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8.B. - Page 71 of 122
<br />Appeal rulings.53 Acceptance of the "reasonable pension" standard enunciated in the first two
<br />Court of Appeal cases could have significant implications for future pension reform efforts, as
<br />well as eliminate the pension "spiking" and "air time" practices for both Classic and New
<br />Members.
<br />Ca1PERS' changes.
<br />CalPERS administers pension plans for Agencies throughout California. Ca1PERS' system -wide
<br />Funded Percentage (that is, value of current assets divided by the present value of future Benefit
<br />payments) is only 68 percent.sa,ss As discussed below in the section entitled "Unfunded
<br />Liabilities and Funded Percentages of the Cities" at p. 16, among private sector pension plans, a
<br />Funded Percentage of 80 percent is the threshold below which a plan's solvency is considered
<br />"at risk".56 Ca1PERS' reported 68 percent Funded Percentage is based on a Return on Investment
<br />and Discount Rate assumption of 7 percent. CalPERS has been criticized in the past for
<br />inaccurate assumptions made in its calculations of future Benefits obligations and Returns on
<br />Investment.57 The May 2017 Roeder Survey of California public pension plans ranked CalPERS
<br />a poor 34th out of 37 California public pension plans rated for "funding assumptions. ,58
<br />However, CalPERS has begun taking actions to strengthen its pension system.
<br />" Webster, Keeley, More briefs ask State Supreme Court to weaken California rule on pensions, The Bond Buyer,
<br />February 27, 2018, <https://www.bondbuyer.com/news/more-briefs-ask-state-supreme-court-to-weaken-california-
<br />rule-on-pensions>. GMSR Appellate Lawyers, California Supreme Court Watch, #18-49,
<br /><https://www. gmsr.com/ 18-49-alameda-county-deputy-sheriffs-assn-v-alameda-county-employees-retirement-assn-
<br />s247095 -a 141913 -19-cal-app-5th-61-mod- l 9 -cal -app -5th -945 a -contra -co sta-county-superior/>.
<br />14 Terando, Scott, Strategies for Managing the New Reality, CalPERS, September 15, 2017, slide 8,
<br /><https://www. cacitie s. org/Re sources-Documents/Education-and-Events-Section/Annual-Conference/2017-
<br />Handouts/Strategies-for-Managing-the-New-Reality-of-Ca1PERS>. CalPERS 2017 CAFR, p. 27. CalPERS,
<br />CaIPERS Reports Preliminary 11.2 Percent Investment Return for Fiscal Year 2016-17, July 14, 2017, p. 1,
<br /><https://www.calpers.ca. goy/page/newsroom/calpers-news/2017/preliminary-fiscal-year-investment-returns>.
<br />ss A Funded Percentage of 68 percent is low compared to CalPERS' historic Funded Percentages over the last 25
<br />years. For a chart showing these percentages since 1993, see, Fox, Kelly, Ca/PERS Update and Path Forward,
<br />December 13, 2017, p. 16, <https://www.cacities.org/Resources-Documents/Education-and-Events-Section/Fire-
<br />Chiefs/2017-S ession-Materials/Ca1PERS-History-and-Pension-Updates>.
<br />16 Nation, Pension Math 2011, p. 17. Financial analyst Rick Roeder notes that a public pension plan with a Funded
<br />Percentage in the 80-90 percent range is considered "reasonably well funded." Roeder, Rick, Roeder Financial,
<br />California Pension Systems: Ranking their Funding Assumptions, May 2017, p. 2,
<br /><hllp://roederfinancial.com/ramblinlzs.php?ramble=42>.
<br />51 See, for example, the following: Ring, Edward, Did CalPERS Use Accounting "Gimmicks " to Enable Financially
<br />Unsustainable Pensions?, California Policy Center, January 24, 2018, <https://califomiapolicycenter.org/calpers-
<br />use-accounting-gimmicks-enable-financially-unsustainable-pensions/>. Dolan, Jack, How a pension deal went
<br />wrong and cost California taxpayers billions, Los Angeles Times, September 18, 2016,
<br /><http://www.latimes.comiprojects/la-me-pension-crisis-davis-deal/>. Malanga, Steven, The Pension Fund that Ate
<br />California, The City Journal, <https://www.cityjournal.or /hg tml/pension-fund-ate-califomia-13528.html>.
<br />" Roeder, Rick, Roeder Financial, California 2017 Funding Assumption Survey, May 2017,
<br /><hlt2://roederfinancial.com/RoederSurvey2Ol7.html>.
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