Biweekly news digest from the California State University Employees Union
If you would like to receive CSUEU E-News directly via email, please sign up at the CSUEU site.
* * *
BUDGET UPDATE
CALPERS TO HOST 20 RETIREMENT PLANNING FAIRS
CALPERS RESPONDS TO BANKRUPTCY ARTICLE
DON’T SIGN A PETITION TO TAKE AWAY YOUR RETIREMENT!
WEB SITE UPDATES
UPCOMING EVENTS
* * *
Budget Update
On February 19, the legislature adopted a package of 34 bills that addresses the $41 billion shortfall and economic downturn in California. It made revisions to the 2008-09 budget it passed last September that included a $66 million cut to the CSU. As part of the same budget package, it also adopted the 2009-10 budget, carrying over the $66 million cut to the CSU, for a total of $132 million in cuts to the base budget over the two fiscal years.
The budget suspends funding for the Governor’s Compact with CSU (as well as UC and the Hastings College of Law), thus foregoing $427.7 million in expenditures. As a result, no funding is provided for enrollment growth, salary, or cost-of-living adjustments. It further assumes student fee increases of approximately 10 percent at both CSU and UC.
The legislature also adopted a “trigger” mechanism tied to federal stimulus money that calls for an additional 2009-10 CSU budget cut of $50 million unless California receives at least $10 billion in federal stimulus dollars that can be used to replace General Fund dollars in 2009-10 fiscal year. That $50 million is just part of a whopping $947.7 million in cuts across the entire state budget, on top of an additional $1.8 billion in tax increases, all of which will be will be triggered if federal stimulus funds fall short of $10 billion.
In earlier budget talks, the trigger figure was lower. The initial trigger mechanism was meant to be an insurance policy in case the federal money did not meet expectations and was therefore set at $9.1 billion.
As part of his demands in exchange for a yes vote on the state budget, Senator Abel Maldonado required that the legislature drop its planned gasoline tax increase of $0.12/gallon. In order to do this, the legislature needed to rebalance the budget deal and did so through a series of adjustments and line item vetoes. One such adjustment was moving the trigger number on federal funds from $9.1 to $10 billion.
In addition to increasing the trigger number from $9.1 billion to $10 billion, the legislature also agreed to allow the governor to line item veto enough to bring the budget back into balance from the loss of the gas tax. Neither the CSU administration nor CSUEU was aware that the governor would use this veto power to cut an additional $255 million dollars from the CSU budget.
The legislature placed seven propositions on upcoming ballots, including six for a May 19, 2009, special election and one for the June, 2010, primary ballot. Only five of the seven measures are budget-related, with the remaining two related to legislative pay and primary elections.
Of the five budget-related propositions, CSUEU members should be especially concerned about Proposition 1A , the spending cap proposal. Here is a brief explanation of the measure:
• Creates a “rainy day fund,” called the Budget Stabilization Fund (BSF), that will ultimately become a slush fund that would allow unlimited borrowing
• Requires that three percent of annual general fund revenue be diverted from the budget and deposited into the BSF until the BSF balance equals 12.5 percent of General fund revenues – even in a year like this, when we are in the depths of a recession, with state revenues falling.
• Gives the governor extraordinary unilateral power over the budget. The director of finance, a political appointee of the governor, makes all the critical decisions, determining when revenues are “excessive” and can be diverted into the “Rainy Day” fund, with no checks and balances from the legislature.
• Gives the governor more power to make unilateral cuts to the budget after it is signed into law, again with no oversight by the legislature (through a corollary law that kicks in if 1A passes)
CSUEU opposed the budget cap, which the governor and legislature hastily drew up with little legislative or other review as part of the overall bad budget deal. If approved by voters in the May 19 special election, Prop. 1A will divert billions of our tax dollars away from our schools, colleges, home care, and healthcare, even in bad years. As a result, our schools, healthcare, and other vital public services will face even deeper cuts in the future and will never recover from this downturn.
We can’t afford to lock in the cuts of recent years. Ranked 47th in school spending, dead last in healthcare reimbursements for doctors and hospitals, and among the lowest in the nation in college graduation, California cannot continue to keep on starving our schools, colleges, healthcare, and other vital services.
Read SEIU’s analysis of the budget and of each of the propositions.
Read background information about the impact of Prop. 1B on existing Prop. 98 provisions, courtesy of Capitol Weekly.
Read the CSU’s budget analysis in the February 27 issue of CSU Leader.
CalPERS to Host 20 Retirement Planning Fairs in 17 Cities
Early planning can make the difference between a secure retirement and one that is not. That’s the focus of a series of retirement planning fairs sponsored by the California Public Employees’ Retirement System (CalPERS). The 2009 series of fairs – 20 events in 17 cities throughout California – begin on March 14 and continue through September 26.
CalPERS members will receive information on CalPERS benefits, programs, and services to help them plan for a financially secure retirement. Retirees receive information about how to better manage and preserve their retirement assets.
Detailed information, including maps, driving directions, and workshop schedules, is available on the CalPERS web site. CalPERS members can pre-register for a fair in the “My Education” area of the my|CalPERS member web site.
The complete schedule of the 2009 CalPERS retirement planning fairs is as follows:
• March 14 in San Diego, 9 a.m. – 3 p.m., Hilton San Diego/Del Mar, 15575 Jimmy Durante Blvd.
• March 18 in Ontario, 9 a.m. – 4 p.m., Ontario Convention Center, 2000 E. Convention Center Way.
• March 27 in Los Angeles, 9 a.m. – 4 p.m., Los Angeles Convention Center, 1201 South Figueroa Street.
