Public radio listeners expect a higher standard of balanced reportage from a public station than what was presented in Rob Schmitz article. Key Facts and CalPERS view provided to him were not included. Left on his cutting room floor was important content, such as: the fact that 75 cents of every dollar comes from investment returns, not tax dollars; the fact that state and local employers were spared large increases this year because we had set aside a rainy day fund that is being applied to their contributions today. In the six seconds he devoted to CalPERS view, Mr. Schmitz chose to use a partial CalPERS comment acknowledging tough times for employers, putting on the cutting room floor the rest of it — that we have partnerships with employers to plan ahead, and that we had a rainy day fund set aside from previous years of investment gains that were applied this year, to help employers at a time when they needed it most. Especially disappointing is his deliberate use of selective data that misrepresented the true cost of pensions in 1999 and today. We advised him his “low point” of employer contributions was not a starting point (it was not even typical rate for a year. )Presenting it in the way it was presented is misleading.

Listeners should know we have disciplined and proactive strategies that position us well for good returns when the markets recover, and we are using our leadership in the industry to influence market reforms that help all investors.

To Pat Macht, CalPERS:

Thank you for your interest in the NPR coverage on the pension crisis in California.

We have never doubted CalPERS’ excellence in managing investments and leading in market reforms. We also understand that CalPERS responds to employers’ needs to establish funding policies that smooth contribution rates as much as possible to avoid significant increases in pension costs from year to year. CalPERS is also complying with recommendations made by the Governor’s PEBC to provide greater transparency on the costs of proposed pension benefit increases. However, in spite of this and current economic conditions, agencies by the hundreds continue to grant benefit increases each year, and very few have adopted lower 2nd tier benefits for new hires. CalPERS could be a leader in effecting positive change statewide that is fair to both new workers and citizens. I would like very much to discuss how we can work together to make this happen because it is in everyone’s best interest—current workers, retirees, future workers, the needy and disabled, and taxpayer/employers—that California continues to be fiscally viable as a state.

It is true that government pensions have gotten out of hand and that there should be limitations, however, the governmental employee should be able to work long years and retire at a reasonable amount. If you put the pension too low, you will have employees delaying retirement beyond desirable ages because they cannot afford to retire.

The following are reforms that should be made:

Pension formula should be based on final three years

Pension amounts should be capped – either by dollar or percent of salary or both (i.e. no more than $100,000 or 70% of salary)

Employers should not be allowed to pay the employee portion of the pension benefit, which would also get rid of the EPMC, that robs government of tax dollars and distorts pension amounts

There should be no favorable tax treatment for employer paid contributions to pension that are not the same for private employees

If employee is fully paying employee portion of social security as well as employee portion of pension, there should be no offset (taxes should take care of excess) unless you are over dollar maximum cap.

There is no reason for percentage caps to be different for miscellaneous than safety, but safety should have a slightly higher percent per year formula to offset the increased risk, and to make the formula even at the lower age 60 instead of 65.

Finally, a look at the rate – 2.2 for safety, 2% for miscellaneous if no social security, and 1.7 if there is social security are much more reasonable rates. Someone who works for 35 years for the government should be able to earn a pension of 70% when they retire.