PLEASE CALL THE ROLL.
SHOWN HERE NIELSEN.
BELL.
DRAW SO YES FOR TADO.
JONES LABOR [inaudible]
WIRE [inaudible]
MY NAME [inaudible]
MORE LUCK [inaudible]
WELL.
AND FOR ALL.
SKINNER STERN.
STONE.
NUMBER.
Y. KASKI.
WE HAVE.
THANK YOU VERY MUCH OF THE
SECRETARY NOTICES THE PRESENCE
OF A QUORUM GOOD MORNING
EVERYONE WELCOME BACK TODAY IS
OUR THIRD FULL BUDGET COMMITTEE
HEARING. FOR THE CURRENT BUDGET
YEAR FIRST UP ON OUR AGENDA
TODAY COLLEAGUES AS YOU'RE NOT
ON THE AGENDA WILL CONSIDER THE
EARLY ACTION BUDGET PACKAGE
WHICH CONSISTS OF A CURRENT YEAR
BUDGET DEAL THAT'S AB.
SEVENTY TWO AND ONE TRAILER BILL
AB.
SEVENTY THREE AFTER WE TAKE
ACTION ON THOSE BILLS --
WILL MOVE INTO THE INFORMATIONAL
HEARING PORTION OF TODAY'S
HEARING AND IT WILL FOCUS ON THE
ADMINISTRATION'S BUDGET
RESILIENCY PROPOSALS INCLUDING
THE PROPOSAL SUPPLEMENTAL
PENSION PAYMENTS.
AND RESERVE PROPOSALS.
THE STATE'S FISCAL STRENGTH AND
RESILIENCY ARE CRITICALLY
IMPORTANT TO OUR ABILITY TO
MAINTAIN AND PROTECT PROGRAMS
AND SERVICES.
THAT CALIFORNIA RESIDENTS
PARTICULARLY THE MOST VULNERABLE
RELY ON DURING BAD ECONOMIC
TIMES THOSE OF US WERE HERE
DURING THE LAST RECESSION
UNDERSTAND THAT ALL TOO WELL.
ALONG THESE LINES ADMINISTRATION
AS A NUMBER PROPOSALS RELATED TO
DEBT IN LIABILITY PAYMENTS
INCLUDING PENSION AND RESERVES.
THESE PROPOSALS ARE CENTRAL TO
THE OVERALL ARCHITECTURE THE
BUDGET AND TODAY'S HEARING WILL
GIVE ALL OF US THE OPPORTUNITY
TO BETTER UNDERSTAND HOW WE
SHOULD CONSIDER THEM.
AS WE PROCEED THROUGH THE BUDGET
PROCESS. FOR THE INFORMATIONAL
PART OF THE HEARING WE HAVE
RIGHT CALPERS.
AND CAL STIRS JOINING US ALONG
WITH THE LA --
AND OF COURSE THE DEPARTMENT OF
FINANCE.
I'D LIKE TO WELCOME MISTER.
THIS ONE UP ON I KNOW THAT YOU
JUST TAKING PITY ON ME AND
YOU'RE GONNA SAY HOWEVER I
PRONOUNCE IT BUT I'M GONNA TRY.
FOR THE INTO THIS BUDGET CYCLE
IS GOING TO ROLL OFF MY TONGUE
LIKE A DOES YOURS MISTER THIS
ONE OFF ON WOULD LIKE TO WELCOME
YOU AGAIN TO OUR COMMITTEE.
ON AND INVITE YOU TO PRESENT THE
EARLY ACTION BUDGET PACKAGE
RIGHT THANK YOU MADAM CHAIR AND
REALLY APPRECIATE THE CHANCE TO
BE WITH ALL OF YOU AGAIN HERE
TODAY AND THAT COMMITTEE.
I WANT TO TALK ABOUT THIS EARLY
ACTION PACKAGE AND I WANNA MAKE
TWO VERY BRIEF POINTS AT THE
BEGINNING.
THE FIRST IS THAT THIS IS REALLY
AN EMERGENCY PACKAGE DEALS WITH
MEASURES LIKE WLDFIRES
EMERGENCY MANAGEMENT.
IMMIGRATION AND THE CRISIS AT
THE BORDER AND THE AVAILABILITY
OF SAFE AND AFFORDABLE DRINKING
WATER.
THESE ARE ISSUES THAT I THINK WE
CAN ALL AGREE OUR CORE TO THE
COMPETENCY AFFECT GOVERNMENT.
AND ISSUES THAT WE WANTED TO
MAKE SURE THAT EVEN THOUGH THE
GOVERNOR HAD PROPOSED AND AND
HIS JANUARY BUDGET PROPOSAL FOR
ENACTMENT IN JUNE WE DIDN'T
THINK THAT THERE WAS ANY REASON
TO WAIT AND WE TALKED.
LET'S BEGIN ON THIS AS SOON AS
POSSIBLE WITH WORKING TOGETHER
WITH THE LEGISLATURE.
AND THE SECOND ONE I WANT TO
MAKE IS I KNOW THIS PACKAGE CAME
TOGETHER VERY QUICKLY --
THE GOVERNOR WAS SWORN IN JUST A
MONTH AGO TODAY ON JANUARY
SEVENTH IN TODAY'S FEBRUARY
SEVENTH --
SO I REALLY APPRECIATE ALL OF
YOU WORKING TOGETHER WITH THE
ADMINISTRATION MUCH OF STUFF AND
SHAUN CHRIS WHAT'S IN THE PRO
TEM'S OFFICE GETTING THIS TO THE
FLOOR IN THE ASSEMBLY. TO WHAT
YOU HAVE BEFORE YOU ARE TWO
BILLS THERE'S AB SEVENTY TWO
WHICH IS AMENDMENT TO THE
CURRENT YEAR BUDGET BILL.
AS WELL AS AB SEVENTY THREE
WHICH IS A TRAILER BILL AND I'LL
BRIEFLY DESCRIBE THE ITEMS IN
EACH OF THEM IN TURN.
IN AB SEVENTY TWO THEIR SIX
COMPONENTS THAT WARRANT YOUR
ATTENTION.
THE FIRST IS A PROPERTY TAX BACK
FILL -- FOR
THE FIRES THAT OCCURRED IN THE
TWENTY EIGHTEEN YEAR --
THIS INCLUDES A THREE YEAR BACK
FILL FOR BUTTE COUNTY AND LAKE
COUNTY.
AS WELL AS A ONE YEAR BACK FILL
RIGHT NOW FOR A LOS ANGELES
COUNTY ORANGE COUNTY RIVERSIDE
COUNTY SHASTA COUNTY AND
SISKIYOU COUNTY.
WE ALSO KNOW THAT THERE ARE
OTHER --
JURISDICTIONS FOR EXAMPLE
VENTURA COUNTY --
THAT WE HAVEN'T RECEIVED THE
INFORMATION YET FOR WHAT EXACTLY
THEY'RE BACK FILL WILL BE BUT
ADDS THAT INFORMATION COMES IN
OVER THE MONTHS IN THE YEAR TO
COME.
OUT WE WILL MAKE SURE AND FUTURE
BUDGET ACTIONS TO ADJUST THAT
APPROPRIATION SO THAT ALL
COUNTIES ARE RECEIVING THE BACK
FILL THAT THEY'RE ENTITLED.
TO IN THIS PROCESS SO WE WORK
WITH THE COUNTIES TO CALCULATE
THE EXACT AMOUNT OF THE BACK
FAILED.
AND THE WAY WE LOOK AT IT IS IT
IS THE DIFFERENCE BETWEEN WHAT
THEY WOULD HAVE RECEIVED THESE
JURISDICTIONS AND THE ABSENCE OF
A FIRE.
AND WHAT THEY ARE RECEIVING
TODAY WITH THEIR NEW ASSESSMENTS
AND WE WANT TO MAKE SURE THAT
THAT DIFFERENCE IS SOMETHING
THAT WE AT THE STATE LEVEL.
CAN FILL IT.
THE SECOND COMPONENT OF THIS
PACKAGE IN AB SEVENTY TWO
RELATES TO EMERGENCY GRANTS WE
ALL KNOW THAT EMERGENCIES ARE
GOING TO CONTINUE WE DON'T KNOW
EXACTLY WHEN OR WHERE BUT THEY
WILL CONTINUE TO HAPPEN.
AND WE WANT TO MAKE SURE THAT WE
BUILD RESILIENCY ESPECIALLY
AMONGST THE MOST VULNERABLE
POPULATIONS IN OUR STATE AND
THAT INCLUDES SENIOR RESIDENTS
IN CALIFORNIA AS WELL AS
COMMUNITIES WITH DISABILITIES WE
WANT TO MAKE SURE THAT EVERYONE
HAS ACCESS TO ALL THE HELP THAT
THEY NEED.
IN THE EVENT OF AN EMERGENCY.
SOON THIS ELEMENT WE HAVE
FIFTEEN MILLION IT'S THIRTY
MILLION DOLLARS TO CALIFONE
TEARS FOR A STATEWIDE EMERGENCY
PREPAREDNESS CAMPAIGN.
AS WELL AS TWENTY MILLION
DOLLARS TO THE OFFICE OF
EMERGENCY SERVICES AND THAT IS
FOR GRANTS TO LOCAL
JURISDICTIONS. TO MAKE SURE THAT
WE CAN BUILD RESILIENCE IN
POCKETS ACROSS THE STATE.
THIRD ELEMENT OF THIS PACKAGE IS
FOR THE SENATE NOT FUND FOR
IMPROVEMENT STORE NINE ONE ONE
SYSTEM WE KNOW THAT HOW WE FUND
THESE IMPROVEMENTS AND HOW THEY
WE GO ABOUT MAKING BAND IS PART
OF A LONGER CONVERSATION WITH
THE LEGISLATURE.
BUT WHAT WE WANT TO DO GIVEN
THAT AT THE CURRENT PACE OF
EXPENSES THIS FUND IS WAS
PROJECTED TO RUN TWO ZERO
DOLLARS THIS YEAR AND WE KNOW
FROM RECENT EMERGENCIES.
JUST HOW IMPORTANT IT IS TO HAVE
A RELIABLE NINE ONE ONE SYSTEM
THAT WE WOULD INCLUDE A TEN
MILLION DOLLAR GENERAL FUND
LOANS TO MAKE SURE THAT THOSE
IMPROVEMENTS CONTINUE TO GET
MADE WHILE WE HAD THE
CONVERSATION WITH THE
LEGISLATURE ON A LONG TERM
SOLUTION FOR THAT.
THE FOURTH ELEMENT IS FOR
EMERGENCY DRINKING WATER
SUPPLIES AND THIS INCLUDES TEN
MILLION DOLLARS DIRECTLY FOR
EMERGENCY DRINKING WATER.
AS WELL AS TEN MILLION DOLLARS
TO WATER SYSTEMS TO MAKE SURE
THAT THEY'RE IN COMPLIANCE WITH
CURRENT STANDARDS.
AGAIN HERE AS WITH NINE ONE ONE
SYSTEM WE KNOW THAT THERE IS A
CONVERSATION TO BE HAD ABOUT THE
LONG TERM SOLUTION FOR THESE --
FUNDING PACKAGE AND WE WANT TO
MAKE SURE THAT WE HAVE THAT IN
THE MONTHS TO COME BUT IN THE
MEANTIME WE MAKE SURE THAT THIS
MONEY GETS OUT THE DOOR.
RIGHT NOW SO THAT COMMUNITIES IN
NEED HAVE ACCESS TO THOSE
RESOURCES.
FIFTH ELEMENT HERE IS --
FOR IMMIGRATION RAPID RESPONSE
THAT PARTICULARLY THE SITUATION
AT THE BORDER BY THE GOVERNOR
AND HIS BUDGET PROPOSED THE
TWENTY FIVE MILLION DOLLAR
PACKAGE WE'RE PROPOSING IN THIS
EARLY ACTION PACKAGE ADVANCING
FIVE MILLION DOLLARS OF THAT. TO
THE CURRENT YEAR WITH TWENTY
MILLION DOLLARS IN THE BUDGET
YEAR TO CALM --
WE KNOW THAT THEIR A LOT OF
ORGANIZATIONS DOING REALLY
IMPORTANT CRITICAL WORK THERE AT
THE BORDER AND SOME OF THEM HAD
VERY URGENT NEED FOR FUNDS AND
WE KNOW IT'S A PRIORITY OF MANY
OF YOU AS WELL. TO GET THAT
MONEY MOVING AS SOON AS CAPTION
THIS PACKAGE TOGETHER WITH YOU --
THE MOMENT THAT THIS BILL WAS
SIGNED INTO LAW BY THE GOVERNOR
AFTER PASSING THE SENATE AS WELL --
THAT MONEY WILL BEGIN TO START
FLOWING.
AND THE LAST ELEMENT OF THIS
PACKAGE IS MONEY FOR THE
ADMINISTRATION. FOR PUBLIC
UTILITY OF LIABILITY ISSUES
MAKING SURE THAT THE
ADMINISTRATION HAS THE COUNCIL
THAT IT NEEDS WE KNOW THAT THE
P. JEANNIE SITUATION IS TOP OF
MIND FOR THE GOVERNOR ND HIS
ADMINISTRATION.
TOP OF MIND FOR MANY OF YOU TO
MAKE SURE THAT THAT SITUATION IS
HANDLED IN A WAY THAT IS FAIR TO
ALL STAKEHOLDERS.
MAKE SURE THAT WE CONTINUE TO
SAVE A RELIABLE SUPPLY OF POWER
AND MAKE SURE THAT VICTIMS ARE
ADEQUATELY TREATED AND AND A
BANKRUPTCY PROCEEDING.
THERE ARE TWO ELEMENTS IN AB
SEVENTY THREE THIS IS THE
TRAILER BILL --
THE FIRST IS THE RECREATION OF
THAT DISASTER RESPONSE EMERGENCY
OPERATIONS ACCOUNT.
THIS IS THE AUTHORITY THAT
ENABLES THE DIRECTOR OF FINANCE
IN IN A IN AN EMERGENCY TO
TRANSFER MONEY FROM THE ASSET TO
USE THE SPECIAL FUND FOR
ECONOMIC UNCERTAINTIES.
INTO THIS ACCOUNT SO THAT WE CAN
MAKE SURE TO BEGIN RESPONSE TO
FOR DISASTER WEBSTER DEBRIS
REMOVAL OR OTHER EMERGENCY
MEASURES --
WHILE WE CONTINUE TO DEAL WITH
THE RESPONSE IN SERVICE AT
ALREADY HAD LAPSED AT THE END OF
THE YEAR ON JANUARY FIRST.
AND WE WANT TO MAKE SURE BECAUSE
AS MENTIONED WE DON'T KNOW WHEN
THE NEXT EMERGENCY WILL COME
THAT WE RENEW THAT ALREADY AS
SOON AS POSSIBLE.
AND AND WORKING WITH THE STAFF
OF THIS COMMITTEE AS WELL AS THE
STAFF OF THE ASSEMBLY BUDGET
COMMITTEE WE WERE ABLE TO CRAFT
LANGUAGE THAT PRESERVES THE
DIRECTOR FINANCES FLEXIBILITY
WHILE ASO MAINTAINING THE
APPROPRIATE ROLE FOR THE
LEGISLATURE WHICH IS THE
APPROPRIATE --
IN OUR GOVERNMENT TO ENSURE THAT
THEY HAVE A IN THE RIGHT.
BUT THAT DOES FUNDS ARE
AVAILABLE TO BE SPENT IN THE
RIGHT MANNER.
A AND THEN THE LAST THING HERE
BEGAN WORKING WITH THE
LEGISLATURE ARE A SERIES OF
BRIEF AMENDMENTS TO A BILL FROM
LAST YEAR SB ELEVEN NINETY FOUR
AT THIS IS A PRIVACY BILL AS IT
RELATES TO COMMON CARRIERS BOTH.
IN KEEPERS AND HOTEL OWNERS AS
WELL AS BOSTON OTHER CHARTER
TRANSPORTATION COMPANIES --
THEY'RE MANIFESTS OF PASSENGERS
ARE PRIVATE BUT WE WANTED TO
MAKE SURE THAT WHEN IT COMES TO
PUBLIC HEALTH CIVIL RIGHTS
CONSUMER PROTECTION AND PC
INVESTIGATIONS AT THOSE
INVESTIGATORS TO HAVE THE TOOLS.
THAT THEY NEED SO THAT'S AB --
SEVENTY THREE THOSE ARE THE TWO
BILLS BEFORE YOU AND VERY HAPPY
TO TAKE ANY QUESTIONS ON EITHER
THOSE BILLS THANK YOU THANK YOU
VERY MUCH JUST AS A POINT OF
REFERENCE COLLEAGUES BOTH BILLS
AB SEVENTY TWO IN AB SEVENTY
THREE PASSED OFF THE ASSEMBLY
FLOOR WITH NO NO VOTE.
OF FIRST STEPS IN REQUIRE.
THANK YOU SO MUCH MANAGER DO
APPRECIATE THE THE COMING TO
TODAY -- IN
THE BOTTOM LINE IS JUST WANT TO
COMMENT ON TWO ITEMS LIKE COUNTY
TAX BACK FILL AS WELL AS NINE
ONE ONE THIS BACK FILL --
IS COMING FROM BACK TWO THOUSAND
FIFTEEN THE DEVASTATING FIRES
WERE LIKE ANY LOST TWELVE
HUNDRED EIGHTY TWO HOMES.
THEY'RE STILL AT A JUST UNDER
30% REBUILT --
IN ITS BECAUSE STATE.
CINEMA AND NAPA WE CAN EARN AT
TIMES THREE TIMES MORE PER HOUR --
FOLKS JUST CAN'T.
BUY THERE'S NO LATE A THANK YOU
TO THE MINISTRATION WAS A THANK
YOU TO THE PRO TEM MR WOODS INTO
THE BUDGET CHAIR.
FOR FOCUSING IN ON THIS IN THIS
UNIQUE SITUATION --
AND IT'S BEEN DEVASTATING IKNOW
HOUSE ON CENTER NIELSEN SISTER
CAN JUST VERY GRATEFUL FOR THE
FOCUSING PLEASE PRESS OUR THANKS
MISS MOSLER.
THINK ON THE ONE NICE ITEM --
MADAM CHAIR IS ON NINE ONE ONE
UNDERSTAND THIS IS A DOWN
PAYMENT TO BE ABLE TO GET US
WHAT WE NEED IN THE PROJECT
KICKED OFF.
BUT THE BOTTOM LINE --
HAVE TO SPEAK FOR MYSELF WE NEED
TO BE ABLE TO GET A PERMANENT
FIX WHICH MEANS WE GOTTA COME
TOGETHER.
NO MATTER WHAT PARTY YOU BELONG
TO TO BE ABLE TO GET AN ONGOING
SHE ESTABLISHED --
THAT FOUR NINE ONE ONE AND
RELATED EMERGENCY ALERTS --
BECAUSE WE ARE VERY VULNERABLE
ACROSS THE STATE --
WHEN IT COMES TO OUR NEW REALITY
WITH WHILE AND FIRES AND GOD
FORBID EARTHQUAKE SO I HOPE THAT
WE'RE GONNA BE ABLE TO COME TO
AN AGREEMENT THIS YEAR ON THAT
PERMANENT FUNDING SOURCE IN
AGAIN THANK YOU SO MUCH?
SENATOR STERN.
A MEASURE --
WELCOME BACK MR RESPONSE ON
THANK YOU FOR YOUR HARD WORK IN
PUTTING THIS TOGETHER IN A
TIMELY WAY I THINK IT'S CRITICAL
THAT WE MOVE THIS.
IMMEDIATELY HERE SO I'M LOOKING
FOR TO VOTING ON AT ALL TODAY
TWO QUESTIONS ON SEVENTY TWO
ONCE ON THE PROPERTY TAX BACK I
KNOW THEY'RE BEING CONVERSATIONS
WITH LA COUNTY IN VENTURA COUNTY
ON GOING AND THAT.
THEY'RE NOT CURRENTLY INCLUDED
IN THIS --
THIS ROUND ESPECIALLY FOR THE
WALLS THE FIRE PIECE OF IT I
JUST WANT TO GET SOME CLARITY
THOUGH ABOUT THE THOSE
CONVERSATIONS AND WHETHER WE
EXPECT SOME RESOLUTION ON THIS
ISSUE IN THE MAY REEBOKS.
SO ONE OF MY COLLEAGUES CHRIS
HILL SHOULD BE ABLE TO ANSWER IN
MORE DETAIL THE PACKAGE THAT WE
HAVE RIGHT NOW.
DOES HAVE SOME BACK FILL FOR LA
COUNTY ALL THE CHRIS WILL BE
ABLE TO TALK ABOUT WHAT IS IN IS
IN INCLUDED CAN BUT YOU ARE
RIGHT ON VENTURA COUNTY THAT
RIGHT NOW WE'RE WORKING WITH
THEM IT'S NOT IN THIS BILL RIGHT
NOW.
NO GOOD MORNING CRYSTAL
DEPARTMENT OF FINANCE THAT'S
CORRECT I BELIEVE THERE IS --
FIVE MILLION DOLLARS BUILT INTO
AB --
SEVENTY TWO AND I'M SORRY I
MISSPOKE TO POINT TO A TWO POINT.
SEVEN MILLION DOLLARS FOR LOS
ANGELES COUNTY.
BASED ON PRELIMINARY ESTIMATES
TO RECEIVE FROM THEM.
AND THEN WE'VE BEEN A REGULAR
CONTACT WITH THE VENTURA COUNTY
AUDITOR COMPTROLLER'S OFFICE AND
THEY'VE TOLD US ARE WORKING --
BUT THERE OUGHT ASSESSOR TO GET
NUMBERS FORCE AND THEY HOPE TO
HAVE SOMETHING VERY SOON WHICH
WE WOULD THEN PUT MOST LIKELY IN
THE REVISION GREAT YEAH I WOULD
JUST ENCOURAGE I NOTES PAPERWORK
TAKES A LITTLE TIME ESPECIALLY
WITH THESE NEAR TERM EMERGENCIES
AND SOME OF THE BACK THOSE.
DATE BACK THREE YEARS SO IT
TAKES THE TIME BUT JUST
APPRECIATE YOU CONTINUE TO WORK
WITH THOSE LOCAL COUNTY SAN.
FILL IN THAT GAP HOPEFULLY IN
THE MAY REVISE OTHER QUESTION
WAS IS --
THE ON THE ON THE CAL VOLUNTEERS
INVESTMENT CAN YOU JUST FLUSH
OUT FOR US A LITTLE BIT MORE
WHAT WHAT DOES THAT LOOK LIKE --%
THAT THAT THIRTY MILLION JUST IN
A IN A LITTLE WHAT IF YOU COULD
ELABORATE YES SO --
I'LL MAKE IT SO THIS IS A NEW
PROPOSAL SO THE FIRST THING I'LL
SAY IS WE DO HAVE --
WE'RE CONTINUING TO WORK IN THIS
IS DIRECTLY IN THE GOVERNOR'S
OFFICE AS A SO CAL VOLUNTEERS IN
THERE THEY RUN THEIR PROGRAM
THERE ALSO WITHIN THE OFFICE OF
PLANNING AND RESEARCH WHICH
ITSELF IT REPORTS TO THE
GOVERNOR.
A BUT WHAT WE'RE THINKING FOR
THIS BECAUSE YOU KNOW YOU
MENTIONED THE LOCAL GRANTEES
THIS IS FOR A STATEWIDE CAMPAIGN
AND SOME OF THAT IS PUBLIC
AWARENESS MAKING SURE PEOPLE
KNOW THE RESOURCES AVAILABLE TO
THEM.
AND WHERE TO GO --
BUT ANOTHER COMPONENT IS DIRECT --
EMERGENCY PREPAREDNESS TRAINING
AND WHAT WE SAW IN THESE MOST
RECENT FIRES --
SOME PRETTY HEART RENDING
STORIES PARTICULARLY WHEN IT
CAME TO PEOPLE WITH DISABILITIES
AND GROUP HOMES FOR SENIORS WE
WANTED TO MAKE SURE THAT THOSE
POPULATIONS IN PARTICULAR
VULNERABLE POPULATIONS.
HAD ACCESS TO THE RESOURCES THAT
THEY NEED WHEN IT COMES TO THE
NUTS AND BOLTS OF WHAT THAT
PROGRAM WILL LOOK LIKE --
WE HAVE A LOT OF WORK TO DO
THERE AND WE WOULD DEFINITELY
WELCOME YOUR INPUT I WOULD LOOK
FOR TO WORK WITH YOU ON THAT FOR
THE IT'S A IT'S A VERY.
WORTHY CAUSE AND YET THE THOSE
MOST VULNERABLE TO GET LEFT
BEHIND IN.
AND WE CAN'T HAVE IT HAPPEN
AGAIN IT'S IT'S A MORAL CHARGE
FOR ALL OF US AT THANKS FOR
PUTTING SOME ATTENTION ON
REMINDING.
