calstrs

By Ed Mendel | 02/18/13 12:00 AM PST

Some still have hard feelings about what happened when CalSTRS, now deep in the red, had a brief funding surplus more than a decade ago: Teacher and state payments into the fund were cut, and retirement benefits were raised.

At a CalSTRS board meeting last week, Lois Shive, a representative of a retiree group, zeroed in on legislation in 2000 that for 10 years diverted a quarter of the annual teacher contribution from the pension fund, a total of $4.9 billion over the decade.

The legislation shifted 2 percent of teacher pay (from the total teacher contribution of 8 percent of pay) into a new individual investment plan, the Defined Benefit Supplement, with a guaranteed minimum return based on the 30-year Treasury bond.

“We didn’t see the side car rolling through the Legislature of a rogue member, who went to a legislator and asked that legislator to please pass a bill that would give that member his own private bag of money,” said Shive.

“That was our 2 percent side car that established the DBS fund,” she said, “and short-funded this wonderful pension fund by a huge amount, building on to what we have now is a snowballing effect.”

Shive represents the California Teachers Association-National Education Association Retirees. As vice chair of the CTA retirement committee in 2000, she “lobbied tirelessly” for pension improvements, a CTA newsletter said.

“I pretty much said what I needed to say there,” Shive said this week, declining to identify the “rogue” member. She said the diversion was a small part of the current funding problem and the focus should be on the rest of her remarks.

A lobbyist, a CalSTRS staff member and others at the Capitol said the bill emerged from negotiations, but they did not recall a push from a “rogue” member. The author of AB 1509, former Sen. Mike Machado, D-Linden, was unavailable for comment.

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