KXTV 2:37 p.m. EST February 19, 2014
State legislators are getting a cold dose of reality about California’s ailing pension fund for teachers: find a way to boost contributions by almost $1 billion in 2015 and $5 billion a year soon thereafter… or watch the system collapse by the time current teachers reach retirement.
That’s part of the report made Wednesday to the Assembly’s pension committee by both independent analysts and top officials at the California State Teachers Retirement System, CalSTRS.
“This is a high-risk financial issue for the state,” said CalSTRS CEO Jack Ehnes in his presentation to assemblymembers. The hearing marked the beginning of what everyone promises will be a focused effort in 2014 to figure out a way to keep the century old teachers retirement system from going belly up in 30 years.
The problems, which are now adding up at a staggering $22 million a day, were caused by both the global recession’s hit on the pension fund’s investments and years of underpayments by the state. CalSTRS funding structure is unique among pension systems, requiring annual payments from teachers, school districts, and the state. And unlike its larger sibling fund for rank-and-file California state employees, CalPERS, legislators must approve any changes to the state’s annual payment — including any effort to actually pay what the system needs.
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