Chairman Clifford T. Phillips III: Ok I'd like to call this hearing to order. The witnesses have been sworn and I'd like to get started right away since we have limited time. Our pension system in this state is in crisis.
As members of this committee may know we have made great strides in providing our state workers with some of the most competitive and progressive defined benefit programs in the country. We have been able to attract and support the best talent in the state and through aggressive hiring, grow total man hours worked by state employees, despite the fact that we have had to struggle with the highest absenteeism rate in the nation. I am proud to say that despite this, real wages for our employees have outpaced the rest of the country by 15% per year for the last 10 years. No, no, please, ladies and gentlemen, hold your applause. Let me continue.
We have reduced the vesting of 120% last year's salary and health benefits in our state pensions to age 48 and, for the first time, added a cost of living multiple that raises cash portions of the pension benefits by 1.2x the CPI so that our retired state workers never have to worry about the Bush Administration's ridiculously low inflation estimates again. This finally puts us in front of San Diego.
We have done our part to support the workers of this great state, now it is time for our financial advisors to meet their commitments to our loyal and sacrificing workers. And this is why we are here. We have expected of the gentlemen before us, our pension fund's financial advisors, and we have made it very clear that we require of them nothing less than 16-18% annual returns. This is not optional, gentlemen. This is what we have mandated. This is what we require. This is what we expect. At this point our state pension fund is beset by a 46% funding ratio. So let me begin by asking you, where are our returns?
William Ackerchapman: First of all, Mr. Chairman, I want to thank the committee for giving me the opportunity to speak this morning. The crisis we face is not a crisis of returns but a crisis of costs. The unfunded obligations of the state pension fund are out of control and need to be-