The Orange County Register reports this morning that CalPERS, the big state pension fund, has effectively slammed the door on cities thinking of getting out of the guaranteed pension business.
Last month, the fund’s board decided to recalculate the unfunded liability of any agencies that want to leave the system, using a discount rate of 3.8 percent instead of 7.75 percent.
That means that a city that believes it owes a bajillion dollars will be told it owes something closer to four bajillion if it tries to leave.
So the door is not officially closed – it just got real expensive to open.
We saw a preview of the costs that would have come to Costa Mesa if they checked out of the system and outsourcesd most of their city jobs. This makes the wholesale destruction of public services by cities trying to duck out of rising pension costs by outsourcing.