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.