Update on CalPERS and COVID-19 | 5.15
May 15, 2020
Subject: Update on CalPERS and COVID-19
Dear Valued Stakeholders,
I hope this note finds you healthy and safe. Below are some updates for your information.
Governor’s Proposed Budget
I know that many of you have already seen Governor Newsom’s proposed state budget, but I did want to note the items that affect CalPERS.
• $2.4 billion of the supplemental payment received from the state earlier this year (that was originally intended to focus on long-term savings) will be redirected to pay the state’s unfunded liability obligations over the next two years. If approved, CalPERS Board will be required to readopt state employer rates after the passage of the budget.
• Similarly, the revised budget proposes to refocus $660 million in existing state payments on behalf of school plans to achieving lower rates over the next two years. The rate would be lowered from 22.67 percent to 20.7 percent in 2020-21 and from 25 percent to 22.84 percent in 2021-22. Corresponding proposals are made regarding CalSTRS rates.
• $500 million in scheduled supplemental payments to CalPERS for the state plan would be cancelled.
Proposed 10% State Worker Pay Cut/Furloughs
As we experienced in the Great Recession, proposed pay cuts and the potential for furloughs often raises concerns by our retirees that their pension checks will be impacted. Please stress with your retired members that their pension payments will not change under the proposed budget. We will also provide frequently asked questions about this topic on our web site and ensure that our Call Center agents are prepared to answer questions.
Return to Work Plan
Our Executive team is in the process of developing a Return Work to Plan for the organization that will encompass key operational priorities.
• Protecting our team members and their ability to serve our members and employers • Maintaining ongoing communication and appropriate education • Flexible work policies including telecommuting, teleconferencing, and video conferencing • Preparedness, response, and recovery activities with other state agencies, external stakeholders, health program providers, and business partners • Cross-training, succession planning, and other strategies for continuing essential functions
We had anticipated returning to our buildings on June 1, but based on guidance by public health officials we believe that Phase 3 of the Governor’s re-opening plan aligns with the operations and size of CalPERS workforce. We will monitor the Governor’s re-opening efforts and keep you posted on our progress to return to our buildings and regional offices.
As previously mentioned, we plan to bring preliminary rates to the Board in June and adopt final health premiums in July at the board offsite. Open Enrollment will take place from September 21 through October 16.
Board Meetings & Events
• CalPERS Board and Committee meetings scheduled for June 15-17 will be held via video conference as we did in May. We will be providing a phone number for live pubic comment instead of submitting comments through email. The phone number and instructions will be provided when the meetings are publicly noticed in early June.
• Given the COVID-19 pandemic, we will not hold the July CalPERS Board offsite in Anaheim, California as previously announced. The offsite currently scheduled for July 15-17 will be held at CalPERS headquarters through social distancing or through video conference or a combination of both. We will provide more details as the dates get closer.
• We are also transitioning our external events to virtual events through the remainder of the 2020 calendar year. This includes our Benefit Education Events and our Educational Forum for employers. We will continue to hold these events on the scheduled dates but they will be held virtually. More information about registration and program details will be available on our web site.
Thank you for your continued partnership and helping us communicate these updates with your membership. Please feel free to contact me if you have any questions.
Have a good weekend,
Chief Executive Officer