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Discussions regarding retirement for California state employees commenced in the 1930s, with a constitutional amendment approved in 1921.
Answer: False
The statement contains conflicting dates. Discussions about state employee retirement began in 1921, and a constitutional amendment was approved in 1930, not 1921. The 1930s saw the establishment of the first retirement plan.
The initial retirement plan for state workers, established in 1931, was named the 'Public Employees' Retirement System' (PERS) and commenced operations in 1932.
Answer: False
The initial retirement plan established in 1931 was named the 'State Employees' Retirement System' (SERS), not PERS. It began operations in 1932.
Local public agencies were first permitted to participate in the state worker retirement system in 1939.
Answer: True
This statement is accurate. Local public agencies were first allowed to join the state's retirement system (then SERS) in 1939.
Initially, the state worker retirement system was restricted to investing solely in bonds, and it was later permitted to invest in real estate in 1953.
Answer: True
The statement is accurate. The initial investment scope for the state worker retirement system was limited to bonds, with the authorization to invest in real estate being granted in 1953.
CalPERS commenced offering health insurance benefits in 1962, subsequent to the enactment of the Meyer-Geddes Hospital and Medical Health Care Act.
Answer: True
This statement is correct. CalPERS began providing health insurance benefits in 1962, following the passage of the Meyer-Geddes Hospital and Medical Health Care Act.
The organization was officially renamed CalPERS in 1992 to differentiate it from other state retirement systems.
Answer: True
The statement is accurate. The name change from PERS to CalPERS occurred in 1992, primarily to distinguish it from other state retirement systems and reflect its broader scope.
When did discussions regarding retirement provisions for California state employees first commence?
Answer: 1921
Discussions concerning retirement benefits for California state employees began in 1921.
What was the original designation of the state worker retirement plan established in 1931?
Answer: State Employees' Retirement System (SERS)
The initial retirement plan for state workers, established in 1931, was named the 'State Employees' Retirement System' (SERS).
In which year were local public agencies first authorized to participate in the state's retirement system (SERS)?
Answer: 1939
Local public agencies were first permitted to join the state's retirement system in 1939, following legislative authorization.
What was the initial primary investment restriction for SERS, and when was it permitted to invest in real estate?
Answer: Restricted to bonds; allowed real estate in 1953.
Initially, SERS was restricted to investing solely in bonds. The system gained authorization to invest in real estate in 1953.
Which piece of legislation, passed in 1962, led to CalPERS offering health insurance benefits?
Answer: The Meyer-Geddes Hospital and Medical Health Care Act
The Meyer-Geddes Hospital and Medical Health Care Act, enacted in 1962, was the legislative catalyst enabling CalPERS to begin offering health insurance benefits.
Why was the organization's name officially changed to CalPERS in 1992?
Answer: To avoid confusion with other state retirement systems.
The organization's name was officially changed to CalPERS in 1992 primarily to distinguish it from other state retirement systems and to reflect its comprehensive role.
Article XVI, Section 17 of the California Constitution grants the CalPERS retirement board 'plenary authority and fiduciary responsibility' over the system's assets.
Answer: True
This statement is accurate. Article XVI, Section 17 of the California Constitution explicitly grants the CalPERS retirement board 'plenary authority and fiduciary responsibility' for the administration and investment of the system's assets.
The CalPERS Board of Administration comprises 13 members, with the majority appointed by the Governor.
Answer: False
While the CalPERS Board of Administration has 13 members, the majority are not appointed by the Governor. The composition includes elected officials, appointed members, and ex officio members, with six elected positions.
CalPERS expanded its headquarters in 2005 with new buildings costing approximately $265 million.
Answer: True
The statement is accurate. CalPERS completed an expansion of its headquarters in 2005, known as 'Lincoln Plaza East & West,' at an approximate cost of $265 million.
In October 2001, the CalPERS Board adopted a 'document of collegiality' intended to address internal disputes among board members.
Answer: True
The statement is accurate. The CalPERS Board did adopt a 'document of collegiality' in October 2001 as a measure to mitigate internal conflicts and foster more harmonious board operations.
Article XVI, Section 17 of the California Constitution, as amended by Proposition 162, is significant because it:
Answer: Grants the CalPERS board ultimate authority over the system's assets.
Article XVI, Section 17 of the California Constitution, particularly after its amendment by Proposition 162, is crucial as it formally vests the CalPERS board with ultimate fiduciary authority and responsibility for the system's assets.
Who are identified as the current CEO and Board President of CalPERS, respectively?
