SSDA Today - Spring/Summer 2018 - 14

on July 1, 2018. The following table, provided by CalPERS, illustrates the timing of these changes, which are not expected to
stray far from current expectations:

in assumed payroll growth (3 percent, down to 2.75 percent).
Rather than increasing employer rates in 2018 to immediately
begin to make up the difference, the growth in unfunded liability is phased-in
Projected Employer
over five years. As
Estimaged
Contribution Rate
a result, in 2023-
PEPRA Member
(As a Percentage
Classic Member
24, employer conContribution Rate
of Payroll)
Contribution Rate
tribution rates are
17.7%
7.0%
6.50%
projected to be
20%
7.0%
6.50%
roughly 0.3 percent higher than
22.7%
7.0%
7.25%
what we see in the
23.7%
7.0%
7.25%
table above.

Valuation Date

Fiscal Year Impact

Discount Rates

6/30/2017

2018-19

7.375%

6/30/2018

2019-20

7.25%

6/30/2019

2020-21

7.00%

6/30/2020

2021-22

7.00%

6/30/2021

2022-23

7.00%

24.3%

7.0%

7.25%

6/30/2022

2023-24

7.00%

24.8%

7.0%

7.25%

6/30/2023

2024-25

7.00%

25.1%

7.0%

7.25%

CALLS FOR DIVESTMENT SLOWLY
CHIP AWAY AT
CALPERS FUND

In spite of concerns that a 7.00 percent discount rate was
overly-optimistic, the Board declined to adopt a more conservative assumption, due, in part, to consistent messaging from
public employers about the fiscal distress caused by lower
investment return assumptions.
For major decisions like this one, it remains critical from small
school districts to remain "in the room" as conversations with
decision makers occur. Marcie Frost, CalPERS chief executive
officer, underscored the need take into account stakeholder input
while striving towards Fund sustainability: "The Board heard
employers' concerns about the pressures of increased pension
costs[.] They balanced those concerns with making sure we are
not taking on additional risk in the market and leaving the Fund
more vulnerable during an economic downturn."
OTHER ACTUARIAL ASSUMPTIONS TO HAVE
MODEST IMPACT ON CONTRIBUTION RATES

The CalPERS Board also adopted other economic and demographic assumptions to complete the ALM process. Key
demographic assumptions (such as post-retirement lifespan,
retirement rates, and salary increases) often have major implications for school employer contribution rates.
In short, the required annual payment toward the school
plan's unfunded liability is increasing due to a slight reduction

A review of all CalPERS divestment mandates and decisions
revealed a 2.6 percent aggregate loss to the pension fund,
equal to $8.47 billion, according to the Board's independent consultants, Wilshire Associates. This revelation was
troubling to many stakeholders and Board Members, as the
CalPERS Fund is estimated to have just 68 percent of the
assets necessary to pay future liabilities.
Existing divestment mandates pertain to issues including
tobacco-related securities, Iran and Sudan, and firearmrelated companies. These arose from a mix of legislative
activity and Board decisions, often in response to advocacy
by groups with critical perspectives on these topics.
In the 2017 legislative session, however, a coalition of parties-including CalPERS, CalSTRS, and school employer and
employee organizations-helped persuade the Legislature to
not legislatively enact any new divestment mandates. These
proposals concerned topical political, social, and environmental issues, including the Turkish-investment vehicles
in light of the Armenian Genocide (AB 1597, Nazarian), construction of the Dakota Access Pipeline (AB 20, Kalra), and
construction of President Trump's border wall (AB 946, Ting).
While these are clearly issues of state and national importance, the question of whether to manipulate our pension
funds to address the issues-at the long-term risk of Fund
sustainability and greater contribution rates-remains a live
debate in the Legislature and at CalPERS and CalSTRS. This
week's report will inform the ongoing conversation.
CONCLUSION

We are always interested to hear about your experiences in the
field when it comes to employee benefits and the retirement
systems. Please feel free to SSDA with any comments or questions.
●

to the advertisers who helped
make this publication possible.
14

SSDA TODAY | SPRING/SUMMER 2018

Derick S. Lennox, Capitol Advisors Group, LLC



Table of Contents for the Digital Edition of SSDA Today - Spring/Summer 2018

EXECUTIVE DIRECTOR’S COLUMN
Student Free Speech: School Officials’ Response to Student Social Media Comments, “Likes” and Followers
CalPERS Rate Increases Begin to Stabilize
New School Nutrition Laws Take Effect
Website Accessibility: How an Educational Entity Can Ensure its Website is Accessible to those with Disabilities
After Years of Debate, Special Education Credential Seems Destined for Changes
School Board Elections and the California Voting Rights Act: Districts Shift from At-Large to District-Based Elections
ADVERTISER’S INDEX
SSDA Today - Spring/Summer 2018 - Intro
SSDA Today - Spring/Summer 2018 - cover1
SSDA Today - Spring/Summer 2018 - cover2
SSDA Today - Spring/Summer 2018 - 3
SSDA Today - Spring/Summer 2018 - 4
SSDA Today - Spring/Summer 2018 - 5
SSDA Today - Spring/Summer 2018 - EXECUTIVE DIRECTOR’S COLUMN
SSDA Today - Spring/Summer 2018 - 7
SSDA Today - Spring/Summer 2018 - 8
SSDA Today - Spring/Summer 2018 - 9
SSDA Today - Spring/Summer 2018 - Student Free Speech: School Officials’ Response to Student Social Media Comments, “Likes” and Followers
SSDA Today - Spring/Summer 2018 - 11
SSDA Today - Spring/Summer 2018 - 12
SSDA Today - Spring/Summer 2018 - CalPERS Rate Increases Begin to Stabilize
SSDA Today - Spring/Summer 2018 - 14
SSDA Today - Spring/Summer 2018 - New School Nutrition Laws Take Effect
SSDA Today - Spring/Summer 2018 - Website Accessibility: How an Educational Entity Can Ensure its Website is Accessible to those with Disabilities
SSDA Today - Spring/Summer 2018 - 17
SSDA Today - Spring/Summer 2018 - 18
SSDA Today - Spring/Summer 2018 - After Years of Debate, Special Education Credential Seems Destined for Changes
SSDA Today - Spring/Summer 2018 - 20
SSDA Today - Spring/Summer 2018 - School Board Elections and the California Voting Rights Act: Districts Shift from At-Large to District-Based Elections
SSDA Today - Spring/Summer 2018 - ADVERTISER’S INDEX
SSDA Today - Spring/Summer 2018 - cover3
SSDA Today - Spring/Summer 2018 - cover4
https://www.nxtbook.com/naylor/SSCB/SSCB0218
https://www.nxtbook.com/naylor/SSCB/SSCB0118
https://www.nxtbook.com/naylor/SSCB/SSCB0217
https://www.nxtbook.com/naylor/SSCB/SSCB0117
https://www.nxtbook.com/naylor/SSCB/SSCB0216
https://www.nxtbook.com/naylor/SSCB/SSCB0116
https://www.nxtbookmedia.com