California teachers’ pension fund $56 billion in the red

April 1, 2011

CalSTRS, the nation’s largest teachers’ retirement fund, said on Thursday that its unfunded liabilities grew to $56 billion in the fiscal year that ended in June, an increase of $15.5 billion. [SacramentoBee]

The gap between the fund’s assets and its pension obligations to California teachers will at some point require more contribution from state taxpayers, teachers and school districts. In light of current budget cuts, some Republicans legislators are calling for pension reductions.

In a report to its governing board, CalSTRS staff said the retirement fund is 71 percent underfunded. The increase in the gap is blamed on the fund’s horrific losses in 2008-2009, which are being phased in over three years.

Currently, school districts contribute $2.3 billion, teachers around $2.2 billion and the state about $573 million a year to the teachers’ fund.

Contribution by the state, will grow next year by around $100 million because of an automatic trigger in CalSTRS’ funding mechanism, Derman said to the Sacramento Bee. But CalSTRS needs increased contributions in the hundreds of millions of dollars, he said, to make itself healthy.

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Personally, I think there is a lot of fault to go around. The administrators of CALPERS and CALSTRS allowed “holiday periods” (a period of time when the funds were doing great so no one had to pay in and no one budgeted for the future), the employers (school districts/teachers) had a time when the school districts paid all the cost into the pensions instead of having the districts pay their share and the teachers/staff pay their share just like private employers and employees pay into social security with equal shares (this is still being done with some school districts (love those union contracts), the saying in the school promotion scheme is if you have a problem teacher, promote them out of the classroom and into administration because that is the only way to solve the problem because of the unions, and lastly, the college teachers with tenure need to start working full time and not having teacher aides teaching their classes and not allowing retired employees come back imediately into the classroom. I know several state community and university college teachers who have retired and are still on board making the smae pay as when they retired (didn’t come back in at the starting pay). This is also becoming a big problem with the prison system which is why Gov Brown made this one of his 12 point pension reform points. If you retire, you go and let someone else have a job or stay and don’t retire, but not both ways.

Gee, how about we make big corps such as GE pay their fair share of taxes…no never mind, they have too many employees in India to support. I’d much rather let the extreme wealthy not pay taxes than have good teachers. Those rotten greedy teachers, how dare they even think of retiring when wall street bankers and big corps are making record bonuses and not paying taxes.

CALSTRS owns $500,000,000 of GE stock. What happens to their investment if you nail GE? Yes, those rotten greedy teachers own the wall street banks and big corps… and so do you! You’d like a simple, partisan solution, but it’s not simple or partisan.

So you are for GE and wall street fat cats not paying taxes?

I’m not saying the system ain’t broke, just that there is no easy fix. I think the Dems are just as fat and dirty as anyone. The darlings of the Left–teachers–are invested up to their eyeballs in all the corporations that the Left also despises but is in bed with at the same time. For most of recent history the Dems have held a majority share of the votes that created the status quo. Don’t kill Wall Street then come crying to me for more taxes to make up the shortfall. We’re over-extended and the faucet is dry.

I agree there are Fat Cat Dems that aren’t paying their fair share, I didn’t bring right or left into it. To me it should just be an fair thing. I have a family member that works for another state. They are cutting his/her salary. Did the CEO of GE’s salary get cut? I’m not saying his salary should be cut but he must pay his way just as I do. I’m not saying that there isn’t problems with our current educational system, but it’s what we have to work to with. Instead of gutting it we should be fixing it.

Teacher’s shouldn’t be collecting food stamps and perhaps they wouldn’t have to if everyone paid what they are supposed to pay. My family member that works for the state is working 10 hour days. She/he has accumulated hundreds of vacation hours that she/he hasn’t been able to use because of the cut backs in the last few years. But just as with so many other state workers or teachers, they’re not saying we need more, this family member hasn’t complained about the vacation hours. Some of them are just saying don’t make us work in unsafe conditions or in impossible conditions. My family member due to cutbacks is working in unsafe conditions. If teachers can’t teach due to over crowding or/and poor learning materials then that needs to change. I just went to a back to school night at AG, I was saddened to see how hard some of these teachers are working now. Some of these class rooms are falling apart, there are no extra supplies as a mater of fact there are little needed supplies. It felt as if our classrooms are turning into third world classrooms. Is that what we want for our future? One teacher was using one of those old computers, like the huge old first one that I bought many years ago. He brought it in from home. It’s crazy. This should be bipartisan, not right and left.

There’s tens of billions of dollars of state agencies that aren’t the school system that I would support cutting. Why is it always teachers that are the hull of budget arguments? It’s fallacious. There’s billions of cuts that could be had without affecting schools. However, in light of this article, pensions have gone far beyond sustainable and teachers will have to sustain market loss just like everyone else.