• March 28 in Los Angeles, 9 a.m. – 3 p.m., Los Angeles Convention Center, 1201 South Figueroa Street.
• April 7 in Irvine, 9 a.m. – 4 p.m., Hyatt Regency Irvine, 17900 Jamboree Road.
• April 28 in San Luis Obispo, 9 a.m. – 4 p.m., Embassy Suites, 333 Madonna Road.
• May 9 in Visalia, 9 a.m. – 3 p.m., Visalia Convention Center, 303 E. Acequia Ave.
• May 21 in Santa Cruz, 9 a.m. – 4 p.m., University Inn, 611 Ocean Street.
• May 29 in Bishop, 9 a.m. – 4 p.m., Cerro Coso Community College, 4090 West Line Street.
• June 10 in Turlock, 9 a.m. – 4 p.m., CSU Stanislaus – Bizzini Hall, One University Circle.
• June 16 in Santa Clara, 9 a.m. – 4 p.m., Santa Clara Convention Center, 5001 Great America Parkway.
• June 24 in South San Francisco, 9 a.m. – 4 p.m., South San Francisco Conference Center, 255 South Airport Blvd.
• July 8 in Concord, 9 a.m. – 4 p.m., Hilton Concord Hotel, 1970 Diamond Blvd.
• July 24 in Sacramento, 9 a.m. – 4 p.m., Sacramento Convention Center, 1400 J Street.
• July 25 in Sacramento, 9 a.m. – 3 p.m., Sacramento Convention Center, 1400 J Street.
• July 30 in San Rafael, 9 a.m. – 4 p.m., Four Points by Sheraton, 1010 Northgate Drive.
• August 13 in Kelseyville, 9 a.m. – 4 p.m., Konocti Harbor Resort & Spa, 8727 Soda Bay Road.
• September 17 in Kings Beach, 9 a.m. – 4 p.m., North Tahoe Conference Center, 8318 North Lake Blvd.
CalPERS Responds to Bankruptcy Article
In early February, a Canadian web site, www.GlobalResearch.ca, posted an article claiming that CalPERS is close to bankruptcy, a development that those who closely follow CalPERS dealings insist is far from the truth. It went on to say that CalPERS members will receive reduced pension benefits or be forced to work longer because of recent investment losses. Following is a response from Pat Macht of CalPERS Public Affairs:
Your article entitled “California Pension Funds Close to Bankruptcy” contains numerous factual errors.
First of all, your headline suggesting that the CalPERS pension fund is “close to bankruptcy” is not true.
The term “bankruptcy” assumes that our fund does not have money to meet its obligations, which is not the case. Like all investors, our pension fund has experienced a decline in the market value of our assets due to the economic downturn. But we are not insolvent, as your headline suggests. We continue to meet our benefit payment obligations, on schedule and without interruption.
CalPERS is designed to weather financial storms and market volatility. For example, in the 2001 recession, CalPERS lost $50 billion on paper, but we rebounded over the next four years with a gain of $120 billion. We have weathered numerous financial storms in the past. We expect to weather this one as well.
Our long-term investment strategy, along with professional investment management, have produced an average annual investment return of nearly 10 percent over the past 20 years – which included several investment downturns – well above our target 7.75 percent annual rate of return to fund benefits.
In fact, over the past 25 years, we have had 20 years with investment returns averaging 15 percent, nearly double our actuarial target rate. There were four down years, averaging a 5 percent loss in those years. One or two years of substandard investment performance does not have a significant impact on the long-term financial health of the CalPERS pension fund.
Also false is the statement that CalPERS members will receive reduced pension benefits or be forced to work longer because of recent investment losses.
CalPERS retirement benefits are protected by law. Courts have repeatedly ruled that vested benefits cannot be reduced or taken away once they are earned. Under state law, CalPERS benefits are determined by retirement age, years of service, and highest compensation--regardless of recent investment performance.
Don’t Sign a Petition to Take Away Your Retirement!
Check carefully before signing any petitions! Paul McCauley of San Diego--an obsessive petition writer--is now gathering signatures to qualify for the ballot an initiative that could reduce public employees’ pensions. Unlike previous pension attacks, which proposed a two-tier system that would pit current retirees against new hires, this proposition would allow public entities to “renegotiate” with current retirees. McCauley needs nearly 700,000 signatures by June 22, but, as he pointedly noted in a recent newspaper column, California has 38 million people not covered by public pensions.
The official title of the initiative is “Renegotiation of Public Employee Pension Contracts--Initiative Constitutional Amendment.” Read the Secretary of State’s announcement about this initiative drive.
Be careful what you sign! And urge your friends and neighbors not to sign.
Web Site Updates
Check out the Board of Directors meeting site, filled with information about the upcoming meeting in Redondo Beach, March 13-15.
Also new: the revamped reclassification section of the Classification Committee’s web site, now filled with information and forms relating to all aspects of reclassification.
Tip for using the Library: Click on the plus signs to the left of folder names in order to reveal sub-folders.
* * *
UPCOMING EVENTS
Friday-Sunday, March 13-15
CSUEU Board of Directors Meeting
Redondo Beach
Tuesday-Wednesday, March 24-25
CSU Board of Trustees Meeting
401 Golden Shore, Long Beach
Friday-Sunday, March 27-29
CSEA Women’s Conference
Holiday Inn, Capitol Plaza, Sacramento
Information: (916) 326-4217
Tuesday, March 31
César Chávez Day
CSUEU Headquarters closed
Monday-Wednesday, April 27-29
CSUEU Lobby Day
Capitol Building, Sacramento
May 19
Special Election
Register to vote now
* * *
See back issues of CSUEU E-News, distributed every other Thursday.
— End —