Myths vs. Facts
Myth: Prior to SB 400, the State paid $400 million in contributions. Ten years later, the State is paying $3 billion due to benefit enhancements.
September 23, 2009
Fact:
The $400 million paid in 1999 was the lowest the State had paid in generations and it was due to the fact that the investment returns in the mid-1990s were so high, little was needed from the State to cover the plans. Some years, the State paid zero contributions for schools. This was due to higher than normal investment returns. Using a starting point of $400 million is misleading, because the late 90s was an atypical period for investment returns. As of June 30, 2000, the State plan had $69.3 billion in assets, and liabilities of $55.5 billion. The State plan surplus at that time was $13.8 billion. The surplus used to fund SB 400 was $4.2 billion, leaving a remaining surplus of $9.6 billion. The $9.6 billion was used in subsequent years to make up for the effect of investment losses in 2001-02. Today, the State pays $3 billion in contributions. Compared to 10 years ago, half of that amount is due to payroll growth and pay raises, not benefit improvements. In fact, only one quarter of the $3 billion is due to benefit changes. View information regarding the breakdown of the change in State contributions between 1997-1998 and 2009-2010.
Back to Pension Security Myths vs. Facts »
» More