The San Diego Unified School District Board of Education Tuesday evening approved an agreement with the teachers union to implement a supplemental early retirement program intended to help balance its budget.
The board unanimously approved the amendment to the memorandum of understanding with the San Diego Education Association, the union representing the district’s teachers, allowing for the retirement incentive plan for eligible teachers.
California became a dual-class public employee state last year when a sweeping law lowered pension benefits for state and local government workers hired in 2013 and later.
What that means for the state, for taxpayers, for employers, has been known for a while. But now a new CalPERS report uses a few examples to illustrate the law’s impact on individuals. It concludes that new members must set aside hundreds of dollars per month or extend their careers for years to achieve the same retirement income as counterparts under older, more generous formulas.
CalSTRS said Thursday that its long-term funding shortfall has risen to $73.7 billion, a stark reminder of the financial issues facing the teachers’ pension fund.
The newest tally reflects CalSTRS’ financial condition as of last June 30. The pension fund said the shortfall grew by $2.7 billion in the 12 months since the previous valuation of June 30, 2012.
CalSTRS’ latest calculation comes as the Legislature and Gov. Jerry Brown continue to debate how to fix the teachers’ retirement fund. Brown originally said the Legislature could enact a funding plan for CalSTRS in 2015, but he also supported the decision by Senate and Assembly committees to hold hearings last month on the issue.
A Wall Street firm cautioned Thursday that the failure to put a pension measure before California voters has negative implications for local governments facing higher retirement benefit bills.
Moody’s Investors Service said Mayor Chuck Reed’s decision to suspend his pension-change campaign is a “credit negative” for California agencies facing rapidly growing retirement benefit costs “with few tools to address them.” Moody’s declaration calls out pensions as one of many factors affecting agencies’ creditworthiness, but it’s not a ratings downgrade or change in the firm’s outlook.
Gov. Jerry Brown‘s “Wall of Debt” doesn’t include a big brick known as unfunded teacher pensions. Obligations to current and future retirees total $80.4 billion more than the California State Teachers’ Retirement System has assets to cover.
Brown’s budget summary earlier this month promised that his administration would begin working with the Legislature, teachers and CalSTRS to create a plan that would fully fund the pension system within 30 years. That will require at least $4.5 billion per year–and much more as the obligations continue to grow.
CalPERS Criminal Prosecutions Needed To End Public Pension Fraud
Yesterday a federal grand jury indicted two former top officials of CalPERS, the nation’s largest public pension fund on fraud, conspiracy and obstruction charges. Three years after the “pay-to-play” influence peddling scandal surfaced at the $225 billion fund, the Department of Justice may be poised to investigate and prosecute public pension corruption nationally. Take my word for it, there’s enough public pension corruption across the country to keep DOJ busy for decades. Forbes
Lawmakers began confronting a multibillion-dollar budget headache Wednesday that’s been looming for years: the funding gap at the state teachers’ pension fund.
The Legislative Analyst’s Office called on lawmakers to erase a $73 billion shortfall at the California State Teachers’ Retirement System over the next 30 years, saying any delay in dealing with the pension fund’s finances will translate into higher costs down the road.
“This is more costly the longer that we wait,” LAO analyst Ryan Miller told a joint Assembly-Senate hearing on CalSTRS funding.
Legislators vowed to deal with the problem, though they indicated it will take time to find a solution.
The recent CalPERS sign-off on an 85 percent premium hike for its most-costly long-term care insurance policies sparked more than 100 calls and emails to The State Worker.
Here are some of the most common themes:
How can they do this?
They can’t afford otherwise. The $3.6 billion privately funded pot of money is too small to cover higher-end policies and hold down premiums for those plans. Nursing home care claims and similar services have run higher than expected. Meanwhile, the California Public Employees’ Retirement System’s investments have taken a beating.