The CalPERS board is scaling back its projected "rate of return" - that is, how much money the system expects it will bring in - from 7.75 percent to 7.5 percent. That means an immediate $167 million increase each year to the state's general fund. And cities, counties and school districts that use CalPERS will see their pension payments go up as well. CalPERS staff actually recommended twice as big a decrease, but the board said no.
The question now is whether Democrats in the California legislature will face more pressure to change the pension system. Governor Jerry Brown's 12-point proposal includes lower government payments into CalPERS … and the creation of a hybrid 401k-style system. But Democrats and their union allies believe parts of Brown's plan go too far.