at a larger struggle, a political tug of war between Brown and public employee unions.

[…]

Sources close to both CalPERS and the Brown administration said Thursday that the governor had been privately lobbying some of the pension fund directors for weeks to push for a faster, deeper cut in the long-term estimates of what will be funded by Wall Street investments. In other words, he wanted to set aside more tax revenues for paying pension obligations.

Doing so would strengthen his hand should he be asked to expand government programs. Or it could help stave off contract demands by state employee unions with whom he’s now negotiating. One of those unions, composed of state engineers and scientists, protested on the streets of Sacramento on Thursday in support of a more generous contract than Brown is offering.

The governor, in so many of his actions over the last few years, has made it clear he wants to pay off as much debt as he can right now.

At least one CalPERS board member wanted the discount rate to be lowered to 6.5 percent immediately, not over the course of 20 years, according to the LA Times.

Photo by Steve Rhodes via Flickr CC License