CTA Runs Clock Out -- Missed Budget Deadline Protects Pension Purchasing Power
Like a winning sports team “running out the clock” to prevent the opposing team from scoring, CTA and its allies won a major victory on June 30 when the passing of a legislative deadline prevented the Schwarzenegger administration from cutting $75 million from a special retirement fund.
June 30 was the last day that the governor could have gained lawmakers’ approval to reduce the state’s annual contribution to the Supplemental Benefit Maintenance Account (SBMA) at the California State Teachers’ Retirement System (CalSTRS). The SBMA is a designated account that provides purchasing power adjustments ensuring CalSTRS retirees that their pensions will always retain at least 80% of their original value.
For the most part, the SBMA adjustments go to long-retired teachers – now in their 80s and most widows – who use the funds to keep pace with the rising costs of food and medicine.
With the expiration of the June 30 action deadline, the state is now required by law to transmit the full amount – without the $75 million reduction – to the SBMA.
The CTA victory came after months of work by Association representatives in the state capitol and members around the state. The issue was high on the list of items CTA members addressed in meetings with their lawmakers in district offices. It was also a key issue that representatives from around the state brought to their lawmakers in May as part of the CTA chapter presidents’ lobby day.
On lobby day, teams of CTA chapter presidents carried into lawmakers’ offices posters resembling dollar bills. Each poster featured a photo of a retiree who would have been hurt by the cuts. Each poster also provided lawmakers with information about how many retirees in her or his district would be harmed by the funding reduction.
Full Funding Vital to Expanding Guarantee
CTA experts believe the $75 million cut would have made it more difficult for the purchasing power guarantee to be boosted above its current 80% level, even though it would not have forced any reduction in the current level of the guarantee.
Ultimately moving the guarantee toward the 100% level is an Association aim. That aim would have become much more difficult to attain if the state were to short circuit its funding for the SBMA.
CTA experts note that the passed deadline protects the SBMA for the next full year. They anticipate having to work hard again in 2008 to keep the account fully funded.