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California Advances Proposal To Pay Down Pension Debt

Alan Cordova / Flickr
 

Alan Cordova / Flickr

A proposal to pay down California pension debt is nearing passage in the state Legislature. It’s garnered bipartisan support, despite criticism from non-partisan analysts.

The proposal by Gov. Jerry Brown would give state retirement system CalPERS $6 billion to invest from what’s essentially the state’s main checking account.

Democratic Assembly Budget Chair Phil Ting said the money is sitting there, but CalPERS can invest it in the stock market.

"That is currently earning about 1 percent and will allow those returns now to earn upwards of 6 or 7 percent," Ting said.

The state’s non-partisan Legislative Analyst’s Office said it’s a novel plan and will probably work, but should undergo more study.

Assembly Budget Vice-Chair Jay Obernolte, a Republican, disagrees.

"I would argue that we are being cautious about it," Obernolte said. "The current account, the Pooled Money Investment Account, has almost $70 billion in it right now. This represents a very small percentage of those funds."

The state will pay back the account’s $6 billion over eight years. The Senate plans to vote on the proposal Monday.

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