Answer: Marcie Frost and Henry Jones
As per the provided information, Marcie Frost serves as the Chief Executive Officer (CEO) of CalPERS, and Henry Jones holds the position of Board President.
In 2005, CalPERS completed an expansion of its headquarters, known as 'Lincoln Plaza East & West', at what approximate cost?
Answer: $265 million
The expansion of CalPERS' headquarters, encompassing 'Lincoln Plaza East & West,' was completed in 2005 at an approximate cost of $265 million.
As of June 30, 2021, the total value of assets managed by CalPERS was reported to be less than $500 billion.
Answer: True
The statement is true. As of June 30, 2021, CalPERS managed over $469 billion in assets, which is less than $500 billion.
The 'CalPERS effect' denotes a phenomenon wherein companies designated on CalPERS' 'Focus List' experience diminished performance due to the agency's shareholder activism.
Answer: False
The 'CalPERS effect' is generally understood to describe the potential for improved stock performance in companies that are the subject of CalPERS' shareholder activism and engagement, not diminished performance.
In late 2016, the CalPERS board reduced its expected annual rate of return on investments to address a funding shortfall.
Answer: True
The statement is true. In late 2016, the CalPERS board lowered its expected annual rate of return from 7.5% to 7.0% to address funding concerns and increase contribution requirements for public agencies.
In 1999, CalPERS' fund value reached $159.1 billion, with the state tax dollar contribution amounting to $159 million.
Answer: True
The statement is accurate. In 1999, CalPERS reported a fund value of $159.1 billion, with state tax dollar contributions totaling $159 million for that year.
The dot-com bubble burst in 2002 adversely affected CalPERS, leading to a decline in its fund value.
Answer: True
This statement is accurate. The downturn in the stock market following the dot-com bubble burst around 2002 negatively impacted CalPERS' investment portfolio, resulting in a loss of fund value.
By 2016, CalPERS' fund value stood at $295.1 billion, with promised benefits exceeding available funds by $241.3 billion.
Answer: True
The statement is accurate. As of 2016, CalPERS reported a fund value of $295.1 billion, with its liabilities for promised benefits exceeding this amount by $241.3 billion.
Between 1999 and 2003, CalPERS experienced consistent investment gains each year, accumulating a total income of $16 billion over the period.
Answer: False
The period between 1999 and 2003 was characterized by fluctuations, including significant losses due to the dot-com bubble burst. While there were gains in some years, the overall trend was not consistent positive performance, though the cumulative income over five years was reported as $16 billion.
From 2004 to 2007, CalPERS achieved an average annual investment income of approximately $27 billion.
Answer: True
This statement is accurate. During the period from 2004 to 2007, CalPERS reported a cumulative investment income of $108 billion, averaging approximately $27 billion per year.
During the 2008 financial crisis, CalPERS reported investment losses totaling $67 billion across the years 2008 and 2009.
Answer: True
The statement is accurate. CalPERS experienced significant investment losses during the 2008 financial crisis, with total losses amounting to $12 billion in 2008 and $55 billion in 2009, summing to $67 billion.
A 1994 study by Stephen Nesbitt is associated with coining the term 'CalPERS effect' to describe the underperformance of companies targeted by CalPERS' engagement.
Answer: False
Nesbitt's 1994 study coined the term 'CalPERS effect' to describe the phenomenon where companies placed on CalPERS' 'Focus List' subsequently outperformed the market, not underperformed.
Wahal's 1996 study indicated that stock prices reacted negatively to pension fund activism, with only firms targeted by CalPERS showing a positive reaction.
Answer: False
Wahal's 1996 study found that stock prices reacted positively to pension fund activism, and specifically noted that firms targeted by CalPERS demonstrated a positive reaction.
According to 2011 state figures, the CalPERS system was reported to be overfunded, possessing a surplus of $133 billion.
Answer: False
The 2011 state figures indicated that the CalPERS system was underfunded, not overfunded. It was reported to be 78% funded, with $133 billion in unfunded future liabilities, not a surplus.
CalPERS' fund value reached $49.8 billion in 1990.
Answer: True
This statement is accurate. The reported fund value for CalPERS in 1990 was $49.8 billion.
According to data from June 30, 2021, what was the approximate value of assets managed by CalPERS?
Answer: Over $469 billion
As of June 30, 2021, CalPERS reported managing assets valued at over $469 billion, positioning it as the largest public pension fund in the United States.
The term 'CalPERS effect' refers to:
Answer: The potential for improved stock performance in companies placed on CalPERS' 'Focus List' due to its activism.
