Calpers Demands $600 Million More From California Amid Deficit

By Michael B. Marois

May 18 (Bloomberg) -- The California Public Employees’ Retirement System, the largest U.S. public pension, wants an extra $600.7 million from the state, which is confronting a $19 billion budget deficit.

The pension fund’s 13-member governing board is set to vote tomorrow to increase the amount the state must pay as its share of retirement costs to $3.9 billion in the fiscal year that starts July 1. The state put in $3.3 billion this year.

The increase is needed, Calpers managers have said, after a 24 percent drop in the fund’s value in the past fiscal year. To help close the budget gap, Governor Arnold Schwarzenegger has proposed ending welfare programs and most day-care subsidies. He has said pension raises in 1999 by Democrats cost too much and has demanded lawmakers retract them.

“This is further evidence of an unsustainable pension system that must be reformed,” Schwarzenegger, 62, a two-term Republican, said today in a statement. “Every additional dollar we spend on state employee pensions is a dollar we take from education, health, and public safety.”

The value of the pension fund, known as Calpers, has climbed about 13 percent to $204 billion of assets under management in the last 11 months.

--Editors: Ted Bunker, Mark Tannenbaum.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editors responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net; Kara Wetzel at kwetzel@bloomberg.net