The pot of invested money used to pay for hundreds of thousands of California public employee pensions has shrunk by $69 billion as coronavirus has squeezed global markets.
The California State Teachers’ Retirement System likely experienced similar losses, but the system doesn’t publicly report its value as often as CalPERS does. Its value stood about $243 billion at the end of February…
Cities, counties and schools will have to pay CalPERS more in the years to come to help make up for the losses, putting pressure on them to raise taxes or reduce public services. And many public workers hired since 2013 — when a pension reform law shaped by the last recession took effect — could have to contribute a larger slice of their paychecks to their retirement plans.
This event is going to hit public employees of all stripes badly, particularly those who work in education. They’ve lost the main vehicle for funding education, and pensions (who have shied away from managed money for passive vehicles for political reasons) have taken major losses. Public pensions were already quite underfunded, meaning state and local governments had not saved enough to fund promised benefits, going into this crash. Some public pensions, like Illinois, Kentucky, New Jersey, and Connecticut were headed toward insolvency. (Kentucky was 13% funded heading into the crash.)