The 'CalPERS effect' describes the phenomenon where companies identified on CalPERS' 'Focus List' tend to experience enhanced stock performance as a result of the agency's active engagement and influence as a major shareholder.
What significant change did the CalPERS board implement in late 2016 concerning its investment strategy?
Answer: Lowered the expected annual rate of return from 7.5% to 7.0%.
In late 2016, the CalPERS board decided to lower its long-term expected annual rate of return on investments from 7.5% to 7.0%. This adjustment was made to address funding shortfalls and ensure greater fiscal prudence.
What was the consequence for CalPERS following the dot-com bubble burst around 2002?
Answer: A loss of value in the fund due to stock market downturns.
The bursting of the dot-com bubble led to significant stock market declines in 2002, which adversely impacted CalPERS' investment portfolio, resulting in a reduction of the fund's overall value.
What trend characterized CalPERS' investment income between 1999 and 2003?
Answer: Fluctuations with both gains and losses, resulting in a cumulative $16 billion income over the period.
The period from 1999 to 2003 exhibited variability in CalPERS' investment income, marked by both gains and losses. Over these five years, the cumulative income was reported as $16 billion.
How did CalPERS' investment performance fare between 2004 and 2007?
Answer: It showed stability with a cumulative income of $108 billion over four years.
The period between 2004 and 2007 was characterized by relative stability for CalPERS' investments, yielding a cumulative income of $108 billion over the four years.
What were the approximate total investment losses for CalPERS during the 2008 and 2009 period?
Answer: $67 billion
During the 2008 and 2009 period, CalPERS incurred substantial investment losses, totaling approximately $67 billion ($12 billion in 2008 and $55 billion in 2009).
A 1994 study by Stephen Nesbitt is associated with coining the term 'CalPERS effect' to describe what phenomenon?
Answer: The positive stock performance of companies placed on CalPERS' Focus List.
Stephen Nesbitt's 1994 study introduced the term 'CalPERS effect' to denote the positive stock performance observed in companies that were included on CalPERS' 'Focus List' due to the agency's engagement.
According to 2011 state figures, what was the funding status of the CalPERS system?
Answer: 78% funded, with $133 billion in unfunded liabilities
In 2011, state figures indicated that the CalPERS system was 78% funded, with an estimated $133 billion in unfunded liabilities for future benefits.
The California Public Employees' Retirement System (CalPERS) holds primary responsibility for the administration of pension and health benefits for a constituency exceeding 1.5 million individuals affiliated with California's public sector.
Answer: True
The statement is accurate. CalPERS is indeed responsible for administering pension and health benefits for more than 1.5 million public sector employees, retirees, and their families in California, as confirmed by its core mission and operational scope.
In fiscal year 2020-21, CalPERS disbursed a combined total of approximately $37 billion in retirement and health benefits.
Answer: True
This statement is accurate. In the fiscal year 2020-21, CalPERS paid out more than $27.4 billion in retirement benefits and over $9.74 billion in health benefits, totaling more than $37 billion.
In 2018, CalPERS disbursed $22 billion in pension benefits to approximately 600,000 beneficiaries.
Answer: True
This statement is accurate. In 2018, CalPERS paid out a total of $22 billion in pension benefits to approximately 600,000 beneficiaries.
The average annual pension for a CalPERS retiree with 20 or more years of service was below $50,000 in 2018.
Answer: False
The statement is false. In 2018, the average annual pension for a CalPERS retiree with 20 or more years of service was $50,333, which is slightly above $50,000.
In 2018, police officers or firefighters with 20+ years of service received an average pension significantly lower than the overall average pension for retirees.
Answer: False
The statement is false. In 2018, the average pension for police officers or firefighters with 20 or more years of service was $78,104, which was significantly higher than the overall average pension.
In 2018, approximately 4% of CalPERS retirees collected pensions exceeding $100,000, and this group accounted for 17% of the total pension payout.
Answer: True
This statement is accurate. In 2018, 4% of CalPERS retirees (approximately 26,000 individuals) collected pensions exceeding $100,000 annually, and these retirees accounted for 17% of the total pension payout.
A 2012 economic impact report concluded that for every taxpayer dollar contributed to CalPERS, $10.85 was returned in economic activity to California.
Answer: True
The statement is accurate. A 2012 economic impact report indicated a significant return on investment, with $10.85 generated in economic activity for every taxpayer dollar contributed to CalPERS.
Modifications in member contribution rates for CalPERS can retroactively affect previously accrued retirement benefits.
