More CalSTRS pressure on lawmakers
Lower rate of return, higher burden for taxpayers
What a difference a quarter of 1 percent makes.
The decision last week by the board of the California State Teachers Retirement System to lower the expected rate of return on investments from 7.75 percent to 7.50 percent equates to an additional $475 million that school districts and the State Legislature must eventually contribute annually to make up for the shortfall and keep the pension fund healthy. That’s on top of the $4 billion extra per year that CalSTRS says contributors should already start paying to compensate for the big hit that investments took when the market tanked in 2008. The Legislature, facing a General Fund shortfall of its own, hasn’t acted on CalSTRS’ recommendation, and it’s also not expected to act this year on the latest change. But the increased liability will add pressure on lawmakers to deal with Gov. Jerry Brown’s proposed reforms to reduce pension costs. Last week, Brown provided a conference committee on
