by Claudia Briggs
State contribution is currently 3.041% of payroll. Source: CalSTRS
The last few years of the economic downturn took a toll on our ability to create the kind of learning environments we know our students need if they are to be prepared for life and success in the 21st century. We stepped up to the challenge and continued to provide an outstanding education, even when school districts reduced both teaching and support staff positions and salaries stagnated. The saving grace was, and continues to be, the promise of a secure retirement — modest, yet secure. The average retirement benefit for a teacher who worked more than 25 years is $3,300 per month.
“We know that secure retirement is critical to attracting and keeping quality educators. As educators, we live by two basic rules: work hard and play by the rules,” says CTA President Dean E. Vogel. “California public school educators have kept their word, never missing a contribution to their retirements. We believe the state must ensure that the retirement commitments made to teachers and other education professionals are fulfilled.”
The California State Teachers’ Retirement System, like pension funds and investment-based savings worldwide, took a financial hit due to the global recession. It is not bankrupt, and it will not bankrupt the state. The CalSTRS shortfall did not happen overnight, and it cannot be addressed overnight. It is going to take time, commitment and collaboration from all stakeholders — that includes us.
Fair share solution?
CTA believes all stakeholders must work together to craft an ongoing, comprehensive solution that will continue to attract and retain quality educators and that will not harm education. CTA supports a fair share solution with increases in contributions from the state, school districts and educators.
According to CalSTRS, acting now to fully fund the program over the next 30 years would translate to an additional contribution of 15.6 percent of payroll.
In crafting a shared solution, CTA believes the state needs to increase its CalSTRS contribution at least to previous levels (4.6 percent). The state has saved more than $3.3 billion from reduced contributions over the past decade. As in the past, the state’s contribution should not take any funding away from students and should not come from Proposition 98 funds.
Fortunately, the governor is taking this matter very seriously and is urging lawmakers to work together this session to find a solution to the unfunded liability. Already, Assembly Speaker John Pérez (D-Los Angeles) and Assembly Member Rob Banta (D-Oakland) have outlined their plan to begin to address the shortfall. The legislators said all options are on the table except the “ostrich” option of pretending a problem doesn’t exist. The first step is a commitment to hold committee hearings that will allow for input and an in-depth look at the facts, which should help lawmakers come up with proposals.
Now some critics claim that CalSTRS is heading toward insolvency, and therefore should be eliminated. While there is a $71 billion shortfall, this does not have to be paid overnight. Like a mortgage, this is an amount that will need to be closed over a 30-year period.
“The shortfall has to be addressed, and CTA is committed to partnering with CalSTRS in finding a long-term funding solution, as we have since the system’s inception in 1913,” says Vogel. “We are also very much looking forward to ongoing conversations with legislators to address this serious problem beginning this session. Instead of attacking teachers over their modest retirement benefits, we should all be having discussions about how to create better retirement options for everyone. Eliminating the retirement options for teachers and public employees will not add to anyone’s retirement security.”
All Californians should have a safe and secure retirement system, just like teachers and other public servants. The real problem is not that teachers, firefighters and other public servants have defined-benefit plans, but that many private-sector workers do not. That’s because the private sector systemically eliminated defined-benefit pension plans in favor of risky 401(k) plans to reduce costs to corporate America at the expense of the American worker.
Keeping and retaining teachers
Despite the shortfall, CalSTRS has been and continues to be a sound system. Until the market collapse, CalSTRS consistently met or exceeded its assumed rate of return. Even now, CalSTRS is 71 percent funded and has sufficient assets and projected contributions to pay benefits until 2043.
CTA believes the solution needs to be fair and equitable for all educators, and that increases in educator contributions should minimize inequities between current and future educators, and should not create new, additional or unequal contribution tiers.
Elk Grove Education Association President Maggie Ellis testified to the Assembly Public Employees, Retirement and Social Security Committee: “We are so focused on our students. … This retirement system is about us, but it’s also good for our students because it keeps good teachers in the classroom.”
Back to Main Page