Later this week the board of the California State Teachers Retirement System, or CalSTRS, will forward to the Legislature a report laying out options for raising higher contributions into the pension system to ensure its long-term viability.
The Legislature has avoided action for a decade, and Gov. Jerry Brown’s budget forecast for education, with healthy projections for revenue, doesn’t take into account the daunting cost of teachers’ pensions on the expense side of the ledger.
Funding ratio of CalSTRS’ defined benefit program for the past 35 years, through 2011. After being fully funded by 2000, the Legislature expanded benefits. Values fell, recovered, then plummeted in 2008. (Click for a clearer image)
The remedies won’t come cheap. The choice that CalSTRS financial analysts recommend would boost payments, currently about $6 billion, by $4.5 billion per year, starting next year. That amount, a whopping 75 percent increase per year – would be borne mostly by the state and by K-12 and community college districts, as employers and not by current employees. If adopted by the Legislature, that option –