California teacher pension fund $56 BILLION short
SACRAMENTO — The state auditor’s office on Thursday added teacher pensions to the list of high-risk issues facing California government.
The report by State Auditor Elaine Howle added the nation’s largest teacher pension fund because it can’t meet the costs of retirement benefits beyond the next 30 years. The pension funding problem was added to a list of risks that includes California’s chronic budget deficit, unfunded retiree health costs and prison crowding.
It’s a well-known problem. The California State Teachers’ Retirement System reported in March that it had 71 percent of the assets needed to cover retirement costs for its 852,000 members and family members. The estimated shortfall is $56 billion.
School districts and educators pay a percentage of each employee’s salary into the pension fund to pay for benefits, but the percentage has not changed for decades. As recently as 2001, the fund had 98 percent of the assets it needed, but benefit changes and economic slumps that hurt asset values have reduced that number.
Both the pension board and Gov. Jerry Brown have called for funding changes to shore up long-term finances at CalSTRS. The board of the California Public Employees’ Retirement System, which covers state and local government workers, can change contribution amounts on its own, but changes to CalSTRS funding require action by the state Legislature.
The report underscores what CalSTRS officials have been saying for years, said Ricardo Duran, a spokesman for the fund.
“The issues are long-range ones, but the longer it takes to develop a plan, the more costly will be the solution,” Duran said in an email.
The long-term financial health of public pension funds has been a hot political topic across the nation.