THANK YOU MADAM CHAIR AND I WANT
TO THANK THE DEPARTMENT IN THE
GOVERNOR.
FOR THE FOCUS OF THESE.
EMERGENCY ALLOCATIONS.
AGREE WITH MY COLLEAGUES ON THE
IMPORT --
FOR THE BACK FILL FOR FIRE
VICTIMS I WANT TO FOCUS IN AND
APPRECIATE.
THE TWO ALLOCATIONS FOR DRINKING
WATER -- AND
REALLY THE EMERGENCY PUBLIC
HEALTH NATURE.
OF PEOPLE DEPENDENT ON BOTTLED
WATER FOR DRINKING BATHING AND
COOKING --
THIS DOES NOT REPRESENT THE LONG
TERM SOLUTION THAT I KNOW THE
GOVERNOR IS COMMITTED.
TO BUT WE ARE DEALING WITH
COMMUNITIES IN CRISIS RIGHT NOW.
AND I JUST WANT TO APPRECIATE
THAT RECOGNITION AS WE WORK ON A
LONG TERM SOLUTION.
THAT THIS IS REALLY EMERGENCY
FIRST AID SO THANK YOU VERY MUCH.
THERE ARE MORE LOCK.
SURE I'M JUST CURIOUS JUST THREE
QUICK QUESTIONS ON THE ESTATE
EMERGENCY TELEPHONE NUMBER
ACCOUNT WHY ARE WE MAKING IT
ALONE.
SO THE REASON WE DECIDED TO
PROPOSE THAT IS ALONE IN THIS IS
CAN JUMP IN CONJUNCTION WITH
THAT BUDGET COMMITTEE STAFFS
OVER HERE.
IS THAT WE KNOW THAT THERE IS A
LOT OF CONVERSATION TO BE BAD
ABOUT HOW THIS WILL BE FUNDED
OVER THE LONG TERM --
AND THERE YOU KNOW SOME FOLKS I
KNOW THINK THAT WE MIGHT HAVE
MONEY IN THE GENERAL FUND THE
ADMINISTRATION'S VIEW IS THAT.
MOST OF THE GENERAL FUND MONEY
WE HAD THIS ONE TIME AND TO
ACTUALLY MAKE THESE IMPORTANT
IMPROVEMENTS ON AN ONGOING BASIS
WE NEED A SUSTAINABLE
SUSTAINABLE FORCE --
SOURCE OF FUNDING.
WE THOUGHT THAT THIS. TO SIDING
ON HOW THAT SHOULD BE FUNDED
WASN'T SOMETHING THAT WE COULD
DO IN TWO TO THREE WEEKS --
AND MORE IMPORTANTLY THIS REVIEW
IS REALLY AN EMERGENCY
APPROPRIATIONS WHILE WE HAD THAT
CONVERSATION CONVERSATION OVER
THE LONG TERM.
SO THAT'S WHY WE THOUGHT IT
COULD BE ALONE MAKE SURE WE
BEGIN TO BUILD THOSE
REDUNDANCIES INTO OUR MICROWAVE
NETWORK FOR NINE ONE ONE AND DAD
IN MARCH APRIL MAY JUNE.
HAVE THE CONVERSATION WITH YOU
OVER HOW TO FUND THESE
IMPROVEMENTS OVER THE LONG TERM.
THEM THANK YOU THEN ON THE ON
THE YOU'VE GOT THREE ITEMS.
FOR A DRINKING WATER AND SO
OBVIOUSLY WE'VE WE'VE GOT IT THE
SYSTEMIC.
ISSUES OF WHY WE'RE HAVING THIS
PROBLEM TO BEGIN WITH AND IN
CALIFORNIA.
DO YOU HAVE ANY COMMENTS ON MAY
BE A LONG TERM STRATEGY.
YES -- SO
PUTTING ASIDE THESE EMERGENCY
APPROPRIATIONS AS WELL AS THERE
IS AN ADDITIONAL COMPONENT
MONNING WHICH VERY BRIEFLY --
ENABLE SCHOOLS TO GET BETTER
HELP TO THE AXIS OF THE NEED FOR
SAFE DRINKING WATER IN SCHOOLS.
A LONGER TERM THAT WE PROPOSED
IN OUR BUDGET --
SAFE AND AFFORDABLE DRINKING
WATER PACKAGE WHICH INCLUDES A
COMBINATION OF A FEE ON DRINKING
WATER AS WELL AS FEES PAID BY
AGRICULTURAL PRODUCERS IN OTHER
DAIRY FARMERS THAT PUT NITRATES
INTO THE GROUND.
BUT AGAIN WE KNOW THAT THIS IS
SOMETHING WHERE THERE ARE A LOT
OF DIFFERENT OPINIONS WE KNOW
SOMETHING WE NEED TO WORK WITH
YOU ON AND THAT'S WHY WHILE
THAT'S THE POSITION THAT THE
ADMINISTRATION SUPPORTS.
WE DIDN'T WANT TO PUT IT IN THIS
PARTICULAR PACKAGE THIS PACKAGE
IS STRICTLY FOR THESE EMERGENCY
SUPPLIES EMERGENCY BOTTLED WATER
OF THE TYPE THAT SENATOR MONNING
MENTIONED.
AND WHEN IT COMES TO THAT LONGER
TERM SOLUTION JUNE.
AND SO JUST TO GIVE YOU SOME
FEEDBACK WE'RE GETTING PLENTY OF
RESPONSE AGAINST A WATER TAX SO
JUST.
WANTED JUST.
PLAY THE OTHER THAN THE LAST
QUESTION IS.
THE SETTING ASIDE FIFTEEN
MILLION --
FOR THE PUBLIC UTILITY LIABILITY
ISSUE -- IS
IS THIS IS A SPENDING THAT'S
GOING TO THE ATTORNEY GENERAL'S
OFFICE OR OR DO YOU PLAN ON
HIRING AN OUTSIDE BANKRUPTCY
LAWYER FIRM OR WHAT WHAT WHAT.
WERE THIS WHO TO DO GETS THIS
MONEY TO THE WAY IT'S STRUCTURED
IN THIS BILL AT IT GOES TO THE
DEPARTMENT OF FINANCE BUT IT'S
REALLY FOR THE ADMINISTRATION AS
A WHOLE AND SET YOU KNOW THE IN
BETWEEN THE GENERAL THEY ARE
ALSO VERY INVOLVED IN THIS ISSUE.
THE P. YOU SEE IS INVOLVED IN
THIS ISSUE --
BUT ONE THING THAT WE REALIZED
COMING AND I THINK IT WAS THE
FIRST WE CAN BE ADMINISTRATION
ONE PGA NAY --
FILED FOR BANK I SIGNALED THEY
WOULD FILE FOR BANKRUPTCY AND
TEN FIFTEEN DAYS LATER THEY
ACTUALLY.
COMMUNICATED AND DID THAT FILING
THIS IS A TOP PRIORITY OF THE
ADMINISTRATION THE GOVERNOR'S
HAVING MEETINGS ON IT EVERY DAY
THE CHIEF OF STAFF AND WARY
THEY'RE DEALING WITH IT EVERY
SINGLE DAY SO WHAT WE REALLY
WANTED WAS AND NO REGRETS.
STRATEGY WE DON'T WANT THE POWER
BEING INTERRUPTED.
WE WANT TO MAKE SURE THAT ALL
STAKEHOLDERS INCLUDING THOSE IN
FAVOR ADMINISTRATION IS LOOKING
OUT.
FOR THEIR CLAIMS REPRESENTED IN
THE BANKRUPTCY COURT AS WELL AS
THE BROADER ISSUES SURROUNDING
THAT PROCEEDING --
AND AS MENTIONED WE EXPECT THIS
TO GO ON FOR A LITTLE WHILE SO
WE WANTED TO MAKE SURE THAT THE
ADMINISTRATION.
IN ADDITION TO WHATEVER IS
HAPPENING UP YOU SEE AND THE
ATTORNEY GENERAL'S OFFICE HAS
THE BEST ADVICE POSSIBLE AND ONE
OTHER POINT THAT I SHOULD THAT
IS YOU KNOW RIGHT NOW P. GENIES
IN THE HEADLINES BUT THIS
AFFECTS A RANGE OF COMPANIES IN
ISSUES ACROSS THE STATE OF
CALIFORNIA.
AND WE KNOW P. JEANNIE OF COURSE
IS MOSTLY CENTERED IN NORTHERN
CALIFORNIA.
AND WE WANT TO MAKE SURE
WHATEVER ISSUES COME UP WHATEVER
NEGOTIATIONS ARE HAPPENING THE
ADMINISTRATION HAS THAT ADVICE
THANK YOU VERY MUCH THANK YOU
MANAGER.
THANK YOU SIR SENATOR NIELSEN.
I DO WANT TO THANK THE GOVERNOR.
FOR THE SENSITIVITY. TO THE
ISSUE UP ON THE PARADISE RICH.
AND THE THE PLIGHT OF BUTTE
COUNTY.
THAT RELATES TO THE DISEASE TAX
MONIES.
AND TE TO IN THIS PARTICULAR
CASE A THREE YEAR.
COMMITMENT IS I BELIEVE IN ORDER
BECAUSE OF THE MAGNITUDE.
AND THE FACT THAT THERE HAVE
BEEN OTHER HUGE EVENTS THAT HAVE
BEEN AFFECTING THAT COUNTY.
AND INDEED POTABLE WATER IS A
BIG ISSUE.
UP THERE RIGHT NOW.
I BELIEVE THAT AS WE PROCEED.
WE'RE GOING TO BE ABLE A HAVE
SOLUTIONS.
GOING AHEAD FOR OTHER COUNTIES
AS WELL AND WE NEED TO BE AWARE
OF HOW WE DEVELOP THOSE.
BUT THE KEY IS THE RESPONSE AND
THE IMMEDIACY OF THE NEED RIGHT
NOW.
THE NINE ONE ONE I HAVE NOT BEEN
TO SYMPATHETIC BUTLAST HEARING.
IT WAS ENCOURAGING TO HAVE SOME
DEFINITIVE DISCUSSION.
ABOUT WHAT THAT'S TO LOOK LIKE
AND WHAT IT IS TO ACCOMPLISH IN
NINE TREAT YOU AS WE PROCEED. TO
BE VERY SPECIFIC ABOUT WHAT IS
THE PLAN.
WEEK WE CAN'T JUST RACE HE IN A
DIFFERENT MANNER.
AND THEN NOT LOWERED WILL GET.
AND THERE HAS TO BE A STAGING
AND A GOOD PROGRAM.
GOING AHEAD OF HOW WE'RE GOING
TO UTILIZED AND IN A FORMAT.
THAT NEW INTEGRATED. ONE NINE
ONE ONE SYSTEM.
A BE WATCHING VERY CLOSELY OVER
THAT WITH THE POLICE LAST WEEK I
WAS FOR THE FIRST TIME A LITTLE
BIT ENCOURAGED COULD SEE BROUGHT
FOR SOME DEFINITIVE INFORMATION.
THIRTY ROCK.
THANK YOU MADAM CHAIR OF YOU
KNOW WITH RESPECT TO THE THE
WATER FEE.
AND THE LIKE I I DON'T THINK ANY
OF US OF REPUBLICAN OR DEMOCRAT --
UP HERE.
AND IN THE LARGER BODY --
WOULD ARGUE THAT WE HAVE A
SERIOUS NEED IN CALIFORNIA THEIR
COMMUNITIES.
MANY OF THEM DISADVANTAGED THAT
ARE.
THAN SIMPLY DO NOT HAVE ACCESS
TO WATER THAT'S APPROPRIATE.
TO DRINK OR COOK WITH OR DO
ANYTHING ELSE WITH --
I ASSUME THE MONEY THAT WOULD BE
GENERATED BY A FEE WOULD BE USED
TO PROVIDE OPERATIONAL SUBSIDIES.
TO THESE SMALL DISTRICTS SENSE
THERE APPEARS TO BE MONEY
THROUGH VARIOUS BONDS WATER
BONDS IN THE LIKE AVAILABLE FOR
CAPITAL PROJECTS.
SO WE'RE TALKING ABOUT
OPERATIONAL SUBSIDIES. TO TRY TO
DRIVE THE COST OF THE WATER DOWN
SO IT'S REASONABLE ONCE WE GET
IT TO THE POINT WHERE IT'S
CAPABLE OF BEING CONSUMED.
I'D LIKE TO SEIZE BEFORE THIS
COMES BACK.
AND I KNOW WHAT WILL I'D LIKE TO
SEE SOME ANALYSIS DONE TO
DETERMINE.
HOW MANY OF THESE SMALL WATER
COME COMPANIES ARE
GEOGRAPHICALLY REMOTE WHERE IT
IS ABSOLUTELY IMPOSSIBLE TO
CONNECT?
WITH THE PIPING OF A LARGER
WATER DISTRICT WHETHER WE
REQUIRE THAT.
CONSOLIDATION OR CONNECTION OR
SIMPLY INCENTIVIZE.
AND HOW MANY OR ASSOCIATED
HOWEVER REMOTELY WITH LARGER
WATER DISTRICTS WERE SUCH.
REQUIREMENT OR INCENTIVIZE
CONSOLIDATION COULD OCCUR AND
THEN THE AMOUNT OF MONEY FOR
EXAMPLE THAT WOULD BE NEEDED. TO
OPERATIONALLY SUBSIDIZE THE
SMALL GEOGRAPHICALLY REMOTE
WATER DISTRICTS.
I THINK THAT WOULD HELP US SOME
OF THOSE.
WERE THIS WATER FEE IS A VERY
VERY SENSITIVE ISSUE.
HELP US DEAL WITH THE
SENSITIVITY OF AS WE UNDERSTAND
THE AMOUNT OF MONEY THAT WE NEED.
AND WHERE WE'RE GOING TO GET IT
WHETHER WE GET IT THROUGH WATER
FEE OR WHETHER WE GET IT THROUGH
A COMBINATION OF A WATER FEE AND
SOME TRUST ACCOUNT THAT WE BUILD
TO THE GENERAL FUND OVER A
PERIOD OF YEARS.
OR SOME OTHER MECHANISM --
AND WE CAN ANSWER THOSE
QUESTIONS TODAY I DON'T EXPECT
TO BUT I WOULD LIKE SOMEONE ELSE
IS DONE.
BY SOMEONE.
OTHER THAN THE ADVOCATES FOR THE
WATER FEE --
BEFORE IT COMES BACK IF THAT
MAKES ANSWER YES WE WILL
DEFINITELY LOOKING TO THANK YOU
FOR TOLERATING THE MANAGER.
THANK YOU SEEN NO SENATOR Y.
CASKEY I'D LIKE TO MOVE AB.
SEVENTY TWO FIVE HE WOULD ALLOW
ME TO OPEN UP FOR PUBLIC COMMENT
FIRST I'D BE I'D APPRECIATE THAT.
THANK YOU THOUGH I FEAR Y.
CASKEY.
I'M GOING TO ASK A MEMBERS OF
THE PUBLIC WHO WOULD LIKE TO
PROVIDE PUBLIC COMMENT ON BOTH
AB SEVENTY TWO AND AB.
SEVENTY THREE TO QUEUE UP AND
WE'LL GET STARTED.
NAME AND THE MORNING MADAM CHAIR
AND MEMBERS MEDICINE BY ON
BEHALF OF THE AMERICAN RED CROSS
IN SUPPORT OF AB SEVENTY TWO WE
APPRECIATE THE FUNDING FOR THE
EMERGENCY PREPAREDNESS CAMPAIGN.
TARGETING BUT ONE OF THOSE
COMMUNITIES THROUGHOUT THE STATE --
AND WE'D LIKE TO THANK THE
LEGISLATURE AND THE GOVERNOR'S
OFFICE FOR UNDERSTANDING THE
IMPORTANCE OF EMERGENCY
PREPAREDNESS WE LOOK FOR TO
CONTINUE TO WORK WITH ALL YOU
ALL THANK YOU [inaudible]
BUT JEFF NEAL WITH THE
CALIFORNIA STATE ASSOCIATION OF
COUNTIES WANT.
TO EXPRESS OUR SUPPORT FOR BOTH
BILLS WE DO.
APPRECIATE THE EXTENDED PROPERTY
TAX BACK FILLS --
FOR BUTTE AND LIKE COUNTIES AS
WELL AS THE ASSURANCES THAT ALL
COUNTIES WILL BE INCLUDED --
THEIR BACK FILLS --
WE KNOW THAT IN.
A BUTTE LIKE COUNTIES THEY
DESPERATELY NEED THAT MONEY IN
THE CURRENT YEAR SO WE REALLY
APPRECIATE THE EXPEDITED BASIS
FOR THIS WE SUPPORT THE
UPGRADING THE NINE ONE ONE
SYSTEM WE KNOW THERE'S BEEN AN
ISSUE IN.
STATES ACROSS THE COUNTRY WE'RE
NOT ALONE IN THIS AND WE
APPRECIATE THE FOCUS ON IT --
AND WE WOULD ALSO --
WOULD ALSO LIKE TO EXPRESS OUR
DESIRE FOR FLEXIBILITY IN USING
THE PUBLIC EDUCATION GRANTS FOR
EMERGENCY ALERT AND AND TWO ONE
ONE AS WELL WE'RE HOPING --
YES CAN CAN MAXIMIZE THE X.
ABILITY IN THESE BECAUSE FICTION
IS IS A WHEN IT COMES --
TO THE NEED FOR DISASTER
PLANNING SO AGAIN THANK YOU.
THANK YOU.
CHRISTINA GALLAGHER ON BEHALF OF
THE JEWISH PUBLIC AFFAIRS
COMMITTEE AND THE JEWISH FAMILY
SERVICES SAN DIEGO --
IN SUPPORT OF AB SEVENTY TWO WE
WOULD LIKE TO THINK THE GOVERNOR
AND FINANCE FOR PUTTING FIVE
MILLION IN THE BUDGET TO ADDRESS
THE IMMIGRATION ISSUE AT THE
BORDER.
THIS IMMEDIATE STATE INVESTMENT
ONE SURE MY GREAT FAMILIES DON'T
FALL INTO HOMELESSNESS AND
ULTIMATELY REACH THEIR FINAL
DUSTIN.
DESTINATIONS WITH FAMILY
SPONSORS IN A SAFER FISH AND
DIGNIFIED WAY THANK YOU.
MADELINE COOPER ON BEHALF OF THE
COUNTY OF SAN DIEGO WE ARE IN
SUPPORT OF AB SEVENTY TWO AND
APPLAUD THE GOVERNOR'S OFFICE --
FOR THE RECOGNITION OF THE
IMMIGRATION CRISIS AT THE BORDER
WE ARE VERY SUPPORTIVE OF THE
FIVE MILLION GOING OUT TO THIS
POPULATION AND ALSO ASK.
THAT YOU CAN GET WHAT CONSIDER
PUBLIC AGENCIES BE REIMBURSED
FOR MONIES FOR THIS POPULATION
AS WELL THANK YOU.
THANK YOU VERY MUCH.
I APPRECIATE HIM TO Y. CASKEY
FOR THE MOTION ON AB SEVENTY TWO
PLEASE CALL THE ROLL.
A BE SEVEN TO THE MOTION IS TO
PASS MITCHELL.
MITCHELL AYE NIELSEN.
NIELSEN AYE BILL BILL AYE --
ALSO -- ALSO
I OR TOTAL LEYVA AYE MCGUIRE
MCGUIRE I'D MONEY MONEY I'M MORE
LOCK.
MORE LUCK I MORALE.
PAN PAN I ROTH ROTH AYE SKINNER
AYE SKINNER AYE STERN STERN AYE
STONE.
AMBER.
NUMBER NINE WAY KASKI BECAUSE
THE I IT'S FIFTEENTH YEAR.
THE VOTER THE FIFTEEN TO ZERO
THAT MOTION KHAIRIZAL ENTERTAIN
A MOTION ON AB.
SEVENTY THREE THANK YOU SENATOR
MINING PLEASE CALL THE ROLL AB
SEVENTY THREE THE MOTION IS TO
PASS MITCHELL.
MITCHELL AYE NIELSEN AYE AYE
NIELSEN AYE BELL.
BELL I ALSO DRAWS AYE OR TITLE.
THE TOWN I JONES LABOR.
LEYVA AYE MCGUIRE REQUIRE I'D
MONEY MONEY I'D MORE A LOT MORE
LIKE AYE MORRELL.
PAN.
PAN AYE ROTH.
ROTH AYE SKINNER.
AMBER.
AMBER GUIDE WHAT KASKI.
ACOSTA I FIFTEENTH.
THE MEASURE CARRIES AS WELL.
THANK YOU COLLEAGUES WERE GONNA
MOVE INTO THE INFORMATIONAL
HEARING SECTION OF TODAY'S
AGENDA BUDGET RESILIENCY PENSION
PAYMENTS.
AND RESERVE.
AND YOU KEEP YOUR SEATS THANK
YOU AND WE'RE GOING TO ASK THE
ADDITIONAL MEMBERS OF THE PANEL.
TO COME JOIN US.
THE REPRESENTED FROM THE LA --
HERS STIRRERS
[inaudible]
I'M THINK.
YEAH BETH.
ARE COLLEAGUES I'M GOING TO
SUGGEST THAT YOU MAKE NO AND
HOLD YOUR QUESTION CITY AND
BECAUSE THE PANEL MAY GET TO THE
ANSWER.
IN THEIR PRESENTATIONS.
WE'RE GONNA SEE IF THEY CAN
PSYCHICALLY TAP INTO WHAT YOUR
QUESTIONS WILL BE.
A I HAVE FULL FAITH IN ALL OF
YOU.
THANK YOU WE WILL GO AHEAD AND
GET STARTED.
THANK YOU MADAM CHAIR AND I WILL
BRIEFLY DESCRIBE THE BUDGET
RESILIENCY ACTIONS IN THE
GOVERNOR'S BUDGET AND I'M HAPPY
TO TAKE ANY QUESTIONS INCLUDING
ANYTHING THAT COMES UP FROM
OTHER MEMBERS OF THE PEOPLE
TESTIFYING UP HERE AND THEN
WE'LL HAVE THE PRESENTATIONS IN
ORDER THAT YOU ALL ARE LISTED.
IN THE AGENDA THAT'S OKAY WITH
YOU.
OKAY BEAUTIFUL THANK YOU.
GREAT.
SO THE CALIFORNIA CONSTITUTION
REQUIRES THAT THE GOVERNOR
PROPOSE IN THE LEGISLATURE ADOPT
A BUDGET THAT IS BALANCED IN A
GIVEN YEAR. ONE IMPORTANT
COMPONENT OF THE GOVERNOR'S
BUDGET PACKAGE THIS YEAR IS THAT
HE WANTED TO PROPOSE A BUDGET
THAT'S NOT SIMPLY BALANCE THIS
YEAR BUT IS BALANCED OVER THE
NEXT THREE YEARS [inaudible]
SO.
THE FIRST COMPONENT THAT IS
MAKING SURE THAT WE HAD ACHIEVED
BALANCE OVER THOSE FOLLOWING
THREE YEARS --
WHICH GOES INTO THE FORECAST
PERIOD OF TWENTY TWENTY TO
TWENTY TWENTY THREE BUT WE DON'T
SIMPLY WANT BALANCED
ADMINISTRATION WANTED THAT I
REVENUES AND EXPENDITURES TO BE
STRUCTURALLY BALANCE WHICH MEANS
THAT THE REVENUES.
RECEIVED THAT WE'RE PROJECTING
IN THAT YEAR ALL THE WAY OUT TO
TWENTY TWO TWENTY THREE AND
EXPENDITURES WE'RE PROJECTING.
FOR THAT YEAR OUR BALANCE SO THE
BUDGET WE PROPOSE TO YOU IS
BALANCED OVER THAT MULTI YEAR
PERIOD.
WE ALSO THINK THAT THE
ASSUMPTIONS THAT WE PROPOSE IN
THAT MULTI YEAR FORECAST A
REASONABLE WERE AVERAGING ABOUT
3% REVENUE GROWTH ANNUAL YEAR
OVER YEAR --
WE ALSO PROJECT THAT --
GROWTH IN THE OVERALL ECONOMY IS
A FUNCTION OF A NUMBER OF
FACTORS INCLUDING THE FEDERAL
RESERVE RECENTLY --
RAISING SOME OF THEIR THEIR
INTEREST THEIR BENCHMARK
INTEREST RATES ARE THE EFFECTS
OF THE TAX CUT PACKAGE THAT WAS
PASSED IN DECEMBER TWENTY
SEVENTEEN AT THE FEDERAL LEVEL.
BEGINNING TO WEAR OFF AND THE
FACT THAT OUR REVENUE AND
ECONOMIC ECONOMICS UNIT IS
PROJECTING MORE GROWS IN THE
MIDDLE OF THE INCOME
DISTRIBUTION WHICH OF COURSE IS
VERY GOOD FOR THE STATE OF
CALIFORNIA.
