Gavin Newsom said Monday that the state’s pension crisis is “worse” than it appears.
The problem with the pension crisis, he said, is that it was caused by the governor’s “pension fund management decisions that are not based on actuarial reality.”
Newsom, who is running for a second term, also said the state was “not paying enough to protect our retirees” and he was concerned that state workers were being “taken advantage of by a greedy hedge fund and a couple of high-priced private equity firms.”
The state has not been able to pay all of its employees enough in pension checks to cover the cost of their health care benefits.
The state also has not paid its unfunded liabilities in pension plans since December 2012, according to the California Budget and Policy Center, a nonpartisan nonpartisan state budget office.
The fund’s liabilities have grown to $1.1 billion.
“The pension crisis has been a serious problem, and it’s a problem that needs to be addressed,” Newsom told reporters at the Capitol.
“But it’s also a problem in California because our system is broken, and we need to change it.”
State lawmakers are trying to overhaul California’s pension system, which has been plagued by deep budget shortfalls and a ballooning retirement crisis.
But lawmakers are not expected to act before the 2018 elections, which will be held in 2020.
New pension reforms could help address the crisisThe changes being considered by lawmakers include a new set of pension rules that would require that all employees in California contribute to their retirement plans.
Under the plan, all California residents would be required to contribute at least 25 percent of their income into their pension plans.
Under current law, workers are required to pay an average of about $2,200 in monthly contributions to their pension accounts.
However, the state has only managed to save about $300 million by requiring some employees to contribute to the pension plan each month.
The proposal also would allow retirees to defer contributions until they reach their age of 70, a move that could help alleviate the financial burden on those already suffering from the crisis.
A bipartisan group of legislators introduced a bill in April that would allow employees to defer their contributions to the retirement plan until they reached their retirement age, which is projected to be 67 by 2027.
Newsom’s proposal would require workers to contribute the maximum amount of their salary into their pensions, instead of having to pay out of pocket.
The plan also would require employers to offer at least one year of health care coverage for workers, including those in the military and federal workers.
“These reforms will create a stronger and more efficient system for California to provide affordable health care to its workers and will ensure that California’s citizens get a quality, affordable health-care system,” said Senate President Kevin de Leon, a Democrat.
The bill is currently stalled in the Senate, which did not take action on it last month.
Newsom has long opposed pension reform, saying it would increase the state budget deficit and harm the state economy.
However his proposed pension reforms would provide an additional $1 billion to the state coffers, making the measure the most significant proposal by any state leader to address the state pension crisis.
California’s pension fund is the largest employer in the state, and Newsom has been seeking to change that.
He has proposed eliminating the $100,000-a-year salary cap that currently applies to public employees and raising the minimum pension for workers to $150,000, which would bring the total to about $200 billion.
The governor has also called for a change in the way California’s retirement systems are funded, which could mean the state would be able to provide a new $400 billion-per-year fund to its retirees.
California currently has $2.3 trillion in unfunding liabilities, which have grown as the state continues to struggle with chronic budget shortruns and the high cost of health insurance.