California teachers' pension system headed toward insolvency

[alp227]

As California school districts anticipate possibly the worst budget crisis in a generation, many will try to lighten their burden by enticing older teachers into retirement. But as more and more teachers retire -- with a pension averaging 55 percent to 60 percent of salary -- they will be straining a system that already can't meet its obligations.

The California State Teachers' Retirement System is sliding down a steep slope toward insolvency. The threat isn't to teachers who have retired or plan to, but to the people of California. Taxpayers, who already pick up 23 percent of CalSTRS expenses, will be increasingly burdened as the giant pension system fails to meet its obligations.

"We're on a path of destruction," said Marcia Fritz, president of pension-reform group California Foundation for Fiscal Responsibility.

And merely rejiggering formulas for new employees won't rescue the system, she said. Simply put: "We overpromised."

Full story: http://www.mercurynews.com/rss/ci_17446295

[proud2BlibKansan]

1. 55-60% ?!

Wow. I wish.

If I go this year I get 40%. Every year I stay I get another 1%. I don't think I can work enough years to get 50%.

[ProgressiveProfessor]

2. All of the state run pension systems are in deep yogurt

And it will getting worse not better.

I expect Jerry Brown to ask for "reasonable" cuts in pensions and benefits that the Gropenator would never have dared to.

[Starry Messenger]

3. Those statements are from an anti-pension RW group.

Here is the response from CalPers:

http://www.calpersresponds.com/downloads/respond-to-challenges-2011.pdf

INVESTMENTS – A $228 BILLION PORTFOLIO (as of 2/11/11)

 Ended June 30, 2010 Fiscal Year with a 13.3 percent investment return, bringing our 20-year return to 7.9 percent, and earned a 12.5 percent one-year calendar return through December 31, 2010

 Gained back more than $65 billion in our investment portfolio since our market low in March 2009

 Adopted a new risk-focused investment strategy, a landmark investment plan that places our investments into one of five major groups, or buckets, according to how they function in high- or low-growth markets and how they respond to the prevailing inflation environment

 Successfully advocated for financial market reforms that give a greater voice to investors, bring accountability to corporate board rooms and give investors access to the proxy

 Advanced strong new laws around placement agents that requires them to register as lobbyists and bans fees contingent on whether CalPERS invests with the external money managers who hire the placement agents

 Implemented an ongoing program to reduce money manager fees. Achieved a reduction of $300 million over the next five years to date

FACT SHEET: CALPERS 2011
Page 2 of 4

 Launched a Web-based system that lets money managers submit proposals directly to CalPERS without the need of placement agents, and levels the playing field

SUSTAINABLE PENSIONS
 Providing new sensitivity analysis of employers rates in all employer valuations to provide greater transparency and additional information

 Developed a pension tool kit for local elected officials to promote greater education of pensions and assist in policy and decision making

 Launched the Public Employee Compensation and Benefits Task Force to enhance disclosure and identify and mitigate any potential loopholes that allow abuse of the system such as those demonstrated in the City of Bell

 Conducted a review of pensions greater than $245,000 annually, with report to be issued in March

 Completed an audit of the City of Bell that dramatically reduces pensions of city officials


If you google Marcia Fritz you'll see she's been on the warpath for years on this, working with CA Republicans who pledge to run as anti-pension candidates. In other words, it's cheddar. The pensions are fine.

[YvonneCa]

4. That's what I thought as I read this...

...article. RW spin. Not to say there aren't issues... :7

[Starry Messenger]

5. Exactly.

RW spin always has that kind of ripe cloud of confusing fog around it, like some bad magic spell. They take a small kernel of factoid and conjure up all kinds of scenarios. ;)