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9A Page 8 CalPERS Board Debates Methods to Ease Economic Pressures on Employer Contribution Rates The economic downturn has caused the California Public Employees Retirement System (CaIPERS) to lose a $100 billion in its investment portfolio. The CalPERS board and staff have begun serious talks about what the losses will mean for public agency employer contribution rates. These losses will have a significant impact on what city employers will be required to pay into the CalPERS pension fund beginning in FY 2011-12. The PERS Board is exploring methods to ease the blow to contribution rates because many cities are straining to meet financial obligations. Chief Ron Seeling on May 13 presented an alternative method for determining employer contribution rates to the CalPERS board that could soften the impact of the market losses on employers. Seeling, referring to the market losses, commented that. "we believe this is a unique and catastrophic event." He painted a bleak future for employers by stipulating that using the current method of determining employer contribution rates. with the losses the fund has experienced so far. will inevitably have a tremendous impact to local governments. Seeling's recommendation involves: 1. Isolating the July 1, 2008 through June 30, 2009 losses; 2. Breaking them into three separate years; and 3. Paying for the losses separately. According to Seeling, by isolating the losses. CalPERS can generate a higher probability of improving its funded status. The CalPERS board voted six-ta-four to have this issue revisited at its next board meeting in June. While most board members were relatively supportive of Seeling's recommendation, the Controller and the Treasurer raised a number of issues. Steve Cooney, the Treasurer's board representative, declared that he was not ready to support Seeling's recommendation on the basis that Uthe economy hasn't really had a chance to play out." He continued that CalPERS is in a unique position to address the larger issue of retirement security and to inspect what part of defined benefits should be re-examined. Cooney also remarked that, while certain benefits should be retained, re-examining other policies such as retirement age makes sense. Tony Oliveira, local government board representative and Kings County supervisor, attempted to persuade the members to vote in favor of Seeling's recommendation by conveying that this is a local government sustainability issue. He said that if the CalPERS board didn't take action, the mounting pressure against defined benefit plans will only get greater and when that's compounded with the current fiscal crises, this can become a huge problem for the state and local governments. Anne Stausboll, CalPERS chief executive officer, announced that CalPERS will be holding a constituent meeting on this issue before the next scheduled CarPERS Board of Administration meeting in June. League staff will send information on the constituent meeting for interested city officials as it is received. To see a more detailed look at Ron Seeling's recommendation please visit: htto:/lWW'W .caloers.ca.aov/eio-docs/aboutlboard-cal-8aenda/aaendas/fu 1I/200905/item 14. pdf. For questions please contact Natasha Karl, League legislative analyst at nkarl@cacities.ora. Bill Could Double Local Government Costs for Public Safety Personnel with Cancer The League opposes AB 128 (Coto), a bill which would change the current cancer presumption law for public safety personnel. Police and fire are covered under the current workers' compensation law, which provides a presumption for a cancer related injury for up to five years post-employment. A presumptive injury, illness, or disease under workers' compensation presumes that the injury, illness, or disease occurred out of or in the course of employment. The burden of proof for a non-presumptive injury lies with the employee, but with presumptive injuries 8