BUT HAS A MODERATING A FACT WHEN
ITCOMES TO THE GROWTH OF OUR
OVERALL STATE REVENUE.
WE DON'T AT THE DEPARTMENT OF
FINANCE PROJECT RECESSIONS.
IT'S VERY HARD TO PREDICT WHEN
OR HOW IT DOWNTURN WILL OCCUR
THERE'S AN OLD JOKE --
THAT ECONOMISTS HAD PREDICTED
NINE OUT OF THE LAST FIVE
RECESSIONS SO WE DON'T KNOW WHEN
IT'LL HAPPEN BUT THAT BEING THAT
BEING SAID --
WE HAVE MODERN WE HAVE MODEL
MODEL THE RECESSION INTERNALLY --
FOR WHAT IF SCENARIO WHITE MIGHT
LOOK LIKE AND WHAT THE FACTS
THAT IT MIGHT HAVE.
THE SCENARIO THAT WE PUT
TOGETHER INTERNALLY --
ASSUMES A RECESSION THAT IS LESS
SEVERE THAN THE GREAT RECESSION
THAT WE SAW IN TWO THOUSAND AND
EIGHT BUT MORE SEVERE THAN THE
RECESSION THAT WE SAW AT THE END
OF THE FIRST DOT COM BOOM AT THE
END OF THE NINETEEN NINETIES.
AND UNDER THAT SCENARIO --
WE PROJECTED A LOSS IN REVENUE
OF TWENTY FIVE BILLION DOLLARS
OVER ONE YEAR.
AND SIXTY SIX BILLION DOLLARS
OVER [inaudible]
TO EVEN ASSUME THAT PROPOSITION
NINETY EIGHT WOULD BE FUNDED AT
ITS MINIMUM LEVEL YOU'D STILL
HAVE ABOUT FORTY BILLION DOLLARS
IN -- THE
BUDGET ISSUE THAT YOU WOULD HAVE
TO ADDRESS SO THESE ARE THE
REASONS THAT WE WANT TO BE READY
FOR NO MATTER WHAT HAPPENS AND
WE WANTED TO BUILD.
RESILIENCY RIGHT NOW.
AND WE REALLY PUT IT IN JUST A
COUPLE OF IMPORTANT CATEGORIES
THE FIRST IS THE RATIO OF ONE
TIME TO ON GOING SPENDING.
WE KNOW AS WE DISCUSSED LAST
MONTH THAT THE ADMINISTRATION AS
WELL AS THE LA OUT IS PROJECTING
A SURPLUS IN THE NEIGHBORHOOD OF
TWENTY ONE BILLION DOLLARS.
BUT ALMOST ALL ABOUT SURPLUS IS
ONE TIME AND IF WE COMMITTED TO
ONGOING SPENDING IT WOULD
INCREASE THE MAGNITUDE OF THE
BUDGET PROBLEM THAT WE WOULD
FACE IN FUTURE YEARS.
IN THE EVENT OF A RECESSION SO
WHAT THE ADMINISTRATION PROPOSES
AND ITS BUDGET IS A RATIO OF SIX
TO ONE SO THAT MEANS FOR EVERY
DOLLAR.
THAT WE'RE COMMITTING AN ON
GOING SPENDING WE'RE COMMITTING
ABOUT SIX DOLLARS IN ONE TIME
SPENDING AND THAT SPENDING THAT
WILL NOT RECUR SHOULD A DOWNTURN
OCCUR IN THE BUDGET YEAR OR IN
FUTURE YEARS.
THE SECOND THING THAT WE'RE
DOING IS PROPOSING PAYING OFF A
NUMBER OF BUDGETARY DEBTS AND
DEFERRALS AND THAT INCLUDES TWO
POINT FOUR BILLION DOLLARS.
IN BUDGETARY DATS RELATED TO
LOANS FROM SPECIAL FUNDS ONES
FROM TRANSPORTATION WAIT FEW
LOANS AND SOME OTHER CATEGORIES
AND WE WANT TO MAKE SURE.
THESE LOANS WERE PART OF THAT
INITIAL WALL AND DOLLARS AT
START OF THIS DECADE SLOWLY BUT
SURELY THE STATE HAS BEEN
CHIPPING AWAY AT THAT AND WE
THINK IN THIS TIME WHEN.
THE ECONOMY REMAINS STRONG WHEN
WE'RE IN A GOOD BUDGET PLACE WE
WANT TO MAKE SURE TO PAY OFF THE
REMAINDER OF THOSE BUDGETARY
DEBT LOANS.
ARE THE LA --
HAS MADE A COMMENT SUGGESTING.
THAT WE MAKE SURE THAT WE PAY
OFF THOSE LOANS BUT OVER A
SPECIFIED PERIOD WE KNOW THAT'S
A CONVERSATION THAT WE NEED TO
HAVE WE THINK OF THAT PAYING OFF
THOSE LOANS IS CONSISTENT WITH
COULD BUDGET PRACTICE GOOD
PHYSICAL HYGIENE.
AND IS COMPLEMENTARY TO OUR
PROPOSALS TO MAKE UNPRECEDENTED
CONTRIBUTIONS INTO ABOUT THE
CALPERS AND CAL STIRS SYSTEMS.
FOR OUR DEFERRALS WERE ALSO
PROPOSING REVERSING THE DEFERRAL
THAT MOVED PAYROLL FOR THE STATE
FROM JUNE TO JULY THE NEXT
FISCAL YEAR --
AS WELL AS A PAYROLL AS WELL AS
A DIFFERENT TO CALPERS FOR THE
QUARTERLY PAYMENT THAT WE SEND
THEM IN THE SUMMER AND AGAIN WE
THINK THESE WERE DECISIONS THAT
WERE MADE IN A BUDGET CRISIS.
NOW AGAIN THAT WE'RE IN A PLACE
WHERE THE ECONOMY FOR NOW IS
STRONG AND ON SOLID FOOTING WE
THINK THIS IS THE RIGHT MOVE TO
REVERSE THOSE DEFERRALS AND GET
US BACK TO WHAT IS CONSIDERED
NORMAL.
BUDGET PRACTICE.
AT THE SECOND COMPONENT OF THIS
IS BUILDING UP OUR RESERVES SO
IN ADDITION TO OUR RAINY DAY
FUND WHICH WITH THE EXPECTED
DEPOSIT IN THE BUDGET YEAR OF
ONE POINT EIGHT BILLION DOLLARS --
WE'LL GO FROM THIRTEEN POINT
FIVE TO FIFTEEN POINT THREE
BILLION DOLLARS IN THAT RAINY
DAY ACCOUNT WERE ALSO PROPOSING
A SPECIAL FUND FOR ECONOMIC
UNCERTAINTIES THIS IS THE
STATE'S EMERGENCY ACCOUNT.
AND ALSO AS WE DISCUSSED IN AB
SEVENTY THREE IN AN EMERGENCY
BETRAY THE DISASTER RECOVERY
EMERGENCY OP --
AND THEN FINE ARE PROPOSING
SEVEN HUNDRED MILLION DOLLARS
FOR THE SAFETY NET RESERVE WHICH
WOULD MORE THAN QUADRUPLE THE
AMOUNT OF MONEY IN THAT RESERVE
AND I WANT TO MAKE A BRIEF
COMMENT ABOUT THAT BECAUSE I
KNOW THIS IS SOMETHING THAT SOME
MEMBERS.
MAY HAVE SOME QUESTIONS UP THAT
RESERVE WAS CREATED LAST YEAR
WITH INITIALLY TWO HUNDRED
MILLION DOLLARS IT'S DESIGNED
FOR BOTH CAL WORKS AND FOR MEDI
CAL IN THE EVENT OF A DOWNTURN.
LAST YEAR'S LANGUAGE --
HAD THE ADMINISTRATION TASKED
WITH PUTTING TOGETHER A
METHODOLOGY FOR HOW WE WOULD
NUMBER ONE PUT CONTRIBUTIONS
INTO THAT ACCOUNT.
AND NUMBER TO THINK ABOUT SOME
SORT OF FORMULA OR STRUCTURE FOR
TAKING OUT THOSE FINDS IN THE
EVENT OF AN EMERGENCY I IN THE
EVENT OF A DOWNTURN I'M SORRY.
SO WHAT WE DID WITH THIS
PROPOSAL LOOKINGINTO IT WE FELT
THAT OUR PROPOSAL RIGHT NOW.
IS GETS CONSISTENT WITH THOSE
GOALS BUT A LITTLE BIT MORE
FLEXIBLE SO WHEN IT COMES TO THE
MONEY GOING AND THE METHODOLOGY
WE COULD HAVE WORKED ON
SUGGESTED LOOKING AT CASELOAD
AND TRYING TO USE A NUMBER OF
DIFFERENT MEASURES.
WE THOUGHT WHATEVER THOSE
MEASURES WERE THERE CERTAINLY
LESS THAN SEVEN HUNDRED MILLION
DOLLARS THE AMOUNT THAT WE'RE
PROPOSING PUTTING IN RIGHT NOW.
AND WE THINK A LITTLE BIT MORE
FLEXIBILITY IN TERMS OF HOW WE
FUND THAT ACCOUNT IS IN ORDER
AND THAT'S A CONVERSATION THAT
WE KNOW WE WANT TO HAVE A WITH
ALL OF YOU.
AND SIMILARLY WHEN IT COMES TO
MONEY COMING OUT OF THAT ACCOUNT --
WE KNOW A LOT OF OUR BUDGETING
IN OTHER AREAS OF THE STATE
BUDGET IS BY FORMULA BUT GIVEN
IN A DOWNTURN AT BOTH OF THESE
PROGRAMS WILL HAVE TO MAKE UP
GROUND BUT IN MAY DIFFER BASED
ON THE NATURE OF THE DOWNTURN.
HOW MUCH IN THE WHOLE THE CAL
WORKS PROGRAM MAYES VERSUS AS
THE MINISTER IS TO HELP GRAHAM'S --
CONNECT THAT'S RIGHT WITH THE
NEEDS OF THE LEGISLATURE SO WE
WANTED TO KEEP THAT FLEXIBLE FOR
RIGHT NOW --
SO QUADRUPLE THAT ACCOUNT BRING
IT TO NINE HUNDRED MILLION
DOLLARS BUT WHEN IT COMES TO HOW
MUCH SHOULD GO TO MEDI CAL HOW
MUCH SHOULD GO TO CAL WORKS
PRESERVE THE FLEXIBILITY ABOUT
THE ADMINISTRATION AND THE
LEGISLATURE.
A AND THEN THE LAST POINT I'LL
MAKE IS ON THE PAYMENTS INTO THE
PURSE STARS AND OTHER RETIREE
LIABILITIES SYSTEM SO WE'RE
PROPOSING AT THREE BILLION
DOLLAR PAYMENT TEMPERS
SUPPLEMENTAL THAT'S ON TOP OF
OUR EXISTING.
OBLIGATIONS AS A STATE TO MAKE
AND WE'RE PROPOSING AND WE'RE
WORKING WITH CALPERS TO
STRUCTURE THAT PAYMENT BUT THOSE
PAYMENTS WILL BE MADE ON BEHALF
OF THE GENERAL FUND DATA THAT'S
SOMETHING THAT THE LA --
HAS POINTED OUT --
COULD BE COULD PRACTICE AS WELL
SO WE BELIEVE THAT MONEY'S
COMING FROM THE GENERAL FUND
WILL BE MADE ON BEHALF OF THE
GENERAL FUND. FOR ITS
OBLIGATIONS AND FOR THE CAL
STIRS SYSTEM --
WE'RE PROPOSING ONE POINT ONE
BILLION DOLLARS IN PROP TWO
PAYMENTS --
IN THE BUDGET YEAR AN OVERALL --
GIVEN THAT WE ARE PAYING OFF OUR
BUDGETARY DADS.
OUT OF THE BUDGET SURPLUS IN ONE
TIME FUNDING WE'RE PROPOSING
THAT NOT JUST THIS YEAR BUT IN
ALL FUTURE YEARS OVER THE
BUDGETARY FORECAST PERIOD.
TWO TWENTY TWO TWENTY THREE ALL
PROP TWO PAYMENTS WILL BE
DEVOTED TO LONG TERM RETIREE AND
HEALTH CARE LIABILITIES THAT
INCLUDES THE CAL STIRS SYSTEM.
THAT INCLUDES PAYMENTS TO REPAY
THE SURPLUS MONEY INVESTMENT
FUND LOAN THAT WAS USED TO MAKE
A SUPPLEMENTAL PAYMENT TO
CALPERS TWO YEARS AGO.
AND THAT INCLUDES PAYMENTS INTO
THE TRUST FUND.
SO WE THINK THAT'S APPROPRIATE
USE OF THOSE PRODUCTS TO FUNDS
AND GIVEN THAT WE PAID OFF OUR
BUDGETARY DADS WE HAVE THE
ABILITY TO DEVELOP THOSE
PAYMENTS EXCLUSIVELY. TO THAT
AND THE LAST POINT I'LL MAKE AND
THIS ISN'T DIRECTLY IN THE
BUDGET RESILIENCY BUCKET BUT AS
YOU KNOW IN ADDITION TO ALL DAYS
WE ALSO HAVE MONEY DEVOTED TO
SCHOOLS THE SCHOOLS SHARE --
BE CAL STIRS LIABILITY SO IT'S
NOT BUDGET RESILIENCY FOR THE
STATE BUT IT CERTAINLY MEANS A
LOT FOR THE SCHOOLS AND WE'VE
BEEN WORKING VERY CLOSELY --
WITH CAL STAR IS ON HOW EXACTLY
TO STRUCTURE THOSE PAYMENTS BUT
WE'RE PROPOSING SENDING THREE
BILLION DOLLARS TO CAL STARS ON
BEHALF OF THE SCHOOLS. SEVEN
HUNDRED MILLION DOLLARS OF THAT
WOULD BE USED TO REDUCE DIRECTLY
TO SCHOOLS PAYMENTS TO THE
SYSTEM IN THE BUDGET YEAR AND IN
THE TWENTY TWENTY TWENTY TWENTY
ONE YEAR.
AND THE REMAINDER WOULD BE
APPLIED TO THE LONG TERM BALANCE
TO REDUCE SCHOOLS --
CONTRIBUTION RATE OVER THE LONG
TERM WE'RE ESTIMATING BY ABOUT
HALF A PERCENTAGE POINT ALTHOUGH
WE KNOW THAT THAT CAN CHANGE --
SO THE LAST THING I WILL SAY IS
WE ARE CLOSELY MONITORING ALL OF
THIS WE KNOW THAT THERE'S BEEN A
LOT OF ATTENTION.
IN THE LAST COUPLE DAYS AND
WEEKS OVER THE STATE'S CASH
POSITION AND HOW REVENUE
PROJECTIONS ARE COMING AND WE
BELIEVE THAT BECAUSE OF CHANGES
IN THE FEDERAL.
TAX SYSTEM THAT WE DISCUSSED
THAT TAX LEGISLATION FROM
DECEMBER TWENTY SEVENTEEN A LOT
OF PEOPLE IN TWENTY SEVENTEEN
XCELERATED THEIR PAYMENTS --
THAT WOULD NORMALLY PAY IN
JANUARY OR APRIL TWENTY EIGHTEEN
AND INSTEAD PAID THOSE IN --
TWENTY SEVENTEEN WITH THE PLEA
FOR THOSE WHO QUALIFY FOR A
HIGHER STATE AND LOCAL TAX
DEDUCTION.
SO FOR THAT REASON WE SAW LAST
PAYING AND WE'RE THINKING THAT A
LOT OF THE PAYMENTS THAT HAD
BEEN MADE IN DECEMBER TWENTY
SEVENTEEN WILL NOW BE MADE OVER
THE NEXT COUPLE MONTHS AND
ESPECIALLY IN A BRAWL WHEN TAX
DAY COMES TO SO.
IN MARCH AND APRIL AND MAY WE
WILL BE IN VERY CLOSE TOUCH WITH
YOU WE'LL BE WATCHING THOSE
REVENUE PROJECTIONS TO MAKE SURE
THAT THE BUDGET WE PROPOSE WITH
THE MAY REVISE WORKING WITH YOU.
CONTINUES TO BE BALANCING
REFLECTS THE MOST UP TO DATE --
VIEW OF THE STATE'S CASH
POSITION AND HAPPY TO ANSWER ANY
QUESTIONS ONCE EVERYONE WRAPS U
THANK YOU.
THANK YOU VERY MUCH NEXT
COLLEAGUES ARE GOING TO HEAR
FROM AND HOLINSHED WITH LA HELLO
WELCOME.
THANK YOU MADAM CHAIR AND
MEMBERS --
YOU SHOULD HAVE A HAND OUT IN
FRONT OF YOU THAT I'LL BE
SPEAKING FROM HIS HAND OUT IS
ALSO BASED ON A REPORT THAT OUR
OFFICE RELEASED A FEW DAYS AGO
WHICH I HOPE YOU ALSO HAVE A
COPY OF IN FRONT OF YOU.
I'M IS SO I'M JUST GONNA HAVE
SORT OF THREE AREAS OF COMMENTS
HERE THE FIRST IS.
TO RE CAP --
THE OVERALL STRUCTURE OF THE
GOVERNOR'S BUDGET THINKING ABOUT
THE MAJOR COMPONENTS OF THAT
BUDGET.
AND THEN I'LL GIVE SOME COMMENTS
FROM OUR OFFICE IN HELPING THE
LEGISLATURE TO EVALUATE THAT
STRUCTURE IN THINKING ABOUT EACH
OF THOSE MAJOR COMPONENTS.
BATTLE TRANSITION SPECIFICALLY
TO THE GOVERNOR'S PROPOSALS --
AND GIVE OUR OFFICES COMMENTS
AND RECOMMENDATIONS ON THOSE AND
THOSE FALL INTO THREE AREAS --
RESERVES PAYING OFF RETIREMENT
LIABILITIES AND PAYING OFF
BUDGETARY BORROWING.
ON THE FIRST PAGE.
OUR THE GOVERNOR'S PROPOSED
BUDGET STRUCTURE HAS FOUR MAJOR
COMPONENTS.
THE GOVERNOR PROPOSES INCREASING
RESERVES BY ABOUT TWO BILLION
DOLLARS WHICH WOULD INCREASE
TOTAL RESERVES I WROTE RELATIVE
TO THE TWENTY EIGHTEEN NINETY
BUDGET ACT AND THAT WOULD
INCREASE TOTAL RESERVES. TO
ROUGHLY EIGHTEEN BILLION DOLLARS
THE LARGEST OF THIS WOULD OF
COURSE BE IN THE BUDGET
STABILIZATION ACCOUNT WHICH IS
THE STATE'S CONSTITUTIONAL
RESERVE CREATED BY PROPOSITION --
TWO THERE WAS ALREADY A PRETTY
GOOD DESCRIPTION OF THE SAFETY
NET RESERVE BUT THAT WAS ALSO
INCREASING FROM TWO HUNDRED
MILLION TO NINE HUNDRED MILLION.
AND THEN A PRETTY KEY FEATURE OF
THE GOVERNOR'S BUDGET STRUCTURE
IS HIS NEARLY ELEVEN BILLION
DOLLAR PACKAGE TO REPAY US
STATES DOUBTS IN MY ABILITIES.
THESE FALL INTO TWO MAJOR AREAS
THE FIRST IS TO ADDRESS LONG
TERM RETIREMENT LIABILITIES
THAT'S ABOUT SIX POINT FOUR
BILLION DOLLARS.
AND THE SECOND IS TO ADDRESS
BUDGETARY BORROWING THOSE ARE
AMOUNTS OF THE GENERAL FUND HAS
INCURRED IN PAST YEARS IN ORDER
TO ADDRESS BUDGET PROBLEMS THAT
ARE STILL OUTSTANDING.
NEXT THE GOVERNOR PROVIDES
ROUGHLY FIVE BILLION DOLLARS IN
ONE TIME SPENDING.
AND TWO POINT SEVEN BILLION
DOLLARS IN ONGOING SPENDING BUT
ACCORDING TO THE
ADMINISTRATION'S ESTIMATES THAT
TWO POINT SEVEN BILLION WOULD
RISE TO AROUND THREE POINT FIVE
BILLION IN THE OUT YEARS ONCE
FULL IMPLEMENTATION OF ALL OF
THESE PROGRAMS IS ACHIEVED.
ON THE NEXT PAGE --
WE HAVE SOME KEY CONSIDERATIONS
FOR THE LEAD X. ABOUT EACH OF
THE STRUCTURAL COMPONENTS OF THE
BUDGET EACH OF THESE.
PIECES THAT ARE VERY IMPORTANT
FOR THINKING ABOUT THE FUTURE OF
THE BUDGET AND IT'S LONG TERM
TRAJECTORY.
THESE FALL INTO GENERALLY THREE
AREAS THE FIRST IS THINKING
ABOUT A RESERVE TARGET WHAT IS
THE TARGET LEVEL OF RESERVES
THAT THE LEGISLATURE WOULD LIKE
TO ACHIEVE BY THE END OF THE
YEAR.
THE SECOND IS CONSIDERING
ALLOCATING ONE TIME RESOURCES
AMONG DEBT REPAYMENTS AND THEN
PROGRAMMATIC COMMITMENTS.
AND THEN THE THIRD DECIDING THE
LEVEL OF ON GOING SPENDING FOR
THE BUDGET.
THERE'S A LOT OF INFORMATION
HERE NOT GONNA WALK THROUGH EACH
OF THESE --
CONSIDERATIONS IN DETAIL BUT
JUST WANT TO HIGHLIGHT SOME OF
THE IMPORTANT ONES.
SO IN THINKING ABOUT RESERVES
THOSE ARE AVAILABLE FOR TO KEEP
PURPOSE SAYS ONE IS OF COURSE A
RECESSION WHEN THE BUDGET CAN
FACE MULTI BILLIONS OF DOLLARS
IN A BUDGET PROBLEM OVER THE
COURSE OF A NUMBER OF YEARS.
RESERVES ARE ALSO AVAILABLE FOR
UNEXPECTED EVENTS INCLUDING
CRISIS IS RELATED TO NATURAL
DISASTERS AND OTHER COSTLY
EVENTS FOR THE STATE.
IN THINKING ABOUT A RECESSION
SPECIFICALLY THE LEGISLATURE
WILL WANT TO CONSIDER WHAT SIZE
OF A RECESSION DOESN'T WANT TO
PREPARE.
FOR BEING PREPARED FOR A LARGER
MORE SUSTAINED RECESSION WOULD
HAVE BEEN CALLED OF COURSE
INVOLVE HIGHER LEVELS OF
RESERVES.
A SECOND IMPORTANT CONSIDERATION
IS WHAT ACTIONS OF THE
LEGISLATURE WILLING TO TAKE
DURING A RECESSION TO ADDRESS A
BUDGET PROBLEM.
SO THOSE ACTIONS COULD BE
REDUCING PROGRAMMATIC SPENDING
INCREASING REVENUES ARE SHIFTING
COSTS AS THE STATE HAS DONE IN
PREVIOUS RECESSIONS. TO THE
EXTENT THAT YOU'RE MORE WILLING
TO TAKE THOSE ACTIONS DURING A
RECESSION LESS RESERVES ARE
NEEDED BUT IF YOU'D PREFER TO
AVOID THOSE ACTIONS THAN MORE
RESERVES ARE NEEDED.
THINKING ABOUT ALLOCATING ONE
TIME COMMITMENTS BETWEEN THAT
AND PROGRAMS THIS IS REALLY A
TRADE OFF BETWEEN THE STATE'S
IMMEDIATE NEEDS VERSES ITS
FUTURE NEEDS.
AND THE REASON I SAY THAT IS
BECAUSE ALLOCATING A DOLLAR
TODAY TOWARD DAD WELL ACTUALLY
FREE UP MORE THAN A DOLLAR ON
GOING.
OVER THE COURSE OF THE BUDGET
AND THAT'S SOMETHING THAT GRAHAM
COMMITMENTS BUT OF COURSE THIS
PRESENTS A TRADE OFF BECAUSE
THAT DOLLAR THAN CAN'T BE USED
FOR PROGRAMS TODAY.
SO IT'S A TRADE OFF BETWEEN
ALLOCATING THAT DOLLAR
IMMEDIATELY TO THE STATE'S
IMMEDIATE NEEDS VERSUS
ALLOCATING THAT DOLLAR IN THE
FUTURE.
FINALLY CONSIDERING THE LEVEL OF
ON GOING COMMITMENTS THAT THE
BUDGET HAS CAPACITY TO TAKE ON
THIS IS REALLY A BASIC
CALCULATION BETWEEN HOW MUCH YOU
EXPECT REVENUES TO GROW RELATIVE
TO CURRENT ONGOING PROGRAM
COMMITMENTS.
