Urgent! Legislative Coordinators:
Urge Senators to Okay CalSTRS Restoration Bill
CTA and the State Teachers' Retirement System (CalSTRS) have been working together to secure more than $500 million withheld from the pension system during 2003. The state owes these funds to the CalSTRS's Supplemental Benefits Maintenance Account (SBMA). That fund underwrites a pension purchasing power guarantee for long-retired CalSTRS members.
The guarantee helps protect retired teachers against the long-term ravages of inflation. Without this adjustment, inflation would hit their pocketbooks hard.
CTA-sponsored legislation, AB 55 by Assembly Member Gene Mullin (D-South San Francisco), would restore the funds to CalSTRS. This is the third year running that CTA has sponsored a similar measure – so your help is vital to ensure its passage.
The Mullin measure has already passed the Assembly on an overwhelming, bi-partisan 71-6 vote and on a unanimous 5-0 vote in the Senate Public Employment and Retirement Committee. The bill heads next to the Senate Appropriations Committee on its way to the Senate floor. Legislative Coordinators should direct their communications to their own state Senator. To clear the Senate, the bill will need a two-thirds vote.
Background
The total -- $500 million plus interest -- was withheld from CalSTRS in 2003.
There was an implicit promise that the funds would be paid back – as have prior borrowings from employee retirement funds. To date, no legislation has been approved that will restore the funds or that will make that promise explicit.
Ultimately, all CalSTRS members could be hurt directly by this funding shortfall.
Over time, current and future CalSTRS members would benefit from the fund because it provides an inflation adjustment that boosts their monthly pension payments to help preserve their buying power.
Those retirees who are currently receiving the quarterly "purchasing power" adjustment checks are mostly retired women teachers in their eighties. Virtually all retired years ago on modest salaries.
Make These Points to Lawmakers
- During 2003, the state withheld $500 million from CalSTRS that should be helping protect a group of elderly retirees against the ravages of inflation.
- As a result of an already approved CTA-backed bill – AB 1102 of 1998 – these moneys are fully vested. The state has both a moral and legal obligation to restore these funds.
- The funds will be used to help protect elderly retirees against further ravages of their pension funds by inflation.
- Providing the funding will help send the message that California values its teachers and is willing to protect their stable retirement.
Here's What Coordinators Should Do
Coordinators should encourage all CTA members and other CalSTRS members to write to their own state Senators, c/o The State Capitol, Sacramento, CA 95814, in support of AB 55 (Mullin).
For more information, contact CTA Legislative Advocate Bill Collins or GR Communications Consultant Len Feldman at 916.325.1500.