According to the rules of the Governmental Accounting Standards Board, unfunded pension liabilities are supposed to be paid off within 30 years. Yet a range of proposals shown to the board of the California State Teachers' Retirement System (CalSTRS) last week included only one option that would meet the fund's obligations -- and not for nearly 75 years.
That revelation accompanies the news that CalSTRS has lowered the earning projections on its investments from 7.75 percent annually to 7.5 percent. That may sound like small change in percentage terms, but it adds up to an extra $500 million a year in unfunded liabilities, bringing the annual shortfall to $4.5 billion (the unfunded liability was already at $56 billion as of June 2010).
With those facts on the table, consider three more that bear on CalSTRS' future: (1) More than 5,000 retired teachers and administrators collect over $100,000 a year in benefits from CalSTRS; (2) CalSTRS has been notably excluded from Governor Jerry Brown's plans for pension reform in the Golden State; (3) The California Teachers Association is the single most powerful special interest in California politics. None of those realities bodes well for reforming CalSTRS -- which in turn does not bode well for California.
With those facts on the table, consider three more that bear on CalSTRS' future: (1) More than 5,000 retired teachers and administrators collect over $100,000 a year in benefits from CalSTRS; (2) CalSTRS has been notably excluded from Governor Jerry Brown's plans for pension reform in the Golden State; (3) The California Teachers Association is the single most powerful special interest in California politics. None of those realities bodes well for reforming CalSTRS -- which in turn does not bode well for California.
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