OF REVENUES ARE EXPECTED TO GROW
FASTER THAN CURRENT ONGOING
PROGRAMS THAT AND THERE ARE SOME
CAPACITY TO MAKE THOSE
COMMITMENTS AND IF NOT THEN
THERE'S PERHAPS LESS CAPACITY TO
MAKE ON GOING COMMITMENTS.
SOME OF THE TRANSITION FROM THE
SORT OF BIG PICTURE --
STRUCTURAL THING --
TO THE RESERVES AND THE DEBT
PROPOSAL SPECIFICALLY AND GIVE
OUR OFFICES COMMENTS.
SO THE GOVERNOR PROPOSES A TOTAL
RESERVE LEVEL OF EIGHTEEN
BILLION DOLLARS AS I ALREADY
MENTIONED AND JUST TO PUT A
LITTLE CONTEXT AROUND THIS
EIGHTEEN BILLION.
OUR OFFICE HAS ESTIMATED IN
HOUSE REPORTS BUT ABOUT TWENTY
BILLION WOULD BE REQUIRED TO
COVER THE BUDGET PROBLEM
ASSOCIATED WITH A MILD RECESSION.
AND ABOUT FORTY BILLION WILL BE
NEEDED TO COVER THE BUDGET
PROBLEM ASSOCIATED WITH A MODERN
RECESSION PROVIDED THAT THE
LEGISLATURE DID NOT WANT TO TAKE
ANY OF THOSE ACTIONS REDUCING
SPENDING OR INCREASING REVENUES.
IN A NOVEMBER OF LAST YEAR WE
RELEASED OUR FISCAL OUTLOOK OR
ANNUAL PUBLICATION AND WE FOUND
THAT THREE BILLION AN ON GOING
COMMITMENTS WAS SUPPORTABLE OVER
THE BUDGET MULTI YEAR.
PROVIDED THAT THE LEGISLATURE
ENTERED A RECESSION SCENARIO
WITH TWENTY FIVE BILLION IN
RESERVES.
SO IF LEGISLATURE WOULD LIKES
YOU WOULD LIKE TO CONCUR WITH
THE ADMINISTRATION'S APPROACH TO
TAKE ON ROUGHLY THREE BILLION IN
ON GOING COMMITMENTS.
THEN WE DO THINK THAT AT THIS
TIME MORE RESERVES WOULD BE
PRUDENT.
WE HAVE TWO OPTIONS FOR THE L. --
FOR THE LEGISLATURE TO CONSIDER
AS IT THINKS ABOUT PERHAPS
BUILDING MORE RESERVES ONE IS OF
COURSE TO JUST PUT A DEPOSIT
INTO ONE OF THE STATE'S OUR CASH
RESERVES ACCOUNTS.
AND ANOTHER WOULD BE TO PREPAY
RETIREMENT CONTRIBUTION THIS IS
A LITTLE BIT TECHNICAL HAPPY TO
GET INTO AN IN MORE DETAIL IF
YOU'RE INTERESTED.
BUT ESSENTIALLY WHAT IT MEANS IS
THE STATE WOULD TRANSFER TO
CALPERS EARLY --
A PAYMENT THAT CALPERS WOULD
HOLDEN TRUST ESSENTIALLY LIKE
CALPERS HOLDING THE RESERVE FOR
THE STATE.
AND THEN THAT COULD BE APPLIED
TO A FUTURE REQUIRED RETIREMENT
CONTRIBUTION.
EDGE OF THIS APPROACH IS THAT
THE RESERVE OF THAT MONEY ONE
IT'S HELD A CALPERS CAN ON A
SLIGHTLY HIGHER RATE OF RETURN
THAT WOULD EARN.
BEING IN CASH RESERVES BUT THE
TRADE OFF OF COURSE IS WITH THAT
WITH GREATER RETURN COMES A
GREATER LEVEL OF RISK AND SO
THAT WOULD BE SOMETHING THAT
WOULD NEED TO BE CAREFULLY
CONSIDERED.
ON THE NEXT PAGE JUST TO GIVE A
BRIEF RECAP OF THE GOVERNOR'S
RETIREMENT LIABILITY PROPOSAL
SPECIFICALLY. TO THE GOVERNOR
PROPOSES MAKING THREE IS
SUPPLEMENTAL PENSION PAYMENTS
THESE ARE IN CONTRAST TO WHAT I
JUST TALKED ABOUT ABOUT --
PREPAYING A RETIREMENT LIABILITY
THIS IS A SUPPLEMENTAL PAYMENTS
THIS IS IN ADDITION TO A PAYMENT
AS OPPOSED TO INSTEAD OF A
FUTURE PAYMENT.
THESE THREE ARE THREE BILLION
DOLLARS FOR CALPERS ONE BILLION
DOLLARS FOR CAL STIRS FOR THE
STATE'S SHARE OF THE
CONTRIBUTION FOR THE STATE'S
TRUCK LIABILITY EXCUSE ME.
AND TWO POINT THREE BILLION TO
CAL STIRS FOR THE DISTRICTS
CHAIR OF THE LIABILITY IN MOST
OF MY COMMENTS ARE JUST GONNA
FOCUS ON CALPERS AND CASTERS FOR
THE STATE'S SHARE.
SO YOU'RE GONNA BE HERE PROBABLY
MORE ABOUT THIS FROM THE
ACTUARIES BUT JUST TO LAY THIS
OUT A LITTLE BIT.
THERE ARE DIFFERENT WAYS TO
THINK ABOUT THE SAVINGS THAT THE
STATE CAN ACHIEVE FROM EACH OF
THESE PAYMENTS THE STAVING COM
BASICALLY FROM LOWER SLIGHTLY
LOWER OVER THE VERY LONG TERM
REQUIRED EMPLOYER CONTRIBUTIONS
TO BOTH OF THE SYSTEMS.
AND THERE'S TWO DIFFERENT
ESTIMATES FOR THINKING ABOUT HOW
THE SAVINGS CAN BE ACHIEVED ONE
IS WHAT'S CALLED AN ACTUARIAL
MODEL AND ONE IS WHAT'S CALLED A
STOCHASTIC MODEL.
THE ACTUARIAL MODEL SAYS WE'RE
GONNA ASSUME ONE FIXED RATE OF
RETURN IS ACHIEVED EVERY YEAR
FOR THE NEXT FEW DECADES.
SO SAY 7% RATE OF RETURN EVERY
YEAR FOR THE NEXT TWO DECADES.
THAT IS OBVIOUSLY UNLIKELY IN
THE REAL WORLD AND SO STOCHASTIC
MODELS SAYS WHAT WOULD HAPPEN IF
THE RATE OF RETURN IS ABOVE THIS
OR BELOW THIS AND WE LOOK AT
THOUSANDS OF DIFFERENT --
THE ACTUARIES LOOKING THOUSANDS
OF DIFFERENT MODELS AT DIFFERENT
POSSIBLE RETURN ASSUMPTIONS.
SO THE SAVINGS FROM EACH OF THE
SUPPLEMENTAL PAYMENTS WOULD VERY
DEPENDING ON WHETHER YOU LOOK AT
THE ARCHERY ON MODEL OR THE
STOCHASTIC MODELS.
WITH CALPERS THE STOCHASTIC
MODEL IS A LITTLE BIT HAD
ACTUALLY OF THE OXFORD A MODEL
THERE'S LITTLE MORE SAVINGS.
WITH CAL STIRS THERE'S LESS
SAVINGS AND IN FACT WITH THE
CASTERS STATE PAYMENT IN ROUGHLY
AND I'M SORRY I SHOULD BE VERY
CLEAR THAT'S OVER THE NEXT FEW
DECADES NOT OVER THE INFINITE
TIME HORIZON BUT OVER THE NEXT
FEW DECADES.
SO IN FACT OVER THE NEXT FEW
DECADES --
ON THE STATE ARE PAYMENT
FORECASTERS THERE'S A 15220%
CHANCE THAT THE STATE WOULD
ACTUALLY ACHIEVE NO SAVINGS AS A
RESULT OF THAT ONE BILLION
DOLLARS SUPPLEMENTAL PAYMENT.
THINKING --
THEN NEXT SORT OF SPECIFICALLY
ABOUT HOW THE CALPERS
CONTRIBUTION WOULD WORK.
THERE ARE FIVE DIFFERENTPLANS --
WITHIN CALPERS THOSE EACH GET
VARYING CONTRIBUTIONS FROM THE
GENERAL FUND AND THEN OTHER
FUNDS LIKE SPECIAL FUNDS --
THEY INCLUDE MISCELLANEOUS PEACE
OFFICER AND FIREFIGHTERS AND
HIGHWAY PATROL DEPENDING ON WHAT
TYPE OF EMPLOYEE --
HIS OF THE STATE.
AND THE ADMINISTRATION'S PLAN AS
WE CURRENTLY UNDERSTAND IT WOULD
ESSENTIALLY DIVIDE THE
SUPPLEMENTAL PAYMENTS AMONG
THOSE PLANS ACCORDING TO HOW
MUCH THE GENERAL FUND
CONTRIBUTES TO THEM.
SO SINCE HIGHWAY PATROL DOESN'T
HAVE ANY GENERAL FUND
CONTRIBUTION IT WOULD NOT
RECEIVE A SUPPLEMENTAL PAYMENT.
BUT THE OTHER PLANS ALL WOOD AND
THEN THE BENEFIT ASSOCIATED WITH
A SUPPLEMENTAL PAYMENT WOULD BE
ACCRUED TO EACH OF THE PLANS
THAT.
RECEIVE THE PAYMENT ARE BOTH TO
SPECIAL FUNDS AND TO THE GENERAL
FUND.
TURNING TO THE NEXT PAGE THIS
PROVIDES TO SIR HIGH LEVEL
COMMENTS --
ON EACH OF THESE PROPOSALS.
THINKING ABOUT THE TRADE OFF
BETWEEN CALPERS AND CAL STIRS
THIS IS REALLY A QUESTION OF
WHAT IS THE GOAL OF THE
SUPPLEMENTAL PAYMENTS IF THE
GOAL OF THE SUPPLEMENTAL PAYMENT
IS TO ADDRESS THE SYSTEMS WENT
UNFUNDED LIABILITIES ACROSS THE
BOARD AT BOTH SYSTEMS.
THEN THE GOVERNOR'S PROPOSAL
DOES ACHIEVE BACK ON BUT IF THE
LEGISLATURE WOULD HAVE A PRIMARY
GOAL TO ACHIEVE STATE SAVINGS
OVER THE NEXT FEW DECADES.
AND POSSIBLY A SUPPLEMENTAL
PAYMENTS TO CALPERS VERSUS CAL
STIRS WOULD MAKE MORE SENSE.
ON THINKING ABOUT THE CALPERS
CONTRIBUTION SPECIFICALLY WE
THINK IT'S BEST TO MAXIMIZE
GENERAL FUND SAVINGS WHEN USING
GENERAL FUND RESOURCES.
AND WE HAVE TWO DIFFERENT
OPTIONS FOR CONSIDERATION IN
ORDER TO DO THAT. ONE WOULD BE
TO MAKE THE ENTIRE THREE BILLION
OR WHATEVER AMOUNT.
OF SUPPLEMENTAL PAYMENT DIRECTLY
TO ONE PLAN THE PEACE OFFICERS
AND FIREFIGHTERS FUND BECAUSE
IT'S NEARLY ENTIRELY GENERAL
FUND SUPPORTED.
BUT THAT WOULD OF COURSE CREE
PREFERENTIAL TREATMENT FOR ONE
PLAN VERSUS ALL OF THE OTHERS
AND SO A SECOND OPTION WOULD BE
TO STILL MAKE THE CONTRIBUTION
AMONG ALL FIVE PLANS INCLUDING
HIGHWAY PATROL WHICH IT DOES NOT
CURRENTLY BENEFIT UNDER THE
ADMINISTRATION'S PROPOSAL.
BUT THEN REQUIRE THE SPECIAL
FUNDS TO FUND FOR THEIR SHARES
OF THE LOAN.
SPECIAL FUNDS WOULD ACTUALLY
STILL BE BETTER OFF ON THAT
BECAUSE THEY WOULD ACHIEVE THE
GREATER SAVINGS ASSOCIATED WITH
A REDUCED RATES.
BUT THE GENERAL FUND WOULD STILL
HAVE AN OPPORTUNITY TO MAXIMIZE
ITS OWN BENEFIT.
JUST VERY BRIEFLY WE ALSO
RECOMMEND MAKING IS TRANSFERS
LATER IN THE FISCAL YEAR.
IN PLANNING DOCUMENTS THE
ADMINISTRATION HAS INDICATED
THAT IT'S GOING TO MAKE THESE --
TRANSFERS IN JULY OF TWENTY
NINETEEN SEVEN BILLION DOLLARS
IN TOTAL TO CALPERS IMPOSTERS --
AND GIVEN THAT EVERY YEAR
REVENUE ASSUMPTIONS ARE
INHERENTLY ON CERTAIN WE THINK
IT MAKES SENSE TO WAIT FOR KEY
REVENUE MONTHS INCLUDING
DECEMBER JANUARY IN APRIL. FOR
THE STATE TO JUST ENSURE THAT
THE SURPLUS IS INDEED AVAILABLE
BEFORE COMMITTING TO THESE
TRANSFERS ONCE THESE TRANSFERS
ARE MADE TO THE SYSTEMS THAT
CANNOT BE TAKEN BACK SO.
IT'S AN IMPORTANT.
MOMENT.
FINALLY AT BY JUST TO DISCUSS
THE BUDGETARY BORROWING
PROPOSALS ON THE LAST PAGE.
THE GOVERNOR HAS TWO MAJOR
PROPOSALS TO REPAY BUDGETARY
BORROWING. ONE IS --
AS ALREADY MENTIONED ABOUT TWO
BILLION DOLLARS TO REPAY
OUTSTANDING SPECIAL FUND LOANS
THIS WOULD ELIMINATE THE CURRENT
MULTI YEAR PLAN THAT'S ALREADY
IN PLACE. TO REPAY THOSE LOANS
OVER THE NEXT FEW YEARS AND THEN
THE USE THAT THAT ADDITIONAL
CAPACITY FOR CASTERS PAYMENTS.
THE SECOND PROPOSAL IS TO USE
ONE POINT SEVEN BILLION DOLLARS
IN GENERAL FUND ON DUE TO
BUDGETARY DEFERRALS --
JUST ADDING A LITTLE BIT OF
DETAIL TO THOSE JUNE JULY
PAYROLL AND CALPERS FOURTH
QUARTER JUNE JULY PAYROLL TO FOR
ALL DOES NOT AFFECT PAVE.
HEY ROLE IN ANYWAY SO DOES NOT
AFFECT EMPLOYEES JACK'S IT'S
JUST AN ACCOUNTING --
MECHANISM.
AND A BOTH OF THESE DEFERRALS
ACTUALLY ACHIEVE ON GOING
SAVINGS FOR THE GENERAL FUND AND
THE REASON FOR THAT IS BECAUSE
PAYROLL GROWS OVER TIME AND
PENSION COSTS GROW OVER TIME SO
PAYING FOR THE PREVIOUS JUNE OF
THE PREVIOUS FOURTH QUARTERS.
PAYROLL OR TRY OUR CALPERS
PAYMENT IS A LITTLE BIT CHEAPER
THAN FOR THE CURRENT YEAR.
SO THERE'S ABOUT A HUNDRED
MILLION AN ONGOING GENERAL CHIEF
STRUCK BY HAVING THESE IN PLACE
AND I'M DOING THEM WOULD UNDO
THAT A GENERAL FUND BENEFIT.
SO JUST A COUPLE COMMENTS ON
THESE WE DO RECOMMEND
PRIORITIZING RETIREMENT
LIABILITIES OVER THE SPECIAL
FUND LOANS USING TWO POINT ONE
BILLION DOLLARS TO PAY OFF
SOMETHING THAT'S MUCH HIGHER
INTEREST LIKE MAKING AN
ADDITIONAL CONTRIBUTION TO
CALPERS.
VERSES REPAYING A SPECIAL PHONE
LINES WOULD SAY THE STATE AT
LEAST HUNDREDS OF MILLIONS OF
DOLLARS --
AND THEN THE STATE COULD STILL
MAINTAIN ITS EXISTING ON MULTI
YEAR PLAN TO REPAY THOSE SPECIAL
FROM LOANS.
AND THEN SECOND WE RECOMMEND
REJECTING THE PROPOSAL TO UNDO
THESE DEFERRALS --
FIRST BECAUSE IT DOES ELIMINATE
THAT GENERAL FUND SAVINGS THAT
IS ONGOING AND IN FACT IF MONEY
IS HOLDEN RESERVES AND THAT
THERE CAN BE.
A LITTLE BIT OF INTEREST
ASSOCIATED WITH IT SO --
IF THE GOAL IS TO BUILD MORE
BUDGET RESILIENCY AND TO HAVE
SOMETHING THAT'S LIKE A RESERVE
THEN THEY'RE JUST --
MORE EFFECTIVE WAYS OF KEEPING
UP WITH ONE POINT SEVEN BILLION.
BASIC QUESTIONS.
THANK YOU VERY MUCH WE'RE GONNA
HOLD QUESTIONS UNTIL --
THE END OF THE ENTIRE PANEL
MISTER UGH TORONTO FROM --
CALPERS THANK YOU MA'AM --
GOOD MORNING.
MADAM CHAIR MEMBERS COMMITTEES --
SCOTT TREND OF CALPERS --
I JUST HAVE A FEW --
AND CHECK IN GENERAL AND THAT
PASSED ALONG TO KERRY WORK AND
WHO WILL GIVE --
A BIT MORE SPECIFICS ON THE
CONTRIBUTION THE PROPOSED
CONTRIBUTION FROM THE
ADMINISTRATION --
A. R. P. AND WE FEEL THAT --
THE CART THE PROPOSED
CONTRIBUTION FROM THE
ADMINISTRATION IS EXTREMELY
HELPFUL FOR RETIREMENT SYSTEM.
IT PROVIDES A SECURITY FOR
PROMISED BENEFITS FOR THE
MEMBERS AND INCREASES THE
SUSTAINABILITY OF THE FUND
[inaudible]
IT ALSO.
BASED ON OUR OUR ANALYSIS AND SO
CASTING PROJECTION SAVES THE
STATE A FAIRLY DECENT AMOUNT OF
MONEY.
IN ADDITION THE ADDITIONAL --
CHANGES TO THE DEFERRALS --
WE THINK ARE ALSO A GOOD IDEA --
IT MENTIONS THAT.
THREE IS --
WHAT'S ONLY IN THE COUNTY CHANGE
IT DOES END UP SAVING THE STATE
SOME MONEY ON A LONG TERM BASIS.
AND HOW --
IS GOING TO PASS ON TO CARRY
HE'S AGAINST SOME OF MORE THE
MORE THE DETAILS ON HOW MUCH TO
SAVE MEANS WE ANTICIPATE AND WE
SEE FROM THESE THAT THREE
BILLION DOLLAR.
THE THREE BILLION DOLLAR PAYMENT
AS WELL AS SOME OF THE NUANCES
ASSOCIATED WITH ALL THAT SO
CLASSICS SIMULATION.
THANK YOU [inaudible]
HE'S GOT --
YEAH WE'RE JUST GOING.
TO START WITH A HIGH LEVEL LOOK
AT THIS RIGHT NOW IS THAT FOR
THE STATE IN AN AGGREGATE WE
HAVE ABOUT FIFTY SEVEN BILLION
OF UNFUNDED LIABILITIES.
AND WE SET UP A NUMBER TO
STATION SCHEDULE OVER THE NEXT
THIRTY THE MINIMUM REQUIRED
PAYMENTS.
SO WHAT YOU'RE EFFECTIVELY DOING
BY MAKING AN ADDITIONAL THREE
BILLION DOLLAR PAYMENT HIS FAST
TRACKING PAYING MORE THAN THE
MINIMUM AND YOU'RE SAVING A
SIGNIFICANT AMOUNT OF INTEREST.
ON THAT OF SENDING LONG. FOR
CHARGING EFFECTIVELY THE
DISCOUNT RATE OF 7%.
SO IT IS 7% RATE YOU'RE MAKING
AN INVESTMENT EFFECTIVELY AND
CREDITING YOURSELF BACK 27%.
SO AND HAS TALKED ABOUT THE ONE
APPROACH WE LOOKED AT WAS ASSUME
THE FUN WAS EARNING 7% EVERY
YEAR.
THAT YOU MADE THE EXTRA PAYMENT.
UNDER THAT APPROACH.
OF FUTURE CONTRIBUTIONS REDUCED
BY SEVEN POINT TWO BILLION OVER
THE NEXT THIRTY YEARS.
SO THE SEVEN POINT TO NET OF THE
THREE BILLION THAT YOU PAID UP
FRONT.
GENERATES A SAVINGS OF FOUR
POINT TWO BILLION [inaudible]
THE OUR OTHER POINTED AND MADE
IS THAT WE'D ALSO DISTANCE TO
CASTING WHICH IS MORE
REPRESENTATIVE OF WHAT THE FUNDS
ARE ACTUALLY GONNA EARN.
WE KNOW THERE'S UPS AND DOWNS IN
THE MARKETS WE KNOW WE'RE NOT
GONNA EARN 7% EVERY YEAR.
AS WE GO FOR FOR THIRTY YEARS
WHAT WE DO BELIEVE OVER THE
AGGREGATE ABOUT A SOME PERCENT
RETURN IS EXPECTED.
UNDER THE STOCHASTIC SIMULATIONS
WE BASICALLY RUN.
OUR MODEL RANDOMIZED MODEL TO
GENERATE RETURNS.
EACH YEAR FOR THE NEXT THIRTY
YEARS AND THERE'S A FILE IRAN.
UNDER THE THOUSAND SIMULATIONS.
AND WE PROVIDED PERCENTILE
BREAKDOWNS BUT UNDER THE
FIFTIETH MEDIAN PERCENTILE.
WE GENERATED SIX POINT TWO
BILLION OF NET SAVINGS.
SO WAS IT ACTUALLY ADDITIONAL
SAVINGS UNDER SOME OF THE
RANDOMIZED VIEW OF OF THE MARKET
RENT.
SO.
AND HERE WE ARE AVAILABLE FOR
ANY QUESTIONS YOU MAY HAVE
RELATING TO SOMEBODY YESTERDAY
ESTIMATES WE PROVIDED --
HIM WITHOUT WILL PASS BACK.
THANK YOU APPRECIATE THAT WILL
MOVE ON TO DAVID LARUE WITH
CASTERS.
THANK YOU GOOD MORNING EVERYONE
THOUGH THEY HAVE A LOT MORE OF
FROM THE CAL STAR IS GLAD TO BE
HERE TODAY --
BEFORE I START JUST WANTED TO
COME TO GIVE SOME BACKGROUND TO
EVERYONE --
CALISTO IS WILL LITTLE BIT.
MAYES STRUCTURED DIFFERENTLY
THAN CALPERS WHEN IT COMES TO A
FUNDING HISTORICALLY.
CASTOR SAYS NEVER BEEN ABLE TO
SET CONTRIBUTION RATES TO
PROPERLY FUND.
ARE THE BENEFITS FOR TEACHERS.
FOLLOWING THE AWAY TWO NINE
FINANCIAL CRISIS MCALISTER'S
STARTED TO WORK WITH STAKEHOLDER
IN THE LEGISLATURE IN A WARM AND
THE WHOLE WORLD.
UNLESS SOMETHING WERE TO CHANGE
WE WERE EXPECTED.
TO DEPLETE OUR ASSETS WITHIN A
THIRTY THE ON THE ROAD
INSOLVENCY TO HAVE NO ASSETS.
THROUGH LIKE.
A THROAT MULTIPLE YEARS OF
DISCUSSION WITH STAKEHOLDERS IN
THE LEGISLATURE AT LANDMARK
LEGISLATION WAS PASSED IN TWO
THOUSAND AND FOURTEEN ASSEMBLY
BILL.
FOURTEEN SIXTY NINE GAVE FOR THE
FIRST TIME EVER.
RATE SETTING AUTHORITY TO OUR
BOARD TO BE ABLE TO ADJUST
CONTRIBUTION RATES TO PUT US ON
A PATH TO WORK FULL FUND.
SAID THE PLAN WAS PASSED WITH
THE DESIRE TO FUND THE OR
ELIMINATE OR UNFUNDED LIABILITY
BY TWO THOUSAND AND FORTY SIX SO
WE HAVE A FUNDING PERIOD THAT IS
FIXED IN STATUTE.
THROUGH NEGOTIATIONS WITH ALL OF
OUR STAKEHOLDERS ALL OVER THERE
YOU STAKEHOLDERS ALL AGREED TO
CONTRIBUTE MORE TO THE CALLOUSED
OUR SYSTEM.
MEMBERS TODAY OF PAYING 2% MORE
OUT OF THEIR SATTAR WITHIN THE
DID BACK IN TWO THOUSAND AND
FOURTEEN THE USED TO PAY ABOUT
8% TODAY THEY'RE PAYING SLIGHTLY
MORE THAN 10% OF THEIR SALARIES.