Answer: False
Changes in member contribution rates do not affect previously accrued retirement benefits, as these are guaranteed by statute. Contribution rates are set by law and can vary but do not alter vested benefits.
CalPERS administers retirement benefits, health benefits, and long-term care benefits, among other services.
Answer: True
This statement is accurate. CalPERS' portfolio of administered benefits includes retirement plans, health coverage, and long-term care programs, in addition to other related services.
CalPERS retirement benefits are calculated based on a member's final compensation, age at retirement, and years of service credit.
Answer: True
This statement is accurate. The calculation of CalPERS retirement benefits is determined by a formula that incorporates the member's years of service credit, their age at the time of retirement, and their final compensation.
Studies commissioned by CalPERS in 2007-2008 indicated that its operations generated minimal economic activity within California.
Answer: False
The studies commissioned by CalPERS in 2007-2008 found that its operations generated substantial economic activity and supported numerous jobs within California, contrary to the statement.
Critics argued that CalPERS' economic impact studies were flawed because private management could yield similar economic activity.
Answer: True
This criticism was indeed raised. Critics contended that the economic impact studies commissioned by CalPERS did not sufficiently demonstrate the unique value of the system, suggesting that similar economic activity could result from private management of funds.
Industrial disability retirement is granted by CalPERS only if the disability is unrelated to the member's employment.
Answer: False
Industrial disability retirement is specifically granted when the disability is a direct result of, or related to, the member's employment. Disabilities unrelated to employment fall under general disability retirement.
In 2018, the average annual pension payout for Social Security was significantly higher than the average CalPERS retiree pension.
Answer: False
The statement is false. In 2018, the average annual pension payout for Social Security was $17,532, which was significantly lower than the average CalPERS retiree pension of $50,333 (for those with 20+ years of service).
What is the fundamental mission of the California Public Employees' Retirement System (CalPERS)?
Answer: To manage retirement and health benefits for California's public employees and their families.
CalPERS' core mandate is the administration of retirement and health benefits for public employees, retirees, and their families across California, as established by its foundational purpose and legislative charter.
In the fiscal year 2020-21, what was the total amount paid out by CalPERS for retirement and health benefits combined?
Answer: Over $37 billion
During fiscal year 2020-21, CalPERS disbursed more than $27.4 billion in retirement benefits and over $9.74 billion in health benefits, resulting in a combined total exceeding $37 billion.
In 2018, how many beneficiaries received pension payments from CalPERS, and what was the total payout amount?
Answer: Approximately 600,000 beneficiaries, totaling $22 billion
In 2018, CalPERS disbursed pension benefits totaling $22 billion to approximately 600,000 beneficiaries.
What was the average annual pension for a CalPERS retiree with 20 or more years of service in 2018?
Answer: $50,333
The average annual pension for a CalPERS retiree with 20 or more years of service in 2018 was reported as $50,333.
How did the average pension for police officers or firefighters (20+ years service) compare to the overall average pension in 2018?
Answer: It was significantly higher than the overall average.
In 2018, the average pension for police officers and firefighters with 20 or more years of service was $78,104, which was substantially higher than the overall average pension for retirees.
In 2018, what proportion of CalPERS retirees collected pensions exceeding $100,000 annually, and what share of the total payout did they represent?
Answer: 4% of retirees accounted for 17% of the payout.
In 2018, approximately 4% of CalPERS retirees received pensions exceeding $100,000 annually, and this group accounted for 17% of the total pension disbursements.
Which of the following benefit expansions did the CalPERS board propose in 1999, justified by projected investment returns?
Answer: Allowing retirement at age 55 with lifetime benefits exceeding half the highest salary.
In 1999, the CalPERS board proposed allowing public employees to retire at age 55 and receive lifetime benefits exceeding half their highest salary. This proposal was predicated on projected investment returns of 8.25%.
According to a 2012 economic impact report, what was the economic return for California for each dollar contributed to CalPERS?
Answer: $10.85
A 2012 economic impact report indicated that for every dollar contributed to CalPERS, $10.85 was generated in economic activity within California.
What is a key characteristic of CalPERS member contribution rates regarding accrued benefits?
Answer: They are set by statute and do not affect guaranteed accrued benefits.
Member contribution rates for CalPERS are established by statute and do not alter the guaranteed accrued retirement benefits that members have earned. These rates can vary but do not impact vested benefits.
Which of the following is NOT listed as a main category of benefits administered by CalPERS?
