CalSTRS says pension funding gap has grown to $73.7 billion

cals

Sacramento Bee: CalSTRS said Thursday that its long-term funding shortfall has risen to $73.7 BILLION, a stark reminder of the financial issues facing the teachers’ pension fund.

The newest tally reflects CalSTRS’ financial condition as of last June 30. The pension fund said the shortfall grew by $2.7 BILLION in the 12 months since the previous valuation of June 30, 2012.

CalSTRS’ latest calculation comes as the Legislature and Gov. Jerry Brown continue to debate how to fix the teachers’ retirement fund. Brown originally said the Legislature could enact a funding plan for CalSTRS in 2015, but he also supported the decision by Senate and Assembly committees to hold hearings last month on the issue.

Two months ago, CalPERS approved a plan to raise contribution rates from state and local agencies to deal with a long-term shortfall of around $100 billion. Unlike the public employees’ pension fund, however, the teachers’ fund needs the Legislature’s permission to implement a rate hike.

The California State Teachers’ Retirement System has been struggling financially for some time and was badly wounded by the 2008 market crash. It has enjoyed recent investment gains, and the worsening of its long-term deficit has actually moderated; it had earlier forecast that the gap would grow by almost twice as much as it did.

Nonetheless, the fund insists the Legislature must act.

“Since at least 2006, we’ve said that CalSTRS cannot rely solely on healthy investment returns to make up the ground lost to the economic downturns and market volatility of the past 14 years,” said CalSTRS Chief Executive Jack Ehnes in a prepared statement.

Although CalSTRS has enough cash to deal with its obligations for the foreseeable future, it is only 66.9 percent funded for the long term. The pension fund said its shortfall grows by $15 MILLION a day. If the problem isn’t corrected, CalSTRS said it expects to run out of cash by 2046. That’s actually three years later than the last time CalSTRS issued a prediction, but the pension fund said the problem can’t wait much longer.

The latest calculation “reflects a reality, affirmed by the Legislature, the administration and stakeholders, that stabilizing CalSTRS funding will require contribution increases,” Ehnes said. “These can be gradual, predictable and fair to all parties, while meeting the long-term needs of the system.”

Considering the monetary drain on this system, I expect that CalSTRS will have no money left to spend on anybody’s future.

Read more here: https://www.sacbee.com/2014/04/03/6294221/calstrs-says-pension-funding-gap.html#storylink=cpy

DCG

Please follow and like us:
error0
 

Leave a Reply

avatar
  Subscribe  
Notify of
truckjunkie
Guest
truckjunkie

Could this be a little touch of KARMA,for them indoctrinating all those young minds to think Socialist? What a shame.

marblenecltr
Guest

Educators at every level and others of the middle class deserve our sympathy and concern for their circumstances, but no more than that due the blue collared, whose jobs were shipped to countries with the cheapest labor. Public workers, did you not realize that your incomes came from taxes factory labor once paid? And private sector middle class employees, did you think that you were secure? Labor, skilled and unskilled, from the other side of the world, or even south of our border, will not pay your salary, nor will it maintain our defense standards. For a while, we will… Read more »

CalGirl
Guest
CalGirl

I am “on” CalSTRS. I expect to work until I’m dead. I am tired, I have been used up. But, I know that, at this point, I am at least 6 years out from my reasonable “retirement.” I don’t think that, when I am ready to retire…willing to retire, HAVE to retire due to age, health, whatever….there will be anything in it for me. I’ve worked the entire Obama admin. without ANY step increases due my years of service (that everyone else before me got) and without any “cost fo living increases” (that everyone before me got)…..and furthermore, b/c my… Read more »