THE STATE ALSO AGREED TO PAY
MUCH MORE.
AN EMPLOYER IS ALSO AGREED TO
PAY MORE EMPLOYERS CONTRIBUTED
EIGHT AND A QUARTER OF A PERCENT
OF EACH OF THEIR EMPLOYEES
SATURDAY.
FOR ABOUT FORTY YEARS AND THAT
CONTRIBUTION RATE IT IS SET IN
STATUTE AS SCHEDULE WAS AGREED
UPON THAT CONTRIBUTION RATE IS
SLOWLY INCREASING.
THEIR CURRENTLY PAYING JUST OVER
SIXTEEN PER IT'S SCHEDULED TO GO
TO NINETEEN POINT 1%.
SOMEONE USE YOUR SOMETIME MEDIA
STORIES OVER --
EMPLOYERS MAY BE HAVING A HARD
TIME TO DEAL WITH SOME OF THE
CAST WAS CONTRIBUTION IT IS THE
SCHEDULE THAT WAS AGREED UPON IN
THE COSTUMES FUNDING PLAN IT IS
SET IN STATUTE.
NOW WHEN IT COMES TO THE STATE
THE STATE ALSO AGREED TO PAY
MORE AND SO OUR BOARD WAS GIVEN
AUTHORITY. TO ADJUST
CONTRIBUTION RATES GOING FORWARD
FOR BOTH THE EMPLOYERS AND THE
STATE IF IT WAS DETERMINED THAT.
CONTRIBUTIONS NEED TO TO BE
INCREASED TO REACH FOR FUNDING
BY TWO THOUSAND FORTY SIX AND
THIS IS WHERE IT'S IMPORTANT TO
UNDERSTAND BECAUSE IT'S GOING TO
HELP YOU SEE.
WHY A IN SOME SITUATIONS ELLIE --
IS SAYING THAT THERE MAY NOT BE
AS MUCH SAVINGS.
IF WE WERE TO RECEIVE THE MONEY
NOW CLARIFIED TO SIT IN THE
SECOND.
OR BOARD WAS GIVEN THE ABILITY
TO ADJUST FOR EXAMPLE THE STATE
CONTRIBUTION RATE.
BY NO MORE THAN A HALF A PERCENT
OF PAYROLL IN ANY GIVEN YEAR IF
IT WAS DETERMINED THAT THE
CONTRIBUTIONS NEEDED TO INCREASE
IN ORDER TO ELIMINATE THE
UNFUNDED LIABILITY.
SO TODAY WHEN WE LOOK AT OUR
UNFUNDED LIABILITY IT'S ABOUT A
HUNDRED AND SEVEN BILLION THAT'S
THE LATEST FIGURE THAT WE'VE
GIVEN TO OUR BOARD.
AND YOU STILL HAVE A PACKET IN
FRONT OF YOU.
IF YOU OPENED A PACKET WE HAVE A
TWO PIECES OF PAPER.
ON ONE OF THEM YOU WILL SEE A
SHEET THAT HAS THE PIGGY BANK ON
IT ANY PIE CHART.
IF YOUR INTERESTED SO THE THE
HUNDRED AND SEVEN BILLION DOLLAR
OF UNFUNDED LIABILITY WE HAVE IN
OUR SYSTEM TODAY.
ABOUT THIRTY FIVE BILLION
DOLLARS IS THE RESPONSIBILITY OF
THE STATE AND ABOUT SEVENTY ONE
BILLION IS THE RESPONSIBILITY OF
THE EMPLOYERS.
THE STATE RIGHT NOW THEY'RE
PROPOSING A PAYMENT OF ONE POINT
ONE BILLION DOLLARS IN THE
BUDGET YEAR TO REDUCE THE CEMENT.
SO HERE IS WHERE --
TO DEMEAN MESSAGE WILL BEEN
TELLING EVERYONE ALWAYS BE
SAVINGS FROM ANY CONTRIBUTION
THAT ARE SENT THE CALLOUSED OR
IS TO REDUCE THE UNFUNDED
LIABILITY.
FOR WHAT IS ON CERTAIN WITH US
BECAUSE OUR BOARD HAS LIMITED
THE RATE SETTING AUTHORITY.
IS.
IT IS POSSIBLE THAT.
IT IS POSSIBLE THAT WE MAY NOT
BE ABLE TO SET CONTRIBUTION
RATES TO LEVELS THAT REFLECT THE
LUMP SUM RECEIVED BY THE STATE.
TO JUST TO GIVE YOU AN EXAMPLE.
TODAY WE ARE WE ARE STILL NOT
COLLECTING THE AMOUNT OF MONEY
WE SHOULD BE COLLECTING TO
ELIMINATE THE UNFUNDED LIABILITY.
BECAUSE CONTRIBUTIONS ARE STILL
SCHEDULED TO INCREASE IT SET IN
STATUTE SO FOR THE STATE TO WE
ARE ABOUT FOUR YEARS AWAY.
FROM BEING AT THE LEVEL THAT WE
NEED TO IN ORDER TO ELIMINATE
THE THIRTY FIVE BILLION DOLLAR
OF UNFUNDED LIABILITY BY TWO
THOUSAND AND FORTY SIX WITH THE
PROPOSAL'S PAYMENTS.
OVER THE NEXT FOUR YEARS WE
EXPECT THAT WE WON'T NEED THE
LAST YEAR OF THE INCREASES SUE
IF YOU LOOK AT THIS PROPOSAL.
IF YOU JUST IF THE GOAL IS TO
HAVE SAVINGS EVERY SINGLE YEAR
FOR THE STATE IN THEIR IN THEIR
CONTRIBUTION TO CAL STAR IS FROM
THIS LUMP SUM.
IT MOST LIKELY WILL NOT BE
POSSIBLE BECAUSE IT RIGHT NOW WE
KNOW WHAT IT FOR THE FIRST THREE
YEARS THE CONTRIBUTION RATE IS
GOING TO BE THE SAME WHAT ARE WE
GET A LUMP SUM OR NOT.
IT'S GOING TO BE IN THE FORTY
HERE THAT THE STATE MAY START
RECEIVING SAVINGS.
NOW ONCE YOU START LOOKING AT
THE ONCE YOU START LOOK AT A
REAL WORLD SITUATION WE ON THE
WIN IF WE LIVE IN AN UNCERTAIN
WORLD WE ALL KNOW THAT
INVESTMENT MARKETS GO UP AND
DOWN.
AND IF YOU LOOK YOU KNOW NONE OF
US KNOW WHAT THE FUTURE HOLDS.
BUT IT IS POSSIBLE THAT WE MAY
GO TO TWO DECADES OF RETURNS BI
LO WHAT WE ISSUE MCALISTER'S WE
CURRENTLY ASSUME 7%.
UNDER SUCH SCENARIO IF WE WERE
TO EARN LEXUS SIX AND A HALF OR
6% -- FOR US
AT CAL STAR IS BECAUSE OF OUR
LIMITED RATE SETTING AUTHORITY
AND THAT'S WHAT YOU HAVE TO KEEP
IN MIND.
OR BOARD.
WOULD HAVE TO INCREASE THE STATE
CONTRIBUTION RATE BY HALF A
PERCENT EACH YEAR.
REGARDLESS OF WHETHER WE RECEIVE
THE ADDITIONAL FUNDS ARE NOT SO
THE QUESTION IS.
IS THE LUMP SUM GOING TO
GENERATE SAVINGS.
THE ANSWER IS YES IT TWELVE BUT
WHAT IS ON CERTAIN IS THE TIMING
WHEN EXACTLY AND I CAN TELL YOU
ONE THING EVEN IN SITUATIONS
WHERE MAY BE.
THERE MAY NOT BE ANY SAVINGS FOR
THE FIRST TEN FIFTEEN OR TWENTY
YEARS BECAUSE OF FOR LET'S SEE
WE GO THROUGH A PERIOD OF LOW
RETURNS.
THIS ADDITIONAL MONEY WILL
ACCUMULATE OVER TIME AND ANY
MONEY WE GET TODAY YOU CAN BE
SURE THAT EVEN IF THE STATE HAS
YET TO EXPERIENCE ANY SAVINGS.
YOU CAN EXPECT THE UNFUNDED
LIABILITY IF WE STILL HAVE ONE
BY TWO THOUSAND FORTY SIX IS
GOING TO BE AT LEAST FOUR FIVE
TIMES LOWER THAN THE PAYMENT WE
RECEIVED FROM THE STATE.
SO IF WE WERE TO RECEIVE ONE
BILLION.
EVEN IF THE STATE DOES NOT
EXPRESS ANY SAY LONG TERM THAT
WE SAVINGS AND IN TWO THOUSAND
AND FORTY SIX IT MAY MEAN THAT
YOU UNFUNDED LIABILITY THIS THE
THE THE SHARE THAT THE STATE IS
RESPONSIBLE.
FOR MAYBE LARA BY FORTY FIVE
BILLION DOLLARS TO SAVINGS WILL
ALWAYS BE REALIZE BUT WHAT'S ON
CERTAIN WITH US IS.
ONE AND WITH THIS I WOULD BE
HAPPY TO TAKE ANY QUESTIONS.
EXCELLENT BEFORE I OPEN IT UP TO
MEMBERS --
MISTER VISWANATHA ON YOU WANT TO
RESPOND ANYTHING YOU HEARD
BEFORE I COLLEAGUES TO MAKE
COMMENTS.
I THINK ONLY FILL IF YOU WANT.
TO BELIEVE YOU THE OPPORTUNITY.
NOTHING SHOULD BE OKAY OKAY
PERFECT --
LET ME ASK A QUICK QUESTION
FIRST AND I'M GONNA PUT OVER TO
SENATOR PAN FOLLOWED BY MINING
FOLLOWED BY MORE LOT --
THE LA --
NOTES THAT --
PROPOSING THIS SEVEN BILLION
DOLLAR TRANSFERRED CALPERS AND
CAL STIRS IN JULY WOULD.
LIMIT THE STATE'S FLEXIBILITY
AND I'M JUST WONDERING IF YOU
HAVE ANY CONCERNS AROUND.
CASH DEFICITS ARE CASH FLOW
ISSUES AND IF SO WHAT.
WOULD BE YOUR PLAN TO MITIGATE.
SO THERE ARE TWO COMPONENTS OF
THAT IN THE FIRST DAYS --
SO FOR THE PURPOSE PAYMENT IT'S
COMING FROM THE GENERAL FUND
SURPLUS AND FOR THE SISTERS CAME
AND THIS IS THE PART THAT IS ON
BEHALF OF THE STATE RATHER THAN
THE SCHOOLS.
THAT'S COMING UNDER PROP --
TO PAYMENT BY THIS FORMULA IN
THE CONSTITUTION SO AS OUR
REVENUES ARE UPDATED IN MAY AND
THROUGH THE BUDGET PROCESS IN
JUNE.
THAT ACTUAL LEVEL WHICH WERE
RIGHT NOW ESTIMATING AT ONE
POINT EIGHT BILLION OVERALL FOR
PROP TO DEBT PAYMENTS OF WHICH
ONE POINT ONE WERE RIGHT NOW
THINKING WE WILL DEVOTE TO STIRS.
ABOUT WILL FLUCTUATE SO WE WILL
BE BACK WITH AN UPDATED ESTIMATE
IN MAY SO THAT THERE'S A BUILT
IN MECHANISM TO MAKE SURE THAT
WHAT WE'RE PROPOSING IS IN LINE
WITH WHAT WE CAN AFFORD.
IT WHEN IT COMES TO THE THREE
BILLION DOLLARS FOR CALPERS ON
THERE THERE'S A TRADE OFF SO ON
THE ONE HAND IF YOU DELAY THAT
PAYMENT AND MAKE IT LATER IN THE
YEAR INTO THE NEXT YEAR --
THEN THAT CAN GIVE YOU
ADDITIONAL FLEXIBILITY TO
ADJUSTED.
AT THE SAME TIME --
FOR EXACTLY THE REASONS WERE
TALKING ABOUT WITH THE
INVESTMENT RETURN RATE EVERY
MONTH THAT YOU DELAY PUTTING
THAT MONDAY AT THAT MONEY AND
IT'S A MONEY WHERE YOU'RE NOT
EARNING THE RIGHT ON THAT AND
AND WITH THREE BILLION DOLLARS
IN OR EVEN A SMALL DATA THAT'S
THAT'S A LOT.
OF MONEY --
SO THAT'S THE TRADE OFF THAT WE
WERE THINKING OUT IN TERMS OF
SCHEDULING THAT AS SOON AS
POSSIBLE [inaudible] THIRTY PM.
THANK YOU MADAM CHAIR AND I ONCE
AGAIN THANK ALL THE PRESENTERS --
USED FOR THE QUESTION HAS TO DO
WITH -- THE
ACTUALLY THE SAFETY NET RESERVES --
SO YOU KNOW YOU --
THEN THE DESIRE FOR FLEX
FLEXIBILITY HOWEVER --
I ALSO WOULD MAKE NOTE THAT --
WE DO HAVE A PARTICULAR PURPOSE
FOR THIS FIND AND IF THERE
AREN'T SOME PARAMETERS.
THEN IT BASICALLY REALLY AND HE
HAS A DIFFERENT TITLE THAT FALLS
INTO THE WASH.
AND AT LEAST IN.
MY MIND AND CERTAINLY ARE --
BUDGET CHAIR OF SOMEONE THE CREW --
BEYOND THAT I SEE THE INNOVATOR
OF THE FUND THAT --
IS SO SHE CAN CORRECT ME IF I
MAKE ANY ERRORS --
I I DO KNOW WE WE UNDERSTAND
THAT BASICALLY WE HAVE A COUNTER
CYCLICAL ISSUE WITH THE STATE
BUDGET RATE OUR REVENUES ARE
HIGHER WHEN TIMES ARE GOOD OUR
NEEDS ARE GREATER WHEN TIMES ARE
BAD.
AND I WOULD MAKE NOTE THAT --
UNFORTUNATELY WHAT HAPPENS ON
JERRY BROWN TALKED TWENTY EIGHT
BILLION DOLLAR DEFICIT --
THAT OFTEN TIMES --
SOCIAL SERVICES PARTICULARLY
THINGS LIKE OUR EXIT CUT FIRST.
RATE AND WE KNOW THAT --
THAT OFFICE HE TO DEMAND GOES UP
BECAUSE IF MORE PEOPLE WHO NEED
THE SERVICES CAL AND I CAUGHT
WORKS ARE MEDI CAL --
SO I I GUESS I WOULD URGE.
SOME THINKING AND CERTAINLY WE
WANT TO DO THAT TO DO WITH THE
WORKING TOGETHER ON TRYING TO
SET SOME --
PARAMETERS THAT REALLY REFLECT.
THE GOALS OF THIS --
AFTER THIS --
SAFETY NET RESERVE AND AND AND
TO ME IT WOULD BE --
PERHAPS SOME MORE BASED ALONG
YOU DON'T EAT IT CAN INCREASE
DEMAND BASED ON INCREASE
ENROLLMENT RIGHT SO WHAT HAPPENS
IS THAT WE HAVE FEWER PEOPLE ARE
CAO WORKS BECAUSE ECONOMIES GOOD
JOBS ARE OPERATE.
IT GOES THE OTHER WAY AND SO AS
THE NUMBERS INCREASE.
WE DON'T WORK YOU KNOW FIND
YOURSELVES WERE BOTH CUTTING THE
AMOUNT AND ONE THAT ALSO WE'D
START ENGAGING AND FRANKLY --
VARIOUS TACTICS TO TRY TO DRIVE
MAKE IT HARDER FOR PEOPLE TO
EVEN AND ROLE FOR THE SERVICES.
LET'S JUST BE REALLY BUT WE CAME
OF SOME PRETTY CRAZY IDEAS WHICH
I WON'T REITERATE THAT I
REMEMBER FROM THE TIME I AND I
THINK A CENTER MITCHELL BOTH OF
US CAME TO SIMPLY AT THE SAME
TIME IN.
TWENTY TEN AND SO WE'D LIKE TO
AVOID THAT.
RIGHT -- WE
WE WE WE WHEN PEOPLE NEED THE
PROGRAM IS NOT WHEN WE SHOULD BE
THROWING UP MORE BARRIERS RIGHT
SO WE SHOULD SO. TO ME IN MY
MIND WE SHOULD BE THINKING ABOUT
SOME PARAMETERS BASED ON IT
AGAIN WE SEE LARGER NUMBERS OF
PEOPLE NEEDING TO SIGN UP FOR
THESE PROGRAMS THAT WE HAVE
RESERVED ALLOW US TO MAINTAIN
THAT.
THAT LEVEL OF YOU KNOW SERVICE --
TO TO TO TO THOSE FOLKS SO --
ABOUT HOPING THAT THAT THE
FINANCE WILL WORK WITH US IS
ONLY ONE LA AS ASSISTANCE AS
WELL.
IN TRYING TO SET SOME PARAMETERS
BECAUSE I APPRECIATE FLEXIBILITY
BUTIT WE AND I APPRECIATE AGAIN
I WANT THANK THE GOVERNOR FOR
PUTTING IN YOU KNOW MAKING THE
SUBSTANTIAL COMMITMENT TO THE
STATE THAT RESERVE.
BUT IF THE STATEMENT RESERVE
DOESN'T HAVE SOME.
PARAMETERS AND CONCEPTS THAT WE
UNDERSTOOD WE COMMONLY
UNDERSTAND WHAT THIS IS FOR I'M
AFRAID THE NEXT RECESSION IT
BECOMES JUST PART OF THE WASH SO.
YES THE TWO QUICK POINTS ON THAT
FIRST I WANT TO MAKE SURE
BECAUSE I KNOW I MENTIONED THE
WORD FLEXIBILITY BUT THE SAFETY
NET RESERVE A SEAT FOR CAL WORKS
AND IT'S FOR MEDI CAL.
NOT FOR OTHER PROGRAMS AND I
JUST WANT TO CLARIFY THAT THAT
IS THE THE PURPOSE WHY THE
SAFETY NET RESERVE WAS CREATED
IN AS YOU NOTED WITH THE RAINY
DAY FUND.
FROM POP TO THAT IS MORE MUCH
MORE GENERAL AND THERE ARE
RESTRICTIONS ON IT YOU KNOW.
NO MORE THAN 50% IN THE FIRST
YEAR CAN BE DEPOSITED IN A
BUDGET EMERGENCY FROM THE RAINY
DAY FUND INTO THE GENERAL FUND
BUT THAT IS FOR EVERYTHING BUT
WE'RE WELL AWARE OF THAT
HISTORY'S WE WANT TO MAKE SURE
THAT -- THIS
FUNDING IS JUST FOR THOSE TWO
PROGRAMS OKAY.
OKAY SO.
LET'S HAVE THAT CONVERSATION
ACTION THAT YOU BELIEVE ME AS A
SUMMER DECISION TAKEN MEDI CAL A
SOURCE CARE ABOUT MEDI CAL BUT I
THINK CAL WORKS EVEN MORE
VULNERABLE YES SO LET'S HAVE
THAT DISCUSSION --
THE SECOND THING I WANT TO
MENTION IS I APPRECIATE THE LA
JOH.
AS AGAIN ACTUAL PUSHING
FLEXIBILITY I ACTUALLY SUPPORT
THE IDEA OF LET'S PAY OFF THOSE
DEBTS THE SPECIAL FUNDS LET'S
GET RID OF THE FOR ALL RIGHT --
AND TO TELL THE PEOPLE
CALIFORNIA LOOK WE'VE ON WILD
ALL THESE THINGS DOWN THEN AGAIN
THEY HAVE BECOME PART OF THE
TOOL BOX IN CASE WE DO HAVE TO
DEAL WITH A SEVERE RECESSION.
BUT I I DO --
ONE OF I DO I MENTION THE POINT
THOUGH AND I AND I GET ALSO
APPRECIATE THE CONTRIBUTION TO
CALPERS.
BUT THIS IDEA THAT THE TO THE
SAME WAY THAT WE HALF THE
SPECIAL THAT'S A GOOD IDEA AND
IT BENEFITS THE SPECIAL FUNDS
THAT THEY SHOULD BE CONSIDERED
LOANS TO THE SPECIAL FUNDS THAT.
WHEN -- THAT
IF IT THERE'S AN ISSUE THAT WE
GET PAID BACK EVENTUALLY FOR
THOSE -- AND
IS IN THE SAME WAY THAT WE
THEY'LL SPECIAL FUNDS LOAN TO US
WHEN WE NEEDED THEM BECAUSE THEY
HAD SOME OF THOSE POTS OF MONEY
AVAILABLE WHEN WE NEED TO HELP
BRIDGE A RECESSION SO.
I WANT YOUR THOUGHTS ABOUT THIS --
CONCEPT THAT WAS BROUGHT UP THAT
THE AB AND I THINK IT'S A GOOD
IDEA THAT WE DO MAKE THESE
PENSION CONTRIBUTIONS BUT THAT.
TO PROVIDE ACTUALLY TO INCREASE
OUR LONG TERM FLEXIBILITY IN
TERMS OF OF WHAT YOU KNOW WE
BORROW FOR THEM SOMETIMES WE
NEED BUT VICE VERSA I LIKE WE'RE
HELPING THEM AND IT'S IT IS A
NET BENEFIT STILL TO THE SPECIAL
FUNDS THAT WE DOING THIS FOR
THEM.
SO WHAT'S YOUR THOUGHTS ON THAT
YES SO BASICALLY WHEN WE WHEN
THE GOVERNOR PUT TOGETHER THE
PROPOSAL TEAM WANTED TO SAVE
TAXPAYERS MONEY AND SAVE OUR
STATE MONEY AND HE WAS THINKING
OF THAT.
ON BEHALF OF THE GENERAL FUND
BECAUSE THAT'S WHERE WHEN YOU
THINK ABOUT THE BIG THREE TAXES
THAT'S WHERE THEY FLOW INTO
VERSUS SPECIAL UNDS WHICH ARE
MOSTLY FUNDED BY FEES AND OTHER
CONSIDERATIONS.
SO THAT IS OUR INTENT --
WE ARE STILL STRUCK SO THE LA OF
THE I AGREE WITH WHEN IT COMES
TO STRUCTURING THAT IT'S A
LITTLE BIT COMPLICATED BECAUSE
AS MISS ALWAYS HAD MENTIONED
ENOUGH.
FOR THE C. H. P. IT'S ALL FUNDED
BY SPECIAL FINE WITH THE MOTOR
VEHICLE ACCOUNT BUT FOR OTHER
FUNDS THERE'S A DIFFERENT
PROPORTION FOR EACH.
SO THAT SOMETHING IN THE WEEKS
AND MONTHS TO COME WE'RE GOING
TO WORK ON THAT MECHANISM BUT
THE INTENTION IS FOR THOSE
PAYMENTS TO BE MADE ON BEHALF OF
THE GENERAL FUND.
OKAY.
ALL RIGHT AND THEN --
FINALLY --
SO IF YOU'VE PREVIOUSLY CHAIR
TIA PUBLIC EMPLOYMENT TIME
ACTIVITY.
APPRECIATE THE UP FRONT --
BESIDE THE AGAIN PRETTY TAKING
SOME OF OUR TIMES IN OUR PROCESS
HAS PAYING DOWN OUR UNFUNDED
LIABILITIES --
IN TERMS OF OUR PENSIONS OTHER
THIS IS KIND OF LIKE RIGHT SO
WHAT EXPECT SOMEONE IN THEIR
TWENTIES UNLESS THEY REALLY HIT
IT RICH THAT THEY WOULD ACTUALLY
HAVE FULLY FUNDED THEIR
RETIREMENT.
WHILE THEY'RE IN THE TWENTIES OR
THIRTIES RIGHT WE WE BUILD UP
TOWARD RETIREMENT PEOPLE ARE ALL
RETIRING AT THE SAME TIME --
SO EIGHT SWIMBAIT NOTED THAT
WHEN PEOPLE TALK ABOUT FUNDED
LIABILITIES --
THE THE OTHER THING IN BUT I I
GUESS ONE OF THE THINGS I JUST
WANT TO TOUCH ON IS I KNOW WHEN
YOU'RE DOING THIS STUFF CASTING
MODELING.
IN MANY WAYS WHAT WE DO IS.
WELL WE CAN PICK OUT NUMBER BUT
REALLY IT'S LIKE A SENSITIVITY
ANALYSIS RIGHT AND SO --
SO IN TERMS OF THE AND
INVESTMENT WHAT'S THE WHAT WOULD
BE BAYSIDE SO CASTING MOLLY
MAYBE OUT OF THE OF NUMBER FRONT
OF YOU.
