Updated to reflect correct spelling of Stausboll's name.
California Public Employees' Retirement System CEO Anne Stausboll sent letters to Gov. Arnold Schwarzenegger and legislative leaders last week expressing the pension system's "significant concerns" about any attempt by the state to borrow $2 billion from the pension system to help solve the state's deficit.
Schwarzenegger is demanding that lawmakers roll back pension benefits for new state employees to 1999 levels. As The Bee reported last month, Schwarzenegger officials floated the idea of borrowing $2 billion in the current fiscal year from the pension fund as an advance against future savings from such pension reductions.
In the Aug. 30 letters, Stausboll said CalPERS neither endorses nor opposes the idea, but the pension system has "significant concerns regarding the concept as it has been reported." Any borrowing transaction must receive approval from CalPERS' board.
She said lowering the state's nearly $4 billion contribution to CalPERS "would raise significant issues of actuarial soundness." She also said the Internal Revenue Code has strict guidelines regarding pension loans to the state due to CalPERS' tax-qualified status. CalPERS would have to ensure that any such transaction would have to occur within IRS rules.
Besides those problems, experts told The Bee that any borrowing plan would be expensive for the state.
Schwarzenegger aides say the governor has not endorsed the idea, though they acknowledged that his Department of Finance floated the plan as one possible way to reach agreement on budget, which is now 70 days late.
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