The California State Teachers’ Retirement System estimates that fully funding the teachers’ pension debt will cost over $4.5 billion in 2014-15. It will increase to almost $4.6 billion the next year and much more each subsequent year after that as more Baby Boomer-aged teachers retire.
Even by CalSTRS’s own calculations, 30 years from now, the annual pension costs for teachers living into their 70s and 80s will hit almost $14 billion dollars.
Much More Needed
Early in 2013, CalSTRS’s total unfunded liability was shown to be $65 billion. Just one year later it is estimated at $71 billion. In keeping our past promises, taxpayers and teachers will need to pay over $230 billion annually for the next 30 years in order to cover this ever-growing liability.
This mounting sum cannot continue to be overlooked by the state Legislature and local school districts. Teachers and taxpayers have a moral – and also contractual – obligations to keep this pension system solvent.
Time to Start Ponying Up
For the past three years the state has been paying less than 50 percent of its annual obligation. The reason the Legislature gave was, so that it could “balance” its budget. In fact, the state has not paid 100 percent of its annual obligation since the beginning of this century.
When will this gross shortchanging by the state stop?
Not Anytime Soon
Even in his latest proposed budget for 2014-15 published this week, Gov. Brown still does not address the elephant in the room, except to acknowledge it.
Most teacher pensions are not extravagant. The average teacher’s monthly check is less than $3,700. Since California teachers do not pay into Social Security or collect those benefits, their Cal-STRS pension is their retirement for many of them.
Split-Tiered Coming?
Teachers now contribute 8 percent of their pay to CalSTRS, and local school districts have to kick in another 8.25 percent. The funding for all these contributions comes from us taxpayers. The percentages they now contribute to CalSTRS probably will only increase in the foreseeable future. Through bargaining, there may even be the need to have a two-tiered system where newly hired teachers pay in even more to help keep the system solvent.
More and More
These staggering sums of $4.5 billion, $71 billion and $230 billion are not going away. The sooner our Legislature starts addressing the looming underfunding of the CalSTRS system, the less it will cost us taxpayers in the future.
See California Will Be Next Pension Battleground « Education Intelligence Agency
Mr. Laase may be contacted at GMLaase@aol.com