THE PROBABILITY IN WHICH
ACTUALLY WEWOULD HAVE A
POSITIVE SAVINGS --
FOR THE UP FRONT MONEY THAT WE
PUT IN SO WE'RE PROJECTING THAT
ON AVERAGE SHE SAID FIFTY
PERCENTILE SIX POINT TWO BILLION --
BUT SOME PEOPLE SAY WLL THERE'S
POSSIBLY YOU KNOW YOU DON'T KNOW
WHAT HAPPENED THAT TO THE
ECONOMY THAT MAY BE A LITTLE BIT
Là SO WHAT KIND OF PERCENT SO
WHAT CAP PERCENTAGE ARE WE
LOOKING AT IN TERMS OF
PROBABILITY OF AGAIN THESE ARE
ALL PROBABILITIES WE CAN'T
PREDICT.
THE FUTURE --
THAT MOVING FORWARD OBVIOUSLY
VERY REMOTE THEY'RE ALL*
SAVING STILL AT THAT POINT
ANOTHER TO GREATER THAN 99%
CHANCE THAT WE'LL STATUS. THIRTY
YEARS THAT'S RIGHT YEARS OKAY
THAT'S GOOD TO KNOW THANK YOU.
FRESH.
FORGOT TO DO IN MY TWENTIES
DOCTOR PAN PHILLY FOR MY
RETIREMENT.
YOU SEE THE DOCTOR PAN YOU
SHOULD OF CALL ME A YEAH YOU
SHOULD TOLD ME EXACTLY.
SENATOR MONEY DID YOU FORGET
ALSO ON YOUR TWENTY SEVEN THE
MONEY.
HE AND THEN IT SOMEBODY BROUGHT
TO MY ATTENTION THAT WE HAVE NO
PENSION IS SO AND WE DON'T
THAT'S WHY WE SHOULD ACTUALLY.
RECORD THEN OF THESE VOTES
BENEFIT US IN ANY MANNER AT
SURVIVOR THAT'S RIGHT SENATOR
MODERATE --
SO PICKING UP A LITTLE BIT ON
SENATOR PAM I THINK TO THE LA --
FIRST AND THEN.
OTHERS AT THE BOTTOM OF PAGE.
THREE THE OPTIONS YOU FRAMED WE
COULD PUT MORE IN CASH RESERVE
AND THEN IT SEEMED LIKE THAT WAS
KIND OF JUXTAPOSED. TO PUTTING
MORE INTO BUILDING DOWN SOME OF
THESE LIABILITIES IN THE
RETIREMENT PROGRAMS --
IN I THINK YOU PARTIALLY
ANSWERED THIS BUT IF WE IS THERE
ANY HYBRID IN OTHER WORDS IF IF
WE MAKE A LARGER INVESTMENT.
IN PAYING DOWN THE LIABILITIES
AND THE RETIREMENT FUNDS AND
THEN WE HIT A RECESSION.
IN THE MARKET [inaudible]
FALLS.
DO WE JEOPARDIZE HAVING FRONT
LOADED --
SOME OF THOSE RESOURCES VERSES
IF WE PROTECTED SOME OF THEM IN.
IN SAVINGS ACCOUNT SIR
[inaudible]
IN.
MADE THAT INVESTMENT OVER TIME I
KNOW EARNING LESS.
BY THAT DISTRIBUTION BUT HELP ME
UNDERSTAND.
ACT HOW DO WE FIND THAT THAT
CORRECT WERE MOST BENEFICIAL
BALLOT SO START WITH LA --
AND OTHERS MAY HAVE THOUGHTS ON
THAT.
YES SO --
THIS THIS IS DEFINITELY THE
TRADE OFF IS THE RISK VERSUS --
REWARD OR RISK FORCES RETURN --
SO.
I'LL JUST MAKE A COUPLE POINTS
ABOUT THIS.
THIS WOULD BE THERE WOULD BE A
VARIETY OF INVESTMENT STRATEGIES
THAT THE LEGISLATURE COULD
PROBABLY TAKE WITH RESPECT TO
THESE FUNDS THEY WOULD BE
INVESTED MOST LIKELY IN --
A TYPE OF FUND THAT WOULD EARN A
LOWER RETURN THAN THE TYPICAL
CALPERS INVESTMENT RETURN OF FOR
THE TYPICAL ASSUMED INVESTMENT
RETURN OF 7% EITHER BE A VARIETY
OF STRATEGIES THAT THE
LEGISLATURE COULD CONSIDER.
THAT RANGE FROM YOU KNOW HIGHER
RETURN MORE RISK TO LOWERED
RETURN LESS RISK ONE OF THE
REASONS THAT WE BRING THIS
PROPOSAL UP NOW.
IS THAT BOTH STATE MIGHT HAVE
NOW ACTUALLY IT DOES PROVIDE A
BIT OF AN OPPORTUNITY FOR THIS
OPTION TO BE USED --
MORE FLEXIBLY IN THE FUTURE AND
SO BY THAT I MEAN SAY THE STATE
ANSWERS A RECESSION AND TWENTY
TWENTY THE CASH RESERVES COULD
BE USED FIRST TO COVER A BUDGET
PROBLEM WHILE FINANCIAL MARKETS
ARE SUFFERING AND YOU KNOW
POTENTIALLY THE VALUE OF THIS
ACCOUNT IS DOWN.
AND THEN SAY IN THE SECOND YEAR
OF THE RECESSION ONCE FINANCIAL
MARKETS HAVE RECOVERED AND
HOPEFULLY THE VALUE OF THIS
ACCOUNT HAS RECOVERED THEN THE
LEGISLATURE COULD OPT TO USE
THAT -- SO
PART OF THE REASON THAT WE BRING
UP THIS IS BEING AN OPTION
THAT'S PERHAPS MORE ATTRACTIVE
NOW IS BECAUSE THE STATE HAS
SOME MATCHING CASH RESERVES.
THANK YOU IN.
OTHERS ANY THOUGHTS ON THAT HAD
HAD YOU.
WHAT'S THE BEST APPORTIONMENT.
TO AND TO HEDGE AGAINST THE RISK
OF PUTTING TOO MUCH XIN ACCOUNTS
ALTHOUGH IT SOUNDED FROM THAT
ANSWER.
THERE'S SOME DISCRETION WITHIN
THE INVESTMENT ACCOUNTS AS WELL
BETWEEN HIGHER RISK IN
[inaudible]
IN.
LOWER RISK --
MORE GUARANTEED RETURN BOND
MARKETS OR SOMETHING RIGHT --
I THINK YOU YOU LOOKING AT YOU
KNOW WE WILL KEEP IT CASH
RESERVES AND HAVE A LOWER RETURN --
IF YOU PUT IT IN THE WITH PREPAY
RETIREMENT CONTRIBUTIONS YOU DO
HAVE -- THE
POTENTIAL FOR GREATER GREATER
CATCH OF THE GREAT RETURNS ON
THOSE CONTRIBUTIONS --
THAT -- YOU
THINK WELL IF IT'S AN CASH
RESERVES IT'S NOT COMMITTED TO
PERS IT'S COMMITTED YOU HAVE THE
FLEXIBILITY FOR ANYTHING.
BUT LOWER RETURNS IF YOU PUT IT
IN THE IF YOU PRE PUT IN THE
PREPAYMENT A CAL.
IT'S BASICALLY A COMMITMENT
OFFERS RITAM PENSION PLANS. FOR
POTENTIAL READ REDUCTION OF YOUR
REQUIRED CONTRIBUTIONS AT YOUR
CHOOSING YOU SAW THAT
FLEXIBILITY AND THEN YOU GET TO
THAT THIRD OPTION WHERE YOU MAKE
THAT SUPPLEMENTAL PAYMENT WHICH
IS A ONE TIME PAYMENT.
MAKES EIGHT EIGHT LIKE A
PERMANENT REDUCTION.
IN THE CONTRIBUTION RATE GOING
FORWARD.
BUT YOU'LL HAVE A MORE FLEXIBLY
AT THAT AT THAT POINT WE MAKE IT --
WE WE ADJUST THE RATES AT THAT
POINT AND THEN.
HE IF.
YOU KNOW RECESSION WHERE THE
CRACKER SAY SEVERAL YEARS DOWN
THE ROAD.
YOU.
YOU YOU WOULD STILL LIKE TO MAKE
THE REQUIRED CONTRIBUTIONS IF IT
WAS SET IN THE PREPAYMENT
ACCOUNT YOU CAN USE THAT TO
OFFSET THE REQUIRED CONRIBUTION
SO IT COMES DOWN.
TO THERE'S NOT A RIGHT ANSWER IT
IT'S WHAT DO YOU WHAT IS BEST
FOR YOUR PARTICULAR SITUATION
AND HE COMES DOWN TO YOUR
PARTICULAR NEEDS.
THANK YOU OUTS MAKE TWO POINTS
IN ADDITION TO THAT --
THE FIRST IS THE REASON THE
ADMINISTRATION FOCUSED ON MAKING
A SUPPLEMENTAL CONTRIBUTION EVEN
THOUGH WE KNOW REDUCES
DISCRETION IS.
WE REALLY WANTED TO APPLY THAT
TO THE LONG TERM LIABILITY MAKE
SURE THE FUNDS AND ARE THERE AS
SOON AS POSSIBLE IT'S TRUE THAT
THE MARKET CAN DECLINE BUT WE
DON'T KNOW WHAT'S GOING TO
HAPPEN.
AND IS ANY AND VESTING ANY
PERSON GIVING GOOD INVESTING
ADVICE WILL.
I YOU WANT TO START EARLY AND
THAT'S THE ONE THING THAT YOU
CAN CONTROL WE DON'T KNOW WHERE
THE MARKET IS GOING TO GO BUT WE
PUT THOSE FUNDS AND AS SOON AS
POSSIBLE THAT CAN MAKE A BIG
DIFFERENCE.
BUT THE SECOND THING I THINK
PREPAYMENT IS SOMETHING THAT
DEFINITELY IMPROVES FLEXIBILITY
AND IT'S CERTAINLY SOMETHING
THAT THE ADMINISTRATION COULD
CONSIDER IN THE YEARS TO COME.
BUT EVEN THAT CAN COME AT A COST
AND I KNOW --
THEY SPOKE ABOUT --
SOME THE COST THE OTHER COST IS
ACTUALLY --
IF YOU'RE PREPAYING AND THEN IN
A RECESSION YOU TAKE ADVANTAGE
OF THAT PREPAYMENT TO REDUCE
YOUR CONTRIBUTION.
THAT ALSO CAN COME OUT ACOSTA
WARREN BUFFETT FAMOUS WE SAYS
WHEN IT COMES TO INVESTING BE
GREEDY WHEN OTHERS ARE FEARFUL
YOUR FEARFUL WHEN OTHERS ARE
GREEDY -- SO
WHEN THE STATE IS REDUCING ITS
ACTUARIAL YOU REQUIRED PAYMENT
BY APPLYING A PREPAYMENT AT JUST
THE POINT WHEN WE MIGHT BE AT
THE BOTTOM OF THE MARKET.
KNOW THAT CAN BE AND WE'VE ALL
SENIOR CALPERS AND CAL STAR IS
YOU KNOW YOU LOOK AT THIS LONG
HISTORY AND WE ALL LEARN FROM
WHAT'S COMING THE CYCLES BEFORE.
SO WITH THE SUPPLEMENTAL PAYMENT
YOU'RE MAKING YOUR PAYMENTS IN
GOOD TIMES YOU'RE MAKING YOUR
PAYMENTS IN BAD TIMES THOSE
PAYMENTS IN BAD TIMES ARE
PAINFUL FOR MAKING SURE IN A
SIMILAR TO DOLLAR COST AVERAGING
FOR AN INDIVIDUAL INVESTOR.
THAT WE'RE GOING THROUGHOUT THE
CYCLE SO THAT WE CAN TAKE
ADVANTAGE OF BOTH THE TOP AND
THE BOTTOM OF THE MARKET.
THANK YOU THANK YOU MADAM CHAIR
THANK YOU MORE LAW --
THIS ONE BY ONE OF THE
GOVERNMENT'S.
I'D LIKE TO PICK UP ON THIS VERY
POINT IS SAY YOU SAID YOU WANTED
TO MAKE A SUPPLEMENTAL PAYMENT
AND I'M ASSUME YOU'RE GOING.
TO PAY THE FULL AMOUNT --
AS AS AS PRESENTED A BUT YOU
SAID WE NEED --
TO DETERMINE THE STRUCTURING OF
THE PAYMENT SO COULD YOU.
EXPAND ON THAT IT I I ALSO A
PREFACE IT BY SAYING.
WHAT THE ACTUARIES ARE PRETTY
SAID WE'VE GOT?
THE REGULAR FIND WOULD GET THE
PREPAID CONTRIBUTION FUND WHICH
IS -- BUT
I'VE I'VE JUST CURIOUS.
WHAT WE NEED TO DO TO HELP YOU?
GET IT RIGHT INTO THE FRONT.
END OF THANK YOU FOR THAT AND
THAT'S SOMETHING WE'RE THINKING
A LOT ABOUT SO RIGHT NOW WE
DON'T HAVE ANY PREPAYMENT --
FOR THAT CALPERS PROGRAM MORE
FOR THE STATURE OF CAL STORES
FOR THE SCHOOLS SHARE OF CAL
STAR IS THERE'S A BIT OF A
COMPLICATED MECHANISM.
BECAUSE WERE MAKING PAYMENTS ON
BEHALF OF THE SCHOOLS THAT
SCHOOLS ARE APPLYING JUST FOR
THE NEXT TWO YEARS AND THE TWO
REASONS THAT WE'RE DOING THAT.
FUND THE SCHOOL DISTRICTS SIDE
IS NUMBER ONE MAKING SURE THAT
THEY DO EXPERIENCE SAVINGS IN
THE NEXT TWO YEARS WE KNOW THAT
OUR SCHOOLS ARE.
UNDER A LOT OF PRESSURE AND THE
SECOND -- AS
MISTER MEMBER MENTION THE CAL
STIRS FUNDING PLAN THAT WAS
ADOPTED IN TWENTY FOURTEEN IS
VERY COMPLICATED AND IT WAS
ADOPTED AFTER MANY YEARS OF WORK
AND SO WE WANTED TO MAKE SURE
THAT.
OUR FUNDING --
SAVE SCHOOLS MONEY BUT IS
CONSISTENT WITH THE DICTATES OF
THAT PROGRAM IN WHICH RATES FOR
SCHOOLS DO NOT ACTUALLY
FLUCTUATED SO I THINK AFTER
TWENTY TWENTY ONE AS WE WANT TO
MAKE SURE THEIR SIBLINGS SAVINGS
OVER TERE.
WHEN IT COMES TO THE STRUCTURING
FOR THE CALPERS THAT YOU
MENTIONED WE KNOW THAT WE WANT
TO MAKE THAT THREE BILLION
DOLLAR PAYMENT DIRECTLY --
AND NOT YOU KNOW THROUGH A
PREPAYMENT MECHANISM.
DESTRUCTION QUESTION IS HOW
AMONG THE STATE'S DIFFERENCE
FUNDS AND THIS IS SOMETHING THAT
MISS HAULING SAID MENTIONED HOW
WE'RE APPLYING IT ACROSS THOSE
FUNDS YOU KNOW BECAUSE CALPERS
AS YOU KNOW.
SERVES THE STATE AND AS WELL SO
MANY OTHER JURISDICTIONS ACROSS --
BUT FOR THAT PORTION SOME OF THE
PAYMENTS MADE TO CALPERS IN ANY
GIVEN YEAR ARE ON BEHALF OF THE
GENERAL FUND AND SOMEWHERE ON
BEHALF OF SPECIAL FUNDS AND AND
I SENATOR PAN MENTIONED --
IF THE STATE IS MAKING A PAYMENT
ON BEHALFOF THE SPECIAL FIND --
THAT CAN BE SEEN IN SOME WAYS IS
A SUBSIDY FROM THE GENERAL FUND
TO THE SPECIAL FUND AND THAT'S
NOT EXACTLY WHAT WE'RE LOOKING
TO DO WE'RE LOOKING SIMPLY.
TO SAY TAXPAYERS MONEY WHILE
REDUCING THE UNFUNDED LIABILITY
SO THAT'S SOMETHING THAT WE WANT
TO WORK WITH YOU.
MAKING SURE THOSE PAYMENTS ARE
ON BEHALF OF THE GENERAL FUND
ACROSS ALL THOSE FIVE CATEGORIES
THAT MISS ALWAYS HAD MENTIONED
SO CURRENTLY THE ACTUARIES.
DETERMINE THE AMOUNT OF THE
CONTRIBUTION FOR THE PLAN
SPONSOR.
AND THE PLAN SPONSORS SAYS HEY I
I WANT TO GET AHEAD OF THIS.
I WANTED TO DO WE GET.
WE GET SPECIAL CASH.
AND NOW THEIR ONLY.
OPTION IS --
ONE ONE FIVE TRUST.
IS THERE A WAY WE CAN ASSIST IN
ALLOWING PLAN SPONSORS.
TO JUST CONTRIBUTE WITHOUT
HAVING TO PUT IT IN A CASH FOR
UNDER ONE ONE FIVE IN JUST RIGHT
IN.
THERE ARE A MY MISUNDERSTANDING
IS ALREADY THAT OPTION AVAILABLE.
PLANS CAN CAN.
CONTRIBUTE ADDITIONAL
CONTRIBUTIONS ANYTIME THEY NEED.
TO NEED TO FOR FOR EXAMPLE --
I THINK WE WOULD THERE'S TWO TWO
WAYS OF LOOKING AT YOU CAN
CONTRIBUTE TO THE ONE THE ONE
FIFTEEN TRUST.
AND THEN THAT CAN BE APPLIED
ONCE IT APPLIED.
AND THEN THEN THERE'S ALSO THE
OPTION OF OF MAKING ADDITIONAL
CONTRIBUTIONS.
DEAL DURING THE YEAR AND THEN WE
WILL HAVE THIS DISCUSSIONS WITH
THEIR YOU KNOW IT IN THIS CASE
THE DEPARTMENT FINANCE ON WHICH
AVERAGES ATION BASES YOU WANT
THOSE APPLY TO SO WE CAN
GENERATE THE BIGGEST SAVINGS.
AND AND YOU KNOW THAT OCCURRED
WITH THIS BEFORE EIGHTY FOUR IN
TERMS OF OF WHEN THAT DOES.
THAT LARGE SIX BILLION DOLLAR
PAYMENT CAME IN.
BOMB WHICH EVERY DECISION BASIS
ARE WE GOING TO APPLY TO IS TO
REDUCE THE RATES THAT OPTIONS
ALWAYS AVAILBLE SO SO YOU DON'T
HAVE TO GO THROUGH ONE FIFTEEN
TRUSTS --
THE ONE FIFTEEN TRUST M. IS
ACTUALLY A NEW THING --
THAT'S THAT'S AVAILABLE THIS
YEAR FOR PURRS --
SO THAT'S BASICALLY ANOTHER
OPTION THAT'S OUT THERE.
OKAY THANK YOU THEN.
OF MR THIS WANNA FIND YOU YOU
ALSO MENTIONED.
UP TO FUNDS COULD APPLY --
TO PEP -- IN
YOU MENTIONED THE CAL STIRS
LIABILITY COULD YOU EXPLAIN THAT.
A LITTLE MORE SLEAZY SICKLY --
WHAT WE'RE PROPOSING FOR PROP
TWO IT'S ABOUT ONE POINT EIGHT
BILLIONS WITH DIFFERENT CAB
CALPERS FOR TYPICALLY STATE
EMPLOYEES?
VENDORS CAL STIRS WHICH MISTER
WEBER MENTIONED OF WHICH THERE'S
A LIABILITY OF A LITTLE OVER A
HUNDRED BILLION DOLLARS OF WHICH
ABOUT. THIRTY FIVE BILLION
DOLLARS IS THE SCHOOL SHARE --
AND THEN WE HAVE THE UNFUNDED
LIABILITY RELATED --
TO RETIREE HEALTH CARE FOR STATE
EMPLOYEES AS WELL AS THEIR
ACTIVE EMPLOYEES WERE PAYING IS
A PAY AS YOU GO BASIS BUT WHO
ARE ALSO.
ACCUMULATING CREDITS WORD
HEALTHCARE IN RETIREMENT AND SO
THEY ARE THE MOST RECENT STATE
COMPTROLLER'S REPORT --
ESTIMATED THAT UNFUNDED
LIABILITY AT NINETY ONE BILLION
DOLLARS AND I BELIEVE THE SCO
THE COMPTROLLER'S OFFICE WILL BE
COMING OUT WITH AN UPDATED
REPORT AT SOME POINT THIS YEAR --
BUT A COUPLE YEARS AGO THE STATE
STARTED AND ITS BARGAINING.
FIGURING OUT HOW WE CAN PRI FUND
THESE OBLIGATIONS AND WHITTLE
DOWN THAT LIABILITY AND ACTUALLY
THE SAME YEAR --
TWENTY FORTY SIX THAT WE MISTER
WEBER MUCH FOR CAL STIRS WE HAVE
THIS PLAN IN PLACE TO MAKE SURE
THAT BY THAT POINT ALL BENEFITS
WILL BE KEEP PRETTY FUNDED AND
WE'RE NO LONGER PAYING ON A PAY
AS YOU GO BASIS BECAUSE THOSE
COSTS HAVE BEEN RISING EVERY
YEAR.
OVER THE LAST TWO DECADES --
SO THAT'S WHY IT'S ELIGIBLE FOR
PROP TO FUNDING TRUST --
FOR PAD --
AND THEN THAT LAST CATEGORY OF
THE PROP TWO PAYMENTS THAT'S THE
CALPERS PAYMENT I'M SORRY TO CAL
STIRS PAYMENT THE OPEC PAYMENT --
AND THEN THE LAST IS AS YOU
REMEMBER TWO YEARS AGO WHEN WE
TOOK OUT THAT LOAN --
TO PUT IN SUPPLEMENTAL PAYMENT
INTO CALPERS --
THEY THINK MR TREND --
MENTIONED --
WE HAVE TO REPAY THAT LOAN --
THAT WE TOOK OUT FROM OUR
SURPLUS MONEY INVESTMENT FUND SO
THAT ALSO IS ELIGIBLE UNDER PROP
TO SIT WE LOOK AT THAT AS A
CENTURY OR CALPERS PAYMENT
BECAUSE WERE REPAYING.
THE MONEY HAT WE BORROWED TO
PUT INTO CALPERS IN THE FIRST
PLACE SO THAT ARE YOU GETTING
LKE AT A BANK TO FOR YOUR BUCK
YOU'RE SAYING WE'RE DOING PROP
TWO RESERVES BUT WE'RE ACTUALLY
PUTTING IT INTO.
THESE RETIREMENT DEBTS.
BUT WE HAVE TO PAY BACK.
PROP TWO FOR WHAT WE'RE PUTTING
INTO SO FOR THAT LAST PART THAT
WAS A DECISION THAT THAT
GOVERNOR BROWN IN THE
LEGISLATURE MAY TWO YEARS AGO --
SO I ACTUALLYDON'T KNOW HOW
IT'S WORKING OUT YOU KNOW RIGHT
NOW YOU'RE JUST BE A VERY STRONG
YEAR IN TWENTY SEVENTEEN AND A
WEAKER YEAR AND TWENTY EIGHTEEN
SEVEN THE WISDOM IN HIND SIGHT
OF THAT DECISION WILL BE
DETERMINED YOU KNOW OVER THE
NEXT COUPLE YEARS OVER THE
LONGER.
TERM -- BUT
RIGHT NOW THEY MADE THE COUNTY
SHORT TERM COST OF BORROWING
FROM THOSE FINES AND THE LONG
TERM RETURN RATE ASSUME THAT
ABOUT 7% WAS LARGE ENOUGH TO
JUSTIFY MAKING THAT ONCE AND NOW
WE'RE IN THE PROCESS OF PAYING
THAT BACK OVER SEVERAL YEARS.
HE BEEN --
NEXT QUESTION WOULD BE WITH THE
I. CALPERS. THREE BILLION TO
CALPERS BUT SEVEN HUNDRED
MILLION TO LOWER THE SCHOOL
DISTRICT PAYMENTS.
SO IN THE LAST MONTH.
WE'VE SEEN LAUSD.
DEMAND A 6% PAY INCREASE.
WE NOW HAVE OAKLAND UNIFIED THAT
WANTS TO CONSIDER GOING ON
STRIKE PER PAY INCREASE.
AND WE GET SACRAMENTO CITY
SCHOOL DISTRICT THAT'S HAVING.
A CASH FLOW PROBLEMS MAY BE OUT
OF CASH ON NOVEMBER.
SO.
WE STEP IN AS A STATE AND SAY
OKAY WE'RE GOING TO PREPAY CAL.
STIRS AND WILL HELP YOU WITH
YOUR PAYMENTS.
BUT IF THAT JUST TRANSLATES INTO
A PAY RAISE.
I'M A PICK ON THE TEACHERS I'M
JUST DOING THE MATH HERE IF THAT
MEANS THAT WE'RE GONNA.
PROVIDE THEM THE THE JUST A
LITTLE BIT OF ROOM TO GET A
RAISE WHICH WHEN YOU GIVE A
REYES NOW ADDS TO THE PENSION
PROBLEM BECAUSE NOW YOU'RE GONNA.
