By Dina Martin
Maggie Ellis explains why CTA must counter attacks on CalSTRS
In the face of increasing attempts to roll back public employee pensions, CTA is working with other unions to persuade lawmakers to preserve retirement benefits. Through CTA-organized protests, press conferences, letters to the editor and opinion columns, your voice is being heard in the debate.
Maggie Ellis chairs CTA’s State Council Retirement Committee. We caught up with the Elk Grove Education Association president at a California State Teachers’ Retirement System (CalSTRS) board meeting to get the latest on the governor’s 12-point pension proposal.
What is happening with the governor’s pension proposal?
The Legislature’s pension committee is putting their report together, and we anticipate hearing something anytime between now and early August. We’ve had boots on the ground in the Capitol, organizing retirement pension committee lobby days. A lot of our members had face-to-face meetings with legislators to explain how pension reform measures affect our CalSTRS members. We’ve talked about all the governor’s pension points.
What do teachers need to know about their retirement?
Retirement is emotional because it’s your security. It’s the rest of your life. Teachers need to be educated about what a defined-benefit plan is. Having a secure defined-benefit (DB) plan allows us to have security in our retirement.
Teachers need to know that CalSTRS is a solid system and an integral part of California’s economy, because we are investors in things that are not just local, but statewide and even worldwide. The CalSTRS is a system worth investing in. It’s worth keeping and worth expanding for all people. This is not an entitlement. It’s an investment.
Teachers need to know that we do have a funding problem, and that increased contributions are going to have to be addressed. What that looks like is part of the conversation we’re having with the Legislature.
This isn’t the message that educators are commonly getting?
No. We are hearing that this is the Titanic, it’s already sinking and there’s no way to save it. That’s so far from the truth. I believe it’s part of a political agenda or a financial agenda to get rid of defined-benefit systems and turn them into defined-contribution (DC) systems. The only people who benefit from a defined-contribution system are Wall Street and vendors who are selling 401(k)-style defined-contribution plans.
Does it seem like teachers have a good understanding of CalSTRS?
Teachers tend to take care of themselves last. We take care of our students, we focus on the classroom, and only in the last few years of our career do we start to think about retirement. That’s when it means something. I hope the positive out of this so-called crisis is that everyone will become aware of their retirement throughout their career, what their benefits are, and will become active in managing their retirement benefits.
How do our pensions benefit the state and the profession?
Having a secure retirement system helps recruit better people to the profession. I worry about teaching becoming a revolving door where people just do it for three or five years and get out. A revolving door means you don’t get the quality of teachers we want for our students.
The state gets the economic activity of our retirees. With a DB plan, teachers are guaranteed a regular income, which means every month retirees are spending money in their local economy. That trickles down to local businesses that hire people and sell their products.
Last year, because of CalSTRS, $10 billion circulated through the state. That’s a lot of money! It drives the entire economy in many areas, especially in our little tiny towns where teachers retire and stay. Imagine if that disappeared.
Too, CalSTRS invests in businesses and infrastructure projects in the state. I think of it as a partnership with the state in terms of the economy. Public pensions are less than 4 percent of the state budget, and yet the state gets back $10 billion in return.
Why do attacks on pensions continue?
CalSTRS has a strong corporate government program and policy — that makes it a target because it expects corporations and boards to do the right thing, to have transparency and report to their shareholders. When they don’t, CalSTRS steps in. CalSTRS uses its proxy shares to vote on compensation for CEOs and has often voted no when it’s not in the best interest of shareholders. There’s a check there, and I don’t think Wall Street likes to be checked. Remember, there are a lot of good businesses. CalSTRS does a good job of engaging them, and a lot of businesses have chosen on their own, or with a little bit of prodding, to be more transparent. But the transparency says a lot about CalSTRS and who they invest with. They have a high standard, and it’s good for our economy.
Anything else members should know about CalSTRS?
Oh yes. CalSTRS has a lot of services and staff who will come out and conduct presentations to answer your questions and help you understand your retirement benefits. It’s a fabulous way of educating our members. Sessions will share information you need to know wherever you are in the profession.
Also, CTA members should beware of vendors who are out there hawking their goods. CalSTRS will never come to your house and will never buy you a piece of pizza (unlike those selling defined-contribution plans) for your business. Know that some are passing themselves off as CalSTRS. If that happens, let us know. Be vigilant! We don’t want you to be taken advantage of.
Editor’s Note: At press time, the Legislature was poised to approve a pension reform package, which the Educator will more thoroughly cover in the fall.