Study: State Pensions Lift Economy

Our retired pubic employeers are putting billions of dollars a year back into California with their pensions. The vast scope was unknown until a major study measured the impact in terms of dollars spent and jobs created. SacBee:

California's retired schoolteachers, firefighters and other public employees pack a powerful economic punch in the state economy, surpassing the impact of three major University of California campuses combined, the airlines or the oil and gas industry, according to a new study.

Whether retirees are spending their pension dollars on rent or groceries, the money is fueling the growth of 139,000 new jobs a year with an annual payroll of $4.8 billion, researchers said in an economic impact report to be released today by California's giant public pension funds.

There are 675,000 retirees currently receiving pensions from the Cal-PERS and Cal-STRS programs. The study shows this amounts to an estimated $21 billion in annual economic activity in California, producing a "$1.36 billion boost to state and local tax coffers". The researchers were actually stunned by their results.

"We assumed they would have a significant impact. The magnitude is surprising," said Robert Waste, a public policy professor and one of the researchers of the study conducted by the Applied Research Center at California State University, Sacramento. [snip]

"Most people don't have any idea of the impact of CalPERS and CalSTRS," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. "They are dispensing money to retirees, and that money is flowing to all facets of the community."

It isn't just the amount of money that comes back into the state that is impressive; it is the rate of return on the tax dollars paid into the system. CalPERS and STRS are remarkably efficient.

But Sacramento State researchers say tax dollars paid into the pension programs have boosted the pot of money used to pay benefits. Over the past decade, Cal-PERS has achieved an 11.9 percent rate of return while CalSTRS has had an 8.6 percent gain.

On average, each dollar the state and local government agencies have invested with CalPERS has returned $8.55 to the state economy, researchers say. For CalSTRS, it's about $6.71

They are extremely well run governmental programs, bringing a great return for the public employees and the taxpayers.