State contribution to CalPERS pensions to drop

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The state of California is getting a slight break on its pension bill for the upcoming spending year.

The California Public Employees’ Retirement System on Tuesday reported that the state’s contribution for the fiscal year that begins on July 1 will be $170 million less than previously estimated.

The biggest factor in the savings is an agreement by state worker unions to hike employees’ contributions to the cost of their own retirements. Employee contributions are going up by between 2% and 5%, CalPERS said, and in the aggregate are forecast to total $1.3 billion in the 2011-12 fiscal year.

Lower-than-expected salary raises and smaller cost-of-living increases also helped reduce the pension burden on the state budget.

As a result, the state’s total contribution to CalPERS will be $3.51 billion instead of $3.68 billion, CalPERS said.

‘Pensions are a shared responsibility, and our members in some cases are paying half the normal cost of pensions,’ said CalPERS board President Rob Feckner.

The slight reduction in annual state pension costs is unlikely to dampen an increasingly hot debate about the future and the sustainability of state and local government pension obligations.

Gov. Jerry Brown is working on a proposal to reduce pension costs that he hopes to present to Republican lawmakers as part of ongoing budget and tax-increase negotiations. Meanwhile, proponents of an initiative that would convert state retirement benefits to a 401(k)-type system are organizing to put a measure on the ballot sometime next year.

-- Marc Lifsher