HAVE TO FUND FOR A HIGHER SALARY --
HOW DO WE?
HOW WE PUT A PROVISO ON ON YOUR
SMART MOVE? TO PREPAY AND REDUCE
FUTURE COSTS WHEN ALLWE'RE
DOING IS SHIFTING IT TO A NEW.
POTENTIAL COST I'M.
RETURNING I'M JUST SAYING THIS
BASED ON WHAT WE'RE WATCHING YOU
KNOW.
HAPPENING IN THE IN THE STATE
WITH SOME OF OUR BIGGEST.
SCHOOL DISTRICT BUT ALSO SOME OF
OUR IN MOST FISCAL CRISIS SCHOOL
DISTRICTS.
TO YES ALL MAKE TWO POINTS ON
THAT THE FIRST IS THE VERY BROAD
POINT IN TERMS OF THE GOVERNOR'S
INTENT --
THIS WAS AWAY BECAUSE WE KNOW A
LOT OF THESE DISTRICTS INCLUDING
VERY LARGE DISTRICTS ARE
STRUGGLING WITH THE COSTS WITH
THESE RISING FIXED COSTS THAT
THEY DON'T REALLY HAVE ANY
DISCRETION OVER SO.
THIS WAS A WAY TO ENSURE THAT
THEY HAVE SOME ADDITIONAL
BREATHING ROOM --
AND I THINK IN THE CASE OF LAUSD
OVER THREE HUNDRED FROM THE TOP
THAT THREE HUNDRED FIFTY NOT
MILLION DOLLAR MARKET WE ARE
ESTIMATING IN THE NEIGHBORHOOD
OF FIFTY MILLION DOLLARS.
OUT WITHOUT RAISING THAT PROP
NINETY EIGHT BASE WHICH WE KNOW
IN AN EMERGENCY YOU KNOW THAT
COULD COMPOUND THE ISSUES THAT
WE'RE DEALING WITH AND INCLUDING
THAT.
CAL WORK SINCE EIGHTEEN EVERITT
IS TAKING A RESERVE IN MEDI CAL
WE WANT BUT ON THE MORE SPECIFIC
POINT THAT YOU RAISE THE WAY
THAT WE'RE THINKING ABOUT THIS
AND MISTER LAMBERT CAN WAY AND
ALSO IS.
THIS IS TO HELP --
ADDRESS THE SCHOOLS AND THE
UNFUNDED LIABILITY FOR CAL STIRS
BY GIVING THEM SOME RELIEF BUT
IN TERMS OF THE ADDITIONAL RACES
AND YOU KNOW IF IF IF TEACHERS
GOT ADDITIONAL RAISES ARE.
COSTS GOING FORWARD I BELIEVE
AND MISTER LAMBERT CAN CORRECT
ME I BELIEVE FOR EMPLOYEES GOING
FORWARD FOR TEACHERS --
THESE RATES ARE SET IN STATUTE
BUT THEY'RE SUPPOSED TO
FLUCTUATE BASED ON NORMAL COST --
SO IF YOU TAKE TE ASSUMPTION
FOR TEACHERS GOING FORWARD AND
GO AND THIS IS FOR NEW TEACHERS
AT FACE VALUE DAN --
IF THAT 7% INVESTMENT RETURN
RATE IS TO DECLINE AND THE
CALPERS CASTERS BORDER TO MAKE A
DETERMINATION THAT WE SHOULD
ASSUME LESS THAN 7%.
THEN THE CONTRIBUTION RATE OF
TEACHERS WOULD ACTUALLY GO UP --
I SHOULD CLARIFY THAT I BELIEVE
THIS APPLIES TO NEWER EMPLOYEES
SCENE OF WHICH I AM ONE OF
MYSELF YOU KNOW FOR STATE
EMPLOYEE.
FROM PLEASE PLACE AFTER TWENTY
THIRTEEN WHERE IT CAN FLUCTUATE
BASED ON NORMAL COST FOR THOSE
PRECEDING EMPLOYEES IT WOULD BE
BASED ON BARGAINING SO THERE'S
NO SIMPLE ANSWER TO THAT.
POINT YOU RAISE IT'S A MIX OF
TWO DIFFERENT CONSIDERATIONS NOW
I JUST DON'T WANT THE WISDOM OF
WHAT YOU'RE TRYING TO DO WHAT
THE GOVERNOR'S TRYING TO DO ALL
OF A SUDDEN.
BE.
OFFSET BY OTHER AGENDAS WHICH I
APPRECIATE BECAUSE I HAVE A
BROTHER WHO'S A SCHOOL TEACHER
SO I I GET ALL THIS --
BUT WHAT I'M CONCERNED ABOUT.
RAINY DAY.
FOR AND SO I'M WONDERING IF THE
GOVERNOR.
CONSIDERING SOME OF THE THAT THE
PLIGHTS OF SOME OF THE SCHOOL
DISTRICTS WHETHER WE SHOULD BE
MAKING A SUPPLEMENTAL PAYMENT TO
THAT FUND.
AHEAD OF THE FORMULA TO BE
PREPARED FOR WHAT ROOM BECAUSE
OF LA UNIFIED COMES KNOCKING ON
YOUR DOOR.
THEY NEED TEN BILLION DOLLARS
THAT WOULD HAVE BEEN WHERE DOES
THAT COME FROM.
I KNOW THAT'S A DIFFICULT
QUESTION SO I WILL SAY YOU KNOW
HERE WE WANTED TO MAKE THE
PAYMENTS INTO THAT.
PENSION FUND BECAUSE WE KNOW
THAT THAT THE SAVINGS WILL
COMPOUND OVER TIME AS SOME THE
GENTLEMEN WERE MENTIONING THE
OTHER THING I THINK IS WORTH
NOTING IT'S NOT A SOLUTION BUT
SOME THE SCHOOLS TO HAVE.
RESERVE AMPLE RESERVES FOR A
WEEK THE NEXT COUPLE YEARS THE
ISSUE THAT WE ARE ALL DEALING
WITH IS YOU KNOW WE'RE NOT
LOOKING JUST FOR THIS YEAR NEXT
YEAR EVEN THE YEAR AFTER WE'RE
LOOKING AT THE LONG TERM.
AND SO THAT'S A CONVERSATION
THAT WE'RE ALL GOING TO HAVE TO
HAVE.
THANK YOU VERY MUCH THANK YOU
MADAM CHAIR.
MANAGER --
THANKS FOR THE THIRD DISCUSSION
HERE.
BY THE I WANTED TO GET A LITTLE
DRILL DOWN A LITTLE MORE ON THE
PROJECTION OF SCENARIOS FOR DOWN
TICKS AND WHAT THEY MAY LOOK
LIKE AN UNDERSTANDING THAT IS.
SOMEWHAT OF A ROUGH SCIENCE IF
NOT AN ART BUT YOU KNOW I WE WE
SORT OF WE CENTRAL GAP GOING FOR
I'M LOOKING HERE.
WHERE?
THIRTEEN EIGHTY ON THE RAINY DAY
FUND SO YOU KNOW.
SOMEWHERE AROUND ALMOST A THIRTY
BILLION DOLLAR GAP --
HI I AGE I DID WILL APPLY J.
PRECIADO THE PROP TO
INTERPRETATION AND I KNOW WE'VE
GOT HUGE INFRASTRUCTURE NEEDS IN
THE STATE BUT I THINK THAT --
YOU KNOW THE VOTERS WHEN THEY
SPOKE ABOUT THE RAINY DAY FUND
THEY THEY DID WANT THAT
DURABILITY IN OUR BUDGETS GOING
FORWARD SO.
I DO APPRECIATE THAT BUT WHAT
WHY DO YOU THINK IT WILL ONLY BE
LIKE THE NINETIES AND NOT WORSE
LIKE WHAT'S WHAT'S THE DRIVING
THAT SORT OF JUST GENERAL BALL
PARKING THINKING.
THAT SO IT'S ACTUALLY IT'S VERY
DIFFICULT YOU KNOW TO KNOW WHAT
WILL HAPPEN IS THAT WHAT WE'RE
ACTUALLY MODELING AND WE'RE NOT
PROJECTING IT BUT WE WANT TO RUN
SCENARIO SOMEWHERE TO THE
CENTERS FOR THE PENSION UNDS.
IS THAT IT ACTUALLY WOULD BE
WORSE THAN THE NINETEEN NINETIES --
BUT BETTER THAN THE GREAT
RECESSION AND WHAT'S ALL
CERTAINLY HOPE IT'S WHATEVER
COMES IS BETTER THAN THE GREAT
RECESSION --
SO WE JUST LOOKED AT THAT AS A
MODERATE AND I KNOW LAOF SPOKE
ABOUT MILES RECESSION IN
MODERATE RECESSION WE JUST
WANTED TO MODEL WHAT A MODERATE
RECESSION WOULD LOOK LIKE AND
THAT'S WHERE OUR ECONOMICS IN
REVENUE UNIT CAME UP WITH THOSE
NUMBERS.
AND AND SO.
IN THAT MODERNIZATION MATER
RECESSION SCENARIO THOUGH WE
STILL FACING A BIG GAP IN SAID
THAT CONSTITUTIONAL CAP
REGARDLESS HOW YOU INTERPRET.
PROP TWO WE'RE STILL GONNA.
HAVE TO FILL IT SOME WAY AND
THAT IS CORRECT THAT'S GOING TO
BE OUT OF HIS CUT ISN'T EVEN IF
THIS MODERATE RECESSION WE'RE
THAT ONLY HAPPENED IN THREE OR
FOUR YEARS.
THE RAINY DAY FUND BY THAT POINT
WOULD BE ALMOST TWENTY BILLION
DOLLARS WHICH IS A HUGE NUMBER
BUT AS YOU NOTED SMALLER THAN
THE NUMBERS YOU WERE TALKING
ABOUT --
THANK YOU FOR THAT --
WHAT --
WANTED TO ALSO LOOK AT THE THE
ASSUMPTIONS SORT OF HISTORICALLY
HOW THEY'VE MATCHED UP SO I KNOW
WE WE WENT FROM SEVEN POINT FIVE
DOWN TO SEVEN THAT ADJUSTMENT.
THINK IT CASTERS AND AND CALPERS.
SO.
HISTORICALLY WHAT HAVE WE BEEN
ACHIEVING.
SORT OF HOW HOW HOW DO YOU HOW
HOW DID WHAT IT WHAT IS YOUR
THINKING BEHIND THOSE SORT OF
ADJUSTMENTS AND ARE WE TOO HIGH
TO LOW POTENTIALLY HERE --
YEAH HOW DO YOU HOW DO YOU GO
ABOUT THAT THOUGHT THE FIRST
HOUSES SOMETIME IT'S HARD TO
JUST LOOK AT THE PAST BECAUSE
IT'S LAKE OUR BOARD AT ALL.
ALL RETIREMENT SYSTEMS WOULD BE
DO NORMALLY ON A ON AN ONGOING
BASIS SO VOTE CALLOUSED CALVET
CULTURES AND CALPERS EVERY FOUR
YEARS THE BOARD WILL LOOK AT HOW
THE ASSETS ARE INVESTED TO TRY
TO DETERMINE IF IT'S THE MOST
APPROPRIATE WAY TO INVEST THE
ASSETS GOING FORWARD AND IF.
YOU LOOK HISTORICALLY.
THE ASSET ALLOCATION A HOW THE
ASSETS HAVE BEEN INVESTED HAS
CHANGED QUITE A BIT AT LEAST FOR
US IF YOU LOOK HISTORICALLY WE
HAVE OUR OWN MORE THAN 7%
HISTORY.
HISTORICALLY BUT WHAT MATTERS
MOST SOME FOR US WE ARE ABOUT TO
START THIS CYCLE WHERE WE'RE
GOING TO LOOK AT OUR ASSET
ALLOCATION IS.
YOU HAVE TO LOOK AS TO AS TO
WHERE YOU ARE TODAY OW THE
MARKETS AND WHAT IS THE OUTLOOK
GOING FORWARD SO.
THE LAST TIME WE DID IT.
WE HARD INVESTMENT CONSULTANTS
WE HAVE OUR OWN INTERNAL STAFF
EVERYONE SAID 7% IS WHERE YOU
SHOULD BE LONG TERM.
BUT WE STILL BELIEVE THIS IS
CORRECT --
WE ARE GONNA GO THROUGH THAT
PROCESS AGAIN THIS YEAR TO ROOM
VALID ID TO SEE IF WE CAN
VALIDATE THIS AGAIN BUT THIS IS
A AN ONGOING QUESTION THAT.
RETIREMENT SYSTEM HAVE TO ANSWER
YOU KNOW CAN I STILL ASSUME 7%
OF WHATEVER YOU'RE SOON GOING
LONG TERM.
THAT IT IS REALLY A SOMETIME
IT'S HARD TO COMPARE ONE TION OF
HOW YOU DECIDE TO INVEST YOUR
ASSETS LIKE IF AS AN INDIVIDUAL
YOU LOOK AT YOUR FOUR ONE K..
AND YOU SAY I'M GONNA PUT
EVERYTHING IN AND GOVERNMENT
BONDS I THINK IT WOULD BE
INAPPROPRIATE FOR YOU TO ASSUME
YOU'RE GOING TO EARN 7%.
RIGHT NOW THE THERE'S THEY'RE
GIVING YOU 12% SO IT'S A DIRECT
RELATION HOW YOU DECIDE TO
INVEST THE ASSETS SO YOU KNOW IF.
THIS WAS SOME TIME WHEN YOU
COMPARE ONE SYSTEM TODAY. TO TO
TO ANOTHER ONE IF YOU SEE ONE
WITH A MUCH LOWER THAN.
EXPECTED RATE OF RETURN THERE
MIGHT BE A GOOD REASON BEHIND IT
YOU MAY FIND OUT THAT THEY MADE
A DECISION TO PUT MORE IN FIXING
COMMON BONDS SO. TO FOR US WE
ARE COMFORTABLE WITH OR 7% AND
WE ARE GOING THROUGH THIS REVIEW
AGAIN ONE MORE TIME --
SIMILAR COMMENTS TO A MISTER
LAMB ROLE --
THREE FOUR YEARS --
CALPERS --
REVIEWS THEIR ASSET ALLOCATION
WE LOOK AT THE WILL CALL THE
CMA'S CAPITAL MARKET ASSUMPTIONS
BOTH -- FOR
WITH INTERNAL STAFF AS WELL AS
OUTSIDE INVESTMENT CONSULTANTS
AND WE MAKE A DETERMINATION ON
OUR OUR EXPECTATIONS --
THAT'S BASED ON THE
CONSIDERATION OF THE ASSET
ALLOCATION AND AS WELL AS LIKE
THE RISK THAT THE THE BOARD ONCE
TAKEN THE SYSTEM --
IT'LL EVERYTHING IN VERY HIGH
RISKY ASSETS TARGET YOUR RETURN
BECAUSE SOMETIMES THOSE RETURNED
STONE OCCUR AND THEN THOSE
LOSSES HAVE TO BE MADE UP BY
ADDITIONAL CONTRIBUTIONS.
THAT CAUSES EXTREME VOLATILITY --
SO IT'S ALWAYS A BALANCE BETWEEN
WANTING THEM ALL LEVEL
CONTRIBUTIONS BUT TRYING TO GET
THAT THE HIGHEST RATED RETURN
RIGHT --
WE'VE JUST TIRED AND YOU CHAU
HIS NAME SPENDING --
I THINK YOU'LL BE HERE TALKING
TO THE RETIREMENT COMMITTEE
JOINT COMMITTEE NEXT WEEK AND
WILL GIVE SOME INSIGHTS BUT HIS
GOAL IN FOCUS AS HE'LL EXPLAIN
IS TRYING TO THAT 7% BUT HE'LL
TELL YOU STRAIGHT OUT.
THAT 7% RETURN IS GOING TO BE A
CHALLENGE --
IF YOU LOOK AT THE EXPECTED
RETURNS OVER THE NEXT SEVERAL
YEARS.
WHAT I'M GETTING AT IT'S MEAN
IT'S GOOD IT'S GONNA BE WHICH IF
YOU OVERSHOOT AND WHAT HAPPENS
IF YOU?
IF FOURTH WE OVERSEEING THE
SEVEN AND WE AND WE ONLY END UP
AT FIVE THE WILL LOSSES OCCURRED
YEAR AFTER YEAR AFTER YEAR.
YOUR RATES WOULD SLOWLY CREEP UP
AND AT SOME POINT WE WOULD HAVE
TO WOULD MAKE AN ADJUSTMENT
DISCOUNT RATE BECAUSE IT.
IT WE HAVE TO ACKNOWLEDGE AT
THOSE RETURNS REALLY
REALISTICALLY CAN OCCUR AND AND
WE DON'T.
IT DOESN'T MAKE SENSE TO
CONTINUE TO HAVE THOSE --
HILL KIND LIKE A MISSED
ALLOCATION OF FUNDS YOU'RE
PUSHING OFF THOSE CONTRIBUTIONS
TO THE FUTURE GENERATIONS AS
OPPOSED TO ACTUALLY MAKING --
THE COST PAYABLE TO BY THE
TAXPAYERS RIGHT.
THANKS I LOOK FORWARD TO
REVIEWING AS YOU GUYS GO THROUGH
YOUR YOUR FOUR YEAR PROCESS MY
VERY LAST QUESTION AND THANK YOU
FOR THE THE TIME MADAM CHAIR --
I KNOW.
WHAT I'M A BUDGET RESILIENCE
TODAY I BROUGHT IT UP IF FEW
HEARINGS IN THE PAST ABOUT --
ONE OF OUR ON GOING WHAT I
CONSIDER ALSO A LIABILITY WHICH
IS -- THE
EMERGENCIES AND DISASTERS THAT
SEEM TO BE COMING UP YEAR AFTER
YEAR AND IN FACT --
PENSION FUNDS ARE DEEPLY
INVESTED IN THE UTILITY SECTOR
IN CALIFORNIA --
IN P. JEANNIE AS WELL AS OUR
OTHER INVESTOR OWNED UTILITIES --
LOOKING AT THAT.
THAT ISSUE NOT SO MUCH AS SAY AN
ENVIRONMENTAL PROGRAMMER AND
ENERGY EXPENDITURE BUT BUT
REALLY TRYING TO GET OUR HEADS
AROUND WHAT THE ON GOING.
COSTS COULD BE TO THE STATE ON A
MULTI YEAR BASIS FROM THE SERVER
WILD FIRE EMERGENCY SECTOR.
I SAW THAT YOU KNOW WE'RE WE ARE
MOVING MORE INTO THE BSA SAY
THAN SAY THE SFE YOU FROM LAST
YEAR.
BUT I REALLY I'M EXCITED THAT WE
I THINK WE JUST RE AUTHORIZED
HERE THROUGH THE VOTE TODAY INC
RE AUTHORIZATION OF OF THAT --
OF THE DISASTER SAID DISASTER.
THAT.
ARE DIZZY OVER ITS YES YES FOR
THAT HAVE YOU GIVEN FURTHER
THOUGHT TO TO THAT ISSUE SORT OF
ODD.
TO HOW.
TO ACCURATELY --
EVEN IF NOT PROJECT AT LEAST
MODEL --
WHAT THAT RISK COULD LOOK LIKE
FOR US GOING FORWARD WHAT IT
LOOKS LIKE TO HAVE A SORT OF
STABILITY OR AT LEAST
ANTICIPATING RISKS ON A MULTI
YEAR BASIS ON THE DISASTER SIDE
OF THINGS AND HOW TO SORT OF?
NOT GET BLIND SIDED --
I MEAN I'D YOU KNOW GOING BACK
TO THE ALEJO'S ANALYSIS WE DID
FLOW.
TO THINK AND ELEVEN BILLION
DOLLARS SOMETHING THAT THE
ELEVEN POINT TWO BILLION DOLLAR
D. W. R. BOND WHEN WHEN WE HAD.
TO LIKE TRICITY CRISIS AND I
DON'T THINK THIS IS AN ENERGY
CRISIS I ACTUALLY I THINK IT'S A
RESTRUCTURING OPPORTUNITY
ACTUALLY TO GET THINGS HEALTHY
AND STABLE BUT JUST FURTHER
THOUGHTS ON THAT SINCE OUR LAST
HEARINGS.
YES SIR THIS IS A VERY
COMPLICATED ISSUE AND IT'S NOT
SOMETHING SPECIFICALLY AT
FINANCE WHERE WE YOU KNOW WE
HAVEN'T MODELED.
THE SERIOUS SPECIFICALLY RELATED
TO CLIMATE BUT ACROSS THE
ADMINISTRATION IS A PRIORITY SO
COUPLETHINGS I WANT TO MENTION
FIRST YOU KNOW AT FINANCE WE
WANT TO MAKE SURE THAT WE HAVE A
HEALTHY ASSET TO YOU.
NOT JUST THIS YEAR BUT OVER THE
NEXT THREE YEARSBECAUSE WE KNOW
THESE THINGS AT SOME POINT WILL
HAPPEN AGAIN HOPEFULLY NOT WITH
THIS LEVEL SEVERITY BUT IT'S NOT
SOMETHING THAT WE CAN PUT AN END
TO RIGHT NOW IS THROUGH THE VOTE.
NINE IN ALMOST ALL THE WERE HERE
LAST ESTABLISH THIS COMMISSION
REPORT TO I THINK IT'S ON JULY
FIRST ON WHAT HESE COSTS ARE
AND YOU FROM THE MOST RECENT
FIRES AND WHAT STRUCTURES WE CAN
UNDERTAKE TO MITIGATE THEM --
AND AS YOU SAW BOTH OF THE
APPOINTEES FROM THE LEGISLATURE
AS WELL AS THE GOVERNOR'S OFFICE
INCLUDING THE FORMER.
INSURANCE COMMISSIONER DAVE
JONES THESE ARE PRETTY HIGH
LEVEL APPOINTEES THAT WE HAVE ON
THIS COMMISSION SO I THINK
THEY'RE GOING TO HELP ALL OF US --
MAKE SOME PROGRESS ON HOW TO
THINK ABOUT THIS.
AND THEN THE LAST THING I KNOW I
MENTIONED HER NAME LAST TIME
BRIEFLY BUT KATE CORD AND SHE
HADN'T COME INTO OFFICE YET BUT
SHE'S OUR NEW OFFICE OF PLANNING
RESEARCH AND DIRECTOR.
AND SHE HAS A LONG BACKGROUND
WHEN IT COMES TO CLIMATE
SUSTAINABILITY BUT ALSO ON THE
SPECIFIC PINT YOU MENTION
QUANTIFYING THOSE RISKS SO I
DON'T KNOW THAT THERE IS A PLAN
IN PLACE TO DO THAT RIGHT NOW
pABOUT THE PEOPLE AND PERSONNEL
INVOLVED.
THERE'S A LOT OF EXPERTISE OF
PEOPLE WHO ARE THINKING ABOUT
THOSE QUESTIONS.
YES THANK YOU THANK YOU THIRD.
THANK YOU MADAM CHAIR.
FIRST I JUST WANT TO SAY THANK
YOU TO ALL OF YOU AND TO THE
GOVERNOR'S OFFICE FOR ALL THE
HARD WORK THAT YOU ARE DOING AND
CONTINUE TO DO. TO MAKE SURE
PENSION FUNDS ARE WHERE THEY
NEED TO BE AND SO THE FOLKS THAT
WE'VE MADE PROMISES TO WE CAN
ACTUALLY DELIVER ON THOSE
PROMISES.
I HAD A QUESTION FOR YOU MISTER
LAMB MORALE THEY SAY THAT EVEN
REMOTELY CLOSE HE DID THE THING
OKAY THANK YOU.
SO A CAL STIR STIRS WILL BE
FULLY FUNDED AND TWENTY FORTY
SIX CORRECT THAT IS THE GOAL OF
THAT'S THE GOAL AND WE HAVE A
PLAN.
SO I APPRECIATE YOU SAYING THAT
BECAUSE WE HEAR SO MUCH ABOUT
UNFUNDED LIABILITIES AND I THINK
THAT PEOPLE MISS THE POINT AND
THE FACT THAT WE ACTUALLY HAVE A
PLAN. TO GET US TO WHERE WE NEED
TO BE SO I HOPE THAT PLAN AND
THAT WE'RE GOING WE'RE WORKING
HARD TO GET TO FULLY FUNDED AND
NOT JUST TALK ABOUT UNFUNDED
LIABILITIES BECAUSE I THINK
UNFUNDED LIABILITIES.
ARE JUST A FACT WHEN IT COMES TO
RETIREMENT SYSTEMS AND PENSION
PLANS.
AND I HAD A QUESTION ABOUT --
CALPERS THEIR FIFTY SEVEN
BILLION AND UNFUNDED LIABILITIES
THAT'S CORRECT.
