Preserving CalSTRS is the goal
In order to preserve CalSTRS, the state’s teacher retirement system, California educators – including community college faculty – will be called on to make a larger contribution to their retirement benefits.
That increase, proposed by Gov. Jerry Brown and approved by the Legislature in the state budget in mid-June, will go hand-in-hand with larger increases in contributions from both the state and local districts.
The plan calls for member contributions to increase from 8 to 10.25 percent over the next three years. College and school district contributions, meanwhile, will increase from 8.25 percent to 19.1 percent over seven years while the state’s portion would increase from the current 3.041 percent to 6.3 percent in the next three years.
"This does represent what seems like a hefty increase in our contributions, since members’ rates have remained at 8 percent since 1972, but this increase will provide for an ongoing annual benefit increase post-retirement. This is a really good thing for our members.” said Dana Dillon, CTA Board member, former NEA Board member for Higher Ed, and CalSTRS Board member.
CCA President Lynette Nyaggah observed, “CCA and CTA recognize that these proposed changes may create hardships for our colleges and thus for our members, but it’s important to recognize that the funding increases will come back to us in our retirement and will guarantee a defined benefit pension for all of us or for our survivors.”
Shortfall can be managed
Although CalSTRS has historically been a sound system, it has faced a funding shortfall since the global financial recession hit in 2008. Absent any changes in contribution rates, the program would have been depleted of its assets as early as 2046. The funding shortfall of $74 billion can be managed, according to CalSTRS officials, but required action.
CTA has long recognized the importance of a secure retirement to attract and retain teachers and its legislative advocates began working with the governor early on to come up with a fair solution that insures all stakeholders shoulder the burden. The governor’s plan comes amid a number of threatened ballot initiatives that would have damaged a safe and secure retirement system.
The approved plan begins to address that $74 billion funding gap, but as CTA President Dean Vogel said, “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 — the state, districts and educators— so we appreciate the governor’s plan to fully fund the teachers’ retirement defined benefit plan within 30 years.”