Answer: Unemployment insurance
CalPERS administers retirement benefits, health benefits, and long-term care benefits, among others. Unemployment insurance is typically administered by a different state agency.
How are CalPERS retirement benefits primarily calculated?
Answer: Using a formula involving years of service, age at retirement, and final compensation.
CalPERS retirement benefits are calculated using a defined formula that incorporates the member's years of service credit, their age at retirement, and their final compensation (typically the average salary over a specified period).
What criticism was raised regarding the economic impact studies commissioned by CalPERS?
Answer: Critics argued similar economic activity could result from private management of funds.
A significant criticism leveled against CalPERS' economic impact studies was that they did not adequately demonstrate the unique value proposition of the system, as similar economic activity could potentially arise from private management of equivalent funds.
According to 2018 data, CalPERS' assets covered less than 70% of its liabilities, indicating an unfunded liability of approximately $150 billion.
Answer: True
This statement is accurate. As of 2018, CalPERS' assets covered less than 70% of its liabilities, resulting in an estimated unfunded liability of approximately $150 billion.
Proposition 162, enacted in 1992, divested the CalPERS board of its fiduciary responsibility over the system's assets.
Answer: False
Proposition 162, passed in 1992, did not divest the board of its fiduciary responsibility; rather, it strengthened it by granting the CalPERS board the sole and exclusive fiduciary responsibility over the system's assets.
Governor Pete Wilson sought to assert control over CalPERS' actuarial projections and board appointments in the early 1990s, partly motivated by a state budget deficit.
Answer: True
This statement is accurate. Governor Wilson's administration attempted to gain influence over CalPERS' projections and board appointments during the early 1990s, influenced by the state's budget deficit.
Kevin de León introduced legislation in 2015 mandating that CalPERS and CalSTRS divest from companies involved in oil extraction.
Answer: False
The legislation introduced by Kevin de León in 2015 required divestment from companies involved in coal, not oil extraction.
In 2001, State Controller Kathleen Connell initiated a lawsuit against CalPERS seeking to increase the compensation for its investment managers.
Answer: False
State Controller Kathleen Connell sued CalPERS in 2001, but the objective was to limit, not increase, the pay of its investment managers. CalPERS ultimately lost this lawsuit.
As of 2021, CalPERS had invested approximately $30 billion in fossil fuels, a decision that drew criticism from environmental advocacy groups.
Answer: True
This statement is accurate. CalPERS' investment of approximately $30 billion in fossil fuels as of 2021 generated criticism from environmental organizations.
Following the Enron scandal, CalPERS resolved to lower accounting and auditing standards for companies within its investment portfolio.
Answer: False
In response to the Enron scandal, CalPERS resolved to improve, not lower, accounting and auditing standards among the companies in its investment portfolio.
In January 2003, CalPERS settled an age discrimination lawsuit, agreeing to pay $250 million in retroactive and future benefits.
Answer: True
This statement is accurate. CalPERS settled an age discrimination lawsuit in January 2003, agreeing to pay $50 million in retroactive benefits and $200 million in future benefits, totaling $250 million.
A primary criticism of CalPERS is that a small percentage of retirees receive a disproportionately large share of the total pension payouts.
Answer: True
This is a recognized criticism of CalPERS. Data indicates that a small fraction of retirees receive a significant portion of the total pension disbursements, raising concerns about payout distribution.
What was the approximate unfunded liability of CalPERS as of 2018, and what percentage of liabilities were covered by assets?
Answer: $150 billion unfunded, assets covering less than 70%
As of 2018, CalPERS reported an estimated unfunded liability of $150 billion, with its assets covering less than 70% of its total liabilities.
What was the primary effect of Proposition 162, passed in 1992?
Answer: It granted the CalPERS board sole fiduciary responsibility over the system's assets.
Proposition 162, enacted in 1992, significantly altered the governance structure by granting the CalPERS board the sole and exclusive fiduciary responsibility for the investment and administration of the system's assets.
In response to the Enron scandal in 2002, CalPERS decided to:
Answer: Improve accounting and auditing standards among its portfolio companies.
Following the Enron scandal in 2002, CalPERS committed to enhancing accounting and auditing standards for the companies included in its investment portfolio.
What was the outcome of the age discrimination lawsuit settlement against CalPERS in January 2003?
Answer: CalPERS agreed to pay $250 million in retroactive and future benefits.
In January 2003, CalPERS settled an age discrimination lawsuit by agreeing to pay a total of $250 million, comprising $50 million in retroactive benefits and $200 million in future benefits.