The Legislative Analyst's Office today called on lawmakers to fully fund the state teachers' pension fund, or CalSTRS, an ambitious goal that would cost billions of dollars over the next 30 years.
In a 13-page report to the Legislature, the nonpartisan LAO said the time has come for California to remedy the $73 billion funding gap confronting CalSTRS.
The funding gap represents an estimate of the long-term shortfall in money needed to pay benefits. Hurt by the recession and a decision more than a decade ago to raise benefits, CalSTRS has plenty of cash to meet needs for the foreseeable future, but it's projected to run out of money in 2044.
Officials at the California State Teachers' Retirement System have been issuing similar warnings the past several years, most recently in a report to the Legislature last month. CalSTRS spelled out eight different options for erasing its funding gap over time, and today's LAO report urges the Legislature to choose the speediest remedy - fully funding the system in 30 years.
It won't come cheap - it would take another $4.5 billion a year to get CalSTRS up to par in 30 years. Currently the system gets $5.7 billion a year from teachers, school districts and the state, with the state's contribution coming to $1.4 billion.
The LAO said the Legislature needs to come to grips with the problem quickly. Because the additional cash can be invested to generate higher returns, raising contributions next year would create immediate payoffs. By contrast, "the longer it takes for the state to increase contributions...the more costly it generally will be to erase the unfunded liability," the LAO report said.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.
Read more articles by Dale Kasler
What You Should Know About Comments on Sacbee.com
Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)
Here are some rules of the road:
Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "Report Abuse" link to notify the moderators. Responding to the comment will only encourage bad behavior.
Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.
Do not attack other users; focus your comments on issues, not individuals.
Stay on topic. Only post comments relevant to the article at hand.
Do not copy and paste outside material into the comment box.
Don't repeat the same comment over and over. We heard you the first time.
Do not use the commenting system for advertising. That's spam and it isn't allowed.
Don't use all capital letters. That's akin to yelling and not appreciated by the audience.
Don't flag other users' comments just because you don't agree with their point of view. Please only flag comments that violate these guidelines.
You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "Report Abuse" link to submit those comments for moderator review. You also may notify us via email at firstname.lastname@example.org. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.
If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them.