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The 2020-21 Budget: Proposition 2 Debt Payment Proposals

The Legislative Analyst’s Office has just published the following report:

The 2020-21 Budget: Proposition 2 Debt Payment Proposals

Over the next decade, the state will be required to allocate an additional $12 billion to $21 billion to accelerate the pay down of state retirement liabilities under the provisions of Proposition 2 (2014). This represents a key and unique opportunity for the state.

The Governor offers one strategy to prioritize these funds over the next few years. Notably, the Governor focuses on the state’s share of the unfunded liability for teachers’ pensions. While we agree this focus makes sense, the amounts the Governor proposes dedicating to this purpose are not connected to the specific actuarial needs of the teachers’ pension system. In this report, we present a method the Legislature could use to tie these payments to the system’s actual needs, which would better target the funding.

This report is available using the following link: https://lao.ca.gov/Publications/Report/4196

This article was released by the California Legislative Analyst’s Office.