The problem is so overwhelming out of control it is hard to know where to begin. The classrooms are crumbling, there are no supplies, classrooms are overcrowded, pensions are broke, etc. If anyone really thinks that the tax proposal is the answer better think again. The answer is in reform, reform, reform. Yesterdays Tribune talks about all the agencies, boards, committees, commissions, etc, for every type of issue. Multipy that with the same agencies, boards, committees, commisions in the federal and local governments and we have created pyrimads of waste. All these special projects have staff, travel costs, etc. etc. etc. People want the corporations and rich to pay more, the corporations and rich want more illegals to do their cheap work, middle class wants the illegals protected and provided for, and the dog keeps chasing its tail.

slobird, I heartily concur…

“and the dog keeps chasing its tail.” Ever see a dog catch it’s tail?

Roger; I have repeatedly pointed out that administrations never seem to take a hit under the budget knife, ever. Every since Prop 13 passed, the result has always been to cut programs, to cut teachers, to increase class sizes and never ever cut anything that the administration(s) are using to run themselves with, so I do agree with you on that point.

There are two points that many forget when we get into a pension obligation situation like this and this time it is so much worse due to the second point I’m going to make. First point: pension funding is “supposed” to be kept current as part of the pay package any group agrees to. The state workers, the teachers and others all have agreed on certain pension obligations and most of those groups pay part of that obligation, but the state is “supposed” to pay the rest of the obligation, but it has not kept up its part of the agreement as the policy decision makers literally rob Peter to pay Paul by short changing the pension payments to make short term gains in attempting to keep the budget balanced. That means in very simple language that it is NOT the “fault’ of the union members at all, but those in charge of keeping the pension payments current. Point two: The pension funds have had their funding reduced by the “contraction” of the market on Wall Street over the last couple of years were there was actual theft by the Wall Street execs who literally invented “derivatives”, a new, untried investment that flushed untold billions of pension funds and personal retirement funds away from those funds into the bank accounts of the billionaires who knew how to rig the game so that the SEC couldn’t stop them until it was too late. Many may see jail time yet, but apparently the FBI moves very slowly in investigating this type of fraud, but for many individuals and large pension funds, the damage has been done. Whether or not it is the “fault’ of the unions or the state managers who didn’t pay into the pensions what they were supposed to doesn’t seem to make much difference now however as the result is the same, the pensions are underfunded and by law they need to be “re-funded” to close to were they are supposed to be, and yes, we taxpayers will be on the hook for some of it. I for one do not think that all of the needed funding should be taken out of the hide of the teachers or any other group, but instead we should be getting creative in increasing revenue such as off-shore processing fees that the oil companies don’t pay here in California but they do in every other state that has off-shore oil drilling, and we should push for a state run “Bank of California” that would be run in the same manner as the Bank of North Dakota. Look it up, they have done it right for around eighty years or so.

Bank of California run by the taxpayers for the benefit of taxpayers sounds fantastic. I’m In!

I think that the Bank of North Dakota is a great idea — for a state that has a small enough population to make possible a relatively uncorrupted government. The fewer people represented by a politician, the less likely that politician is to get away with broken promises or wasteful spending. I can’t imagine that such an institution would not be corrupted in this state. (State Lottery, anyone?)

California is more populated than many nations with corresponding problems in keeping an eye on corruption. There are too many agencies with too many highly paid staffs which are filled with political appointees — often with conflicts of interest. There are too many career bureaucrats who make “empire building’ a higher priority than achieving the goals for which their department was created. Most Sacramento politicians are too controlled by special interest groups(from trade associations to unions and more) many of whose power is greater than that of the voters supposedly represented by politicians.

Whether you agree with them politically or not, our state legislators are at least not as dogmatically committed to political warfare as those from other parts of the state. We can sit here on the relatively under-populated Central Coast and whine all we want about waste and corruption in Sac. and we may be right. But there is damn little we can do because of the requirements for massive funding needed to get elected in more densely populated areas and the resulting corruption of those who get it.

“The fewer people represented by a politician, the less likely that politician is to get away with broken promises or wasteful spending.” Some see only problems, others will see potential solutions; our process of electing politicians is corrupted by the money that flows in and out of our elections. To remove corruption out of politics, remove the money that controls too much of what is addressed by those who do manage to get elected; do this by restricting elections to publicly funded elections only. Any one who wants to run for public office should need to submit a certain number of signatures of the population area that office represents in order to qualify for public funds for their campaign, and with no exceptions for those who are wealthy. Mandate a change in how the ballots are printed and how the votes are counted to a “I.R.V.” system of instant runoff voting to further eliminate the costs of running elections and to seat the candidates into office after the elections. Once you have removed the private monies used to pay for elections, then you address the lobbying industry in politics. Do not allow any politician to receive money from any person or business, period; with the election process changed to publicly financed method, there is no reason for lobbyists to try and “purchase” the legislation that they favor by donating to a politicians re-election campaign, which is the root of the evil that is money in politics. None of this is simple, none of this will happen with the current media situation we have in America, but it is “possible”, just very very difficult to enact.