AND ARE THEY ALSO ON TRACK TO BE
FULLY FUNDED AND TWENTY FORTY
SIX YEAH ACTUALLY PROBABLY A
LITTLE BIT FOR THE RIVER.
AMORTIZATION POLICY THAT THAT
SORT OF ALLOCATES ON A YEAR BY
YEAR BASIS SO WE HAVE SOME BASIS
THAT HAVE BEEN ON AND ARE BEING
PAID OFF. TEN TWELVE YEARS HAVE
LEFT THAT'S GREAT AND THEN THE
MORE RECENT ONES ARE THE LIKE A
THIRTY YEAR BASE WHICH HAS
THIRTY YEARS REMAINING.
ARM WE'VE JUST CHANGE OUR POLICY
IN FACT WE'RE GOING TO TWENTY
YEARS.
MAXIMUM PERIOD STARTING WITH THE
NEXT ALLEY WHICH THE COMES UP.
SO WE ARE MOST THOSE BENEFITS
AND OBLIGATIONS WE PAID OFF
WITHIN THIRTY YEARS FANTASTIC
DID YOU HAVE SOMETHING WHAT IS
THE ONLY ONE COMMENT I WOULD
LIKE TO MAKE IS BECAUSE SOMETIME
WE HAVE EVEN FOR US WE HAVE A
LOT OF MEMBERS.
THAT WILL CALL US AND BE WORRIED
BECAUSE THEY SEE WERE 63% FUNDED
IN THE MAIN MESSAGE WE HAVE FOR
EVERYONE WE REPEAT IT TWO OR
BOARD ALL THE TIME.
IT'S DONE THIS IS SILLY WHERE
YOU ARE THAT SHOULD BE ALARMING
IS OR YOU SHOULD BE LOOKING TO
WHERE YOU'RE HEADING THAT'S
RIGHT IF YOU LOOKED IS BACK.
LAKE TEN YEARS AGO FOR US WE
WERE ABOUT 80% FUNDED AT CAL
STIRS.
BUT WE WERE ON THE WAY DOWN
BECAUSE WE CHIU IN PLACE TODAY
ALL THE WITH 63% FUNDED WERE
HEADING UP AND THAT'S THE KEY
pYOU SHOULD ALWAYS BE FOCUSING ON
WHAT'S THE DESTINATION.
AND RIGHT NOW A DESTINATION IS
ALL POURED WHICH IS.
IS WHAT WE SHOULD BE VERY GLAD
AND BE FOCUSING ON YES I AGREE A
100% APPRECIATE EVERYONE'S WORK
AND IF WE CAN JUST CONTINUE TO
GET THAT MESSAGE OUT THERE
BECAUSE I THINK SO MANY TIMES
IT'S JUST TWO MEN GLOOM AND
EVERYTHING IS HORRIBLE.
AND THEY DON'T REALIZE THAT WE
ARE ON AN UPWARD TRACK SO THANK
YOU ALL VERY MUCH.
THE WHITE HOUSE. ONE QUESTION --
MR THIS ONE UP ON CALPERS AND
CAL STIRS OUR SHAREHOLDERS IN
THE P. JEANNIE REORGANIZATION
ONE THE CARDINAL RULES IN
BANKRUPTCY IF YOU DON'T PAY YOUR
CLAIM IT'S A 100%.
THOUGH SHAREHOLDERS GET WIPED
OUT.
CAN YOU QUANTIFY THAT SEVEN
BILLION DOLLAR RISK WHAT WE MAY
TWO BECAUSE TYPICALLY IN A
REORGANIZATION THE DEBTOR OFFERS
THOSE WIPED OUT SHAREHOLDERS AN
OPPORTUNITY TO PURCHASE NEW
SHARES AT SOME.
DISCOUNTED RATE.
GOING LOOKING FORWARD.
SO YES SO --
I DON'T HAVE A CLEAR ANSWER TO
THAT QUESTION BECAUSE AS YOU
KNOW IN EVERY BANKRUPTCY THE OUT.
OFTEN SHAREHOLDERS TO GET WIPED
OUT -- BUT
WHEN YOU LOOK BACK TO THE MOST
RECENT P. JEANNIE BANKRUPTCY AND
THE OUTCOMES WERE MUCH MILDER
FOR A LOT OF THE STAKEHOLDERS
THERE.
SO THE ONLY ANSWER I HAVE IS
NUMBER ONE WE DON'T KNOW WHAT'S
GONNA HAPPEN BUT NUMBER --
TWO THE PACKAGE THAT YOU JUST
STARTED ON WHICH INCLUDES
ADDITIONAL RESOURCES FOR THE
ADMINISTRATION TO DEAL WITH THE
SITUATION WILL MAKE SURE THAT
WHEN IT COMES NOT JUST TO THE
STATE ITSELF BUT TO CALPERS AND
CAL STIRS WITCHER OUR RETIREES.
INTERESTS AS WELL [inaudible]
YEAH.
THANK YOU MADAM CHAIR FOR YOUR
INDULGENCE I JUST HAD A QUICK
QUESTION FOR CAL STIRS AND AND
EIGHTY BEFORE AGAIN THAT SCAN
WHAT THANK THE MINISTRATION FOR
ACTUALLY HELPING OUT SCHOOL
DISTRICTS BUT PUTTING SOME FUNDS --
AT THAT.
SINCE YOU PROJECTED HALF PERCENT
I MEAN IT'S A LOT.
OF MOVING FORWARD --
ON ON GOING BASIS BUT I KNOW
SOME CONCERN WAS RAISED WELL GEE
YOU KNOW THE TEACHERS SWEET HELP
OUT.
THE ONLY ABOUT THE STIRRED
RECOMMENDATION THEY'RE JUST
GOING TO NOW ASK FOR MORE SALARY
BUT I'D.
THAN DO I KNOW YOU'RE THE
ACTUARIES BUT I GO SHEETS AND
IMPOSE MADE REFERENCE TO MY
SCHOOL DISTRICT AND SOME OTHER
SCHOOL DISTRICTS AROUND --
THAT IS PART OF THE NEGOTIATIONS
SUCH AS THE SALARY THAT THAT
COMMENSURATE ENTRIES IN.
TENSION THAT MIGHT RESULT IN
INCREASED SALARY ACTUALLY IS
BUILT IN TO THE SALARY INTO THAT
NEGOTIATION INCLUDING THEIR
CONTRIBUTION BY PERCENTAGE. TWO
THOUSAND HOURS IS THAT YOUR
UNDERSTANDING.
YES VS AND UX ON THIS POINT I
JUST WANT TO GO BACK --
BUT TO MISTER MOORE LOCKS A
QUESTION OR COMMENT EARLIER SO --
IT'S INTERESTING BECAUSE AS I
MENTIONED EARLIER WE HAVE A
FUNDING PLAN IN PLACE BUT
CONTRIBUTION RATES THAT ARE
FIXED FOR THE SCHOOL DISTRICT.
THROUGH FISCAL YEAR.
TWENTY TWENTY ONE AND RIGHT NOW
SCHEDULED TO GO UP TO NINETEEN
POINT 1%.
BEYOND THAT POINT OR BOARD WILL
THEN HAVE AUTHORITY TO ADJUST
THE CONTRIBUTION RTE FOR THE
SCHOOL DISTRICTS WE HAVE LIMITS
FOR THE I I DID MENTION IT
EARLIER BUT OUR BOARD WILL BE
ABLE TO MAKE ADJUSTMENTS.
UPWARD OR DOWNWARD BY NO MORE
THAN 1% IN ANY GIVEN YEAR.
AND IN THE MOST RECENT
INFORMATION WE PROVIDED OR BOARD
LAST YEAR WAS AT THIS TIME WE
EXPECT TO HAVE TO DECREASE.
THE SCHOOL DISTRICT'S
CONTRIBUTION TO SOMEWHERE AROUND
18%.
SO IT CREATES AN INTERESTING
SITUATION FUNDING FROM THE STATE
SCHOOL DISTRICT WILL BE ASKED TO
START CONTRIBUTING EIGHTEEN
POINT 1% NEXT YEAR. NINETEEN
POINT 1% THE FOLLOWING YEAR AND
IT POTENTIALLY OR BOARD WOULDN'T
TURN AROUND A YEAR LATER AND
WOULD USE IT AGAIN --
I'M NOT A BUDGET PERSON I'VE OF
I USED TO WORK AT CALPERS BEFORE
AND I REMEMBER SOME OF THE
COMMENTS THAT EMPLOYERS USE TO
TELL US WHICH IS I WOULD RATHER
HAVE A STABLE CONTRIBUTION RATE.
THAN HAVE WANTED INCREASES AND
SUDDENLY DECREASES SO I THINK
WHEN YOU LOOK AT THE
ADMINISTRATION'S PROPOSAL --
IT I SORT OF A TRADE OFF AND
GIVING SHORT TERM RELIEF TO
EMPLOYERS AND LONG TERM RELIEF
AS WELL.
I PLEASE MYSELF IF I MADE A
BUDGET PERSON AND I'M LOOKING AT
WHAT IT MIGHT DO IT'S LOOKING IN
ALL ITS WORST IT SEEMS THAT IT
WILL PROVIDE.
MORE OF A STABLE.
IF YOU WANT PATH FOR THE
CONTRIBUTION REQUIREMENT TO CAL
STIRS WERE POTENTIALLY IT WILL
INCREASE 18% AND STAY AROUND
THAT LEVEL SO.
THAT'S PROBABLY ANNOYS YOU
CONSIDER THIS PROPOSAL THIS THIS
COULD BE VIEWED AS ONE OF THE
ADVANTAGES.
UT THEY SHOULD PROVIDE MORE
BUDGET STABILITY --
FOR EMPLOYERS.
I'M.
HAVING BEEN ON A PRIVATE SECTOR
PENSION PLAN OF ONE OF HE
THINGS THAT ALWAYS IMPACTED THE
PLAN WITH THE NUMBER OF
PARTICIPANTS.
AND THE NUMBER OF EMPLOYERS.
SO MY QUESTION TO YOU IS IN THE
PUBLIC SECTOR.
UP VERSION OF THE PLAN.
WHAT WHAT IS THE WHAT HAS BEEN
HAS THERE BEEN AN IMPACT IN
TERMS OF NUMBER OF PARTICIPANTS
A NUMBER OF EMPLOYERS?
AND IN PARTICULAR WITH CHARTER
SCHOOLS --
COULD YOU DESCRIBE THAT IS THAT
AN ISSUE HASN'T BEEN.
OR COULD YOU SEE I I CAN
ELABORATE ON THIS SO AGAIN I
THINK THE ANSWER MAY BE
DIFFERENT BETWEEN CAL STIRS AND
CALPERS --
SO FOR US EVERY YEAR FOR THE
LAST. FOR PRESENTING TOUR ABOARD
A REPORT THAT WE CALL THE REVIEW
OF CAL STORMS FUNDING LEVELS AND
RISK WE WE HAVE BEEN TRYING TO
FOCUS AND MAKE OUR BOARD AWARE
OF WHERE WHAT ARE SORT OF THE
MAIN RISKS.
THAT WE SHOULD BE AWARE IS A
SYSTEM THAT COULD PREVENT US
FROM REACHING FULL FUNDING AND
YOU MAKE A GOOD POINT BECAUSE
FOR THE LAST TWO YEARS WE HAVE
BEEN FOCUSING ON THREE MAIN
RISKS.
FIRST ONE BEING INVESTMENT RISK
I THINK EVERYONE IS AWARE OF THE
FLUCTUATION INVESTMENT MARKETS.
THE SECOND ONE BEING A HOW LONG
OUR MEMBERS LIVE AND IN CASE YOU
HAVEN'T SEEN RECENT NEWS REPORTS
WE'VE ALWAYS KNOWN THIS AT CAL
STIRS BUT THE THE EXPRESSION
THAT TEACHERS LIVE FOREVER.
HAS MORE AND MORE TRUTH TO IT.
TAKE EACH MONTH OR BOARD MEMBER
OR ARE CHAIR OF THE IN A DILLON
SENDS BIRTHDAY CARDS TO OUR
BOARD MEMBERS WHO TURNED ONE
HUNDRED YEARS OLD TO OUR MEMBERS.
AND SHE'S BEEN SIGNING CLOSE TO
THIRTY OF THESE LETTERS EACH
MONTH.
JUST TO GIVE YOU AN IDEA WE HAVE
APPROACHING FOUR HUNDRED MEMBERS
WHO ARE CURRENTLY A HUNDRED
YEARS OLD A MORE.
AND THE THIRD RISK THAT WE PAY A
LOT OF ATTENTION --
GOING BACK TO THE QUESTION IS
THE NUMBER OF PARTICIPANTS IN
OUR SYSTEM.
IT AGAIN IT ALL GOES BACK TO
REASON WE BRING THAT UP FOUR AND
THEN AGAIN IT'S JUST SPECIFIC TO
OUR SITUATION.
BECAUSE OUR BOARD HAS LIMITED
AUTHORITY TO ADJUST CONTRIBUTION
RATE.
AND ONE OF THE BIG FACTOR IS OF
CONTRIBUTING TEACHERS THE
PAYROLL OF THE SYSTEM IF YOU
WANT TO TO THE EXTENT WE WERE TO
START TO SEE A DECLINE IN THE
NUMBER OF TEACHERS IN CALIFORNIA
FOR VARIOUS REASONS.
IT COULD BE BECAUSE WE HAVE LESS
CHILDREN IT COULD BE BECAUSE OF
BUDGET PRESSURE WHAT WE HAVE TO
REDUCE CLASS SIZES.
OR FOR US WE TRY TO KEEP AN EYE
ON COMMITTEE COLLEGES WHICH ARE
PART OF CAL STIRS BECAUSE YOU
NEVER KNOW.
THE WE WOULD DELIVER IT
EDUCATION MAY CHANGE DOWN THE
ROAD OF WITH ONLINE LEARNING
THERE MAYBE A NEED FOR LESS
TEACHERS IN THE FUTURE SO THOSE
ARE KIND OF WE'VE BEEN PAYING
ATTENTION TO THESE RISK AND FOR
US.
BECAUSE WE HAVE RATE SETTING WE
HAVE LIMIATION ON HOW WE CAN
SET THE RATES IT BECOMES A VERY
IMPORTANT PART OF THE EQUATION.
HAS IT BEEN SO.
YOU HAVE ANY INFORMATION. TO FOR
US IN THE LAST FIVE TO TEN YEARS
THE NUMBERS HAVE GROWN ACT IF
YOU GO BACK A DECADE --
IT IT IT KIND OF DIPLO ABOUT A
DECADE AGO BUT SINCE FOR THE
LAST FIVE YEARS WE HAVE SEEN A
CONSTANT INCREASE THE NUMBER OF
ACTIVE TEACHERS IN CALIFORNIA
AND SO OUR MEMBERSHIP HAS BEEN
GROWING --
BUT WHEN WE LOOK AT PROJECTIONS
FOR EXAMPLE THE DEPARTMENT OF
FINANCE ISSUES ABOUT PROJECTION
OF FOR STUDENTS A K. THROUGH
TWELVE STUDENTS FOR EXAMPLE.
IT'S FAIRLY STABLE OR EVEN
EXPECTED TO SLIGHTLY DECLINE SO
WE WOULDN'T EXPECT THAT MUCH OF
A GROWTH.
GOING FORWARD BUT HE HAS BEEN
GROWING FOR THE LAST FEW YEARS.
AND IT'S BEEN ONE OF THE DRIVER
OF WHY WE NOW EXPECT.
A SLIGHTLY LOWER CONTRIBUTIONS
TO WIN THE CAL STIRS FUNDING
PLAN WAS PASSED IS BECAUSE WE
HAVE MUCH MORE TEACHERS TODAY IN
THE SYSTEMS THAN WE DID BACK IN
TWO THOUSAND AND FOURTEEN IRAQ.
I THOUGHT THE THE FOLKS WHO KOW
ABOUT THESE THINGS HAVE BEEN
TALKING FOR SOME TIME ABOUT
DECLINING ENROLLMENT IN CASE
THROUGH FOURTEEN IN THE STATE.
CERTAINLY IN THE OUT YEARS AND
GIVEN THE FACT THAT WE'RE
TALKING ABOUT.
TWENTY FORTY SIX IF THAT'S TRUE
DO YOU PLAN FOR IN YOUR
PROJECTIONS FOR ANY SIGNIFICANT
DECLINE.
IN STUDENT ENROLLMENT IN CASE TO
FOURTEEN AND AND THE
COMMENSURATE.
POTENTIAL FOR A REDUCTION IN
YOUR PARTICIPATING --
EMPLOYEES.
BENEFICIARIES WITH A RECALL.
RIGHT NOW BASED ON WHAT WE HAVE
WHICH WE WE RELY A LOT ON SOME
OF THE INFORMATION DEPARTMENT
FINDS HAS ON THEIR WEBSITE THAT
IS KIND OF THE PROJECTION OF K.
THROUGH TWELVE STUDENTS.
WERE IN ALL OF OUR WORK WE
ASSUME THAT WE'RE GOING TO DE DE.
FROM THE STUDENT POPULATION A
NUMBER OF TEACHERS WILL REMAIN
CONSTANT OVER TIME IS SORT OF
THE WAY WE DO IT BUT TO THE
EXTENT WE ALSO PROVIDE THE
SENSITIVITY ANALYSIS TO OUR
BOARD.
AND IN SITUATIONS WHERE WE IF WE
WHERE TO GET TO SEE A DECLINE IN
THE NUMBER OF TEACHERS THAT
WOULD PUT PRESSURE ON
CONTRIBUTION REQUIREMENTS.
PUSHING EVERYTHING UPWARD AT THE
SONORA ON OUR SIDE.
THANK YOU FOR THE ROTH IN THE
FINAL OF QUESTIONS OR COMMENTS
FROM COMMITTEE MEMBERS BEFORE WE
OPEN UP THE PUBLIC COMMENT.
SEEING NONE PUBLIC COMMENT.
THE MORNING CHURN MEMBERS DEREK
CLINICS ON BEHALF OF THE SMALL
SCHOOL DISTRICTS ASSOCIATION THE
SCHOOL EMPLOYERS ASSOCIATION OF
CALIFORNIA.
STATE THE OBVIOUS THE THREE
BILLION DOLLARS FOR OUR STIRS
OBLIGATIONS ON SCHOOL EMPLOYERS
I WE STRONGLY SUPPORT THAT.
IN JUST ONE ME TWO QUICK POINTS
ON IT TO SPEAK TO SOME OF WHAT
THE MEMBERS FOR SAYING.
THE FIRST IS BECAUSE WE SUPPORT
A. B. FOURTEEN SIXTY NINE THE
FULL FUNDING PLAN BECAUSE THIS
HELPS TO STRENGTHEN THAT PLAN
HELP US GET TO A 100%.
YOU KNOW POTENTIALLY THREE
BILLION DOLLAR SOONER --
WE THINK IT'S A REALLY SMART
MOVE BECAUSE OBLIGATED AND
COMMITTED TO PAYING THOSE
BENEFITS FOR OUR EMPLOYEES.
AND THE SECOND THING IS EVEN
THOUGH WE'RE HERE TALKING TO ME
BUDGET COMMITTEE ABOUT RESERVES
DEBTS AND LIABILITIES THIS
CONVERSATION COULD EASILY BE
HAPPENING IN SUB.
ONE OVER TALKING ABOUT EDUCATION
BECAUSE IT'S NOT IN OUR VIEW A
THREE BILLION DOLLAR INVESTMENT
TOWARDS PENSINS IT'S A THREE
BILLION DOLLAR INVESTMENT
TOWARDS K. FOURTEEN EDUCATION
BECAUSE YOU'RE FREEING UP SO
MANY OPERATIONAL RESOURCES. FOR
SCHOOLS AT A LOCAL LEVEL SIR
THANK YOU FOR ALLOWING US TO
FEEL HEARD IN THIS CONVERSATION
WE KNOW THAT YOU'VE BEEN HEARING
IT FROM YOUR CONSTITUENTS.
AND WE THINK THIS IS ONE OF THE
MOST IMPORTANT PARTS OF YOUR
PROPOSED BUDGET THANK YOU.
THANK YOU NEXT WITNESS.
GOOD MORNING JENNIFER BAKER WITH
THE CALIFORNIA TEACHERS
ASSOCIATION I'D LIKE TO ECHO
MANY OF THE COMMENTS THAT WERE
MADE -- BY
MY COLLEAGUE --
IN APPRECIATE THAT LEADERSHIP
THAT THE GOVERNOR AND AND HIS
STAFF WITH DEPARTMENT OF FINANCE
ARE TAKING ON THIS ISSUE IT IS A
TRUE THIS WILL HAVE A
SIGNIFICANT IMPACT.
ON HELPING SCHOOL DISTRICTS TO
HAVE FLEXIBILITY IN THEIR
BUDGETS FAX DO MATTER IN DURING
THE TWO THOUSAND EIGHT RECESSION
OUR SCHOOLS LOST SIXTY FIVE
BILLION DOLLARS IN FUNDING FROM
PROP NINETY EIGHT THAT WE NEVER
RECEIVED OR NEVER GOING TO
RECEIVE.
THAT IS THE ONE OF THE REASONS
WHY THE SYSTEMIC A LACK OF
FISCAL SUPPORT DURING THAT
RECESSION HAS REALLY --
BECOME MORE ABOUT BOILING OVER
PORT --
POINT IN A LOT OF SCHOOL
DISTRICTS THAT WE'RE HEARING
ABOUT --
IT'S NOT BECAUSE OF PENSIONS
IT'S BECAUSE OF THE SYSTEMIC
UNDER.
OF EDUCATION FOR THE NEEDS THAT
WE HAVE BECAUSE WE DO HAVE
INCREASES IN CAL STIRS RATES BUT
AS MANY OF YOU KNOW THAT TALK IN
EDUCATION TERMS.
SPECIAL EDUCATION HAS BEEN A
SICK LACK OF FUNDING YESTERDAY I
WAS WITH THE EDUCATORS FROM
PARADISE IN SANTA ROSA.
AND THE LACK OF ADEQUATE FUNDING
IN TRANSPORTATION HAS MEANT THAT
THOSE DISTRICTS THAT HAVE BEEN
IMPACTED BY THE RECENT WILDFIRES
HAVE HAD TO USE MORE OF THEIR
RESOURCES TO ACTUALLY HELP COVER
TRANSPORTATION WHICH IS
ENCROACHING INTO THEIR BUDGET.
SO I DO WANT TO CLARIFY IN NOTE
THAT THE STRIKE THAT WE RECENTLY
HAD AN LA.
THE STRIKE THAT COULD
POTENTIALLY HAPPEN IN OAKLAND
THE VERY COURAGEOUS
CONVERSATIONS THAT ARE HAPPENING
IN SACRAMENTO CITY ARE NOT
BECAUSE OF PENSIONS BETTER
BECAUSE OF THE LACK OF SYSTEMIC
SUPPORT. FOR EDUCATION AND WE
DON'T THINK THAT IT'S A CRIME
FOR EDUCATORS TO BE ABLE TO HAVE
A SALARY TO ALLOW THEM TO LIVE
IN THE COMMUNITIES IN WHICH THEY
SERVE.
AND EVEN IF THEY GET THOSE
INCREASES THAT WOULD STILL NOT
ONLY NOT ALLOW THAT TO HAPPEN
BUT MORE IMPORTANTLY WITH THEIR
TRULY ASKING FOR SYSTEMIC
SUPPORT IN THE CLASSROOM.
SO THAT DISTRICTS CAN OFFER THE
SUPPORT IN THE CLASSROOM BEFORE
AND AFTER SCHOOL AS WELL AS TO
MAKE SURE THAT THE COMMUNITIES
NEEDS ARE HEARD --
AND THEY'RE ALSO WANT TO MAKE
SURE THAT THE ENCROACHMENT OF
THE COST OF INCREASING OF
CHARTER SCHOOLS ALSO DOESN'T
INHIBIT THE DISTRICT'S ABILITY
TO SERVE THE STUDENTS AND WHAT
THEY NEED SO.
BY SUPPORTING INTO THREE HUNDRED
OUT THE THREE BILLION DOLLARS IN
CAL STIRS WHAT YOU'RE DOING IS
GIVING OUR SCHOOL DISTRICTS MORE
SUPPORT TO MAKE SURE ALL
STUDENTS CAN GET SERVE
HOLISTICALLY AND WE THINK THE
GOVERNOR'S LEADERSHIP FOR THAT.
THANK YOU VERY MUCH.
WOULD LIKE TO OUR THANK MISS
HOLLINSHEAD GENTLEMAN FOR YOUR
PARTICIPATION IN TODAY'S HEARING
VERY HELPFUL GAVE US ALL AN
OPPORTUNITY.
TO DIG A LITTLE DEEPER AND GET
OUR QUESTIONS ANSWERED AND THE
THE DIALOGUE WILL CONTINUE
THROUGH THE SUBCOMMITTEE PROCESS
THANK YOU VERY MUCH HEARING IS
ADJOURNED