As for the “Bank of California” not being able to work due to the possibility of corruption in our state government, do not allow ANY private outsourcing of any part of implementing the start up of a state run bank; it can work regardless of how large a population is.

Actually folks,

It’s not the teachers that are really the problem… as far as costs go… it is the logarithmic growth in administration. I have said this before, but I remember when there was a principal, a receptionist, a janitor and teachers. If you get rid of the overfed admins, you could pay the teachers a bit more and still save a bunch! Get rid of one administrator and give 100 teachers a 1,2 or 3 thousand dollar raise!

BTW< San Luis Coastal has been creating NEW positions and hiring… anybody else see anything wrong with this picture? Do you realy know what the County Superintendent of schools office really does? They dole out the paychecks… we really don't need them because it could all be automated.

I do have real problems with the content of what is being taught… but the money issue lies in trimming down the administrators.

Homerun, rogerfreberg…

It’s not teachers per se, it’s the overhead and administration costs that are soaring out of sight.

And the simple math equation that today does not balance out, only so many are paying into a retiremnt fund that a very small number benefit from, so who is going to get stuck paying it? Sooner or later we the taxpayers will be expected to pick up the tab for all the remaining costs for all these retirement programs. Not jsut teachers but all public employees…

Hows your retirement fund paid for? Who is going to cover the costs if your investments takes a dip or there are not enough individuals paying into that fund?

I’ll be darned, I looked up “Administrator” in a new American dictionary and it said ” self servant individual who likes to screw the public” “purveyor of waste” “jackass who makes excuses for his and his cronies unnecessary positions” LOL.. Isn’t Rogers perspective of the problem the same for all sectors of the Gov? maybe we need to hire a “find Chit out Czar”

Its those greedy teachers making too much money and taking more than they deserve in their pensions….


If you cut the number of teachers we have then we don’t have enough paying into the system. Class sizes are on the rise and teacher layoffs imminent. The system is a ponzi scheme. Need new people and a growing teacher force in order to support the commitments that are on the book. Once again teachers will be blamed.

Hire more teachers and help CA education!

Good God..PERS is broke, the POA is broke, SS is going broke, CalSTRS, who’s next and who did the long range planning for these benefit systems?

“The gap between the fund’s assets and its pension obligations to California teachers will at some point require more contribution from state taxpayers”

This one sentance speaks volumes…

Nice edit attempt there, easymoney; what the sentence actually said, if you print the ENTIRE sentence is “The gap between the fund’s assets and its pension obligations to California teachers will at some point require more contribution from state taxpayers, teachers and school districts.” You weren’t apparently trying to be too deceiving since you did not include a period at the end of your quote, but you did not finish the entire sentence. The pain will be spread, not concentrated on just the taxpayers.

You are making a personal attack on me, bob, how about sticking to the topic…

The truth is there if you bother to look, the public employees retirement fund is not in the black now and never was funded completely by those benefiting from it.

So pray tell bob, who is going to wind up paying if not the taxpayers?

easymoney: “You are making a personal attack on me, bob, how about sticking to the topic… ” Uh, yeah, pointing out that YOU are attempting to edit the sentence to make YOUR point is a personal attack? Me thinks thou doth protest too much :) The “facts” of the matter are that the taxpayers will have to pay more to bring the funding up, but the teachers and school districts will also have to pay more as well. Those are facts; to state that the taxpayers alone will have to pay all of the costs is not a fact but is your “opinion” of what will happen. My “attack” is not on you personally, but on your assertion of an edited sentence that you attempted to use to bolster your case. Read the entire sentence again to yourself, slowly if that helps you comprehend it better, but your opinion is not going to change the facts.

I did not edit the sentance, just cut n pasted it. Then made my own personal comment about the sentance.

Point of this entire article is that,

“California teachers’ pension fund $56 billion in the red”, there I cut n pasted another line. It says in the red, not in the black, so in my mind that reads in debt…

Goldman Sachs sold Calpers some mortgage paper I think. some big deal back east I saw it mentioned during the collapse. ongoing. SS would be alright if we had not borrowed from it to finance the cold war. SS must be worth something though, otherwise the republicans would not be interested in privatizing it.

Teachers own $240 Million of Goldman Sachs.