Get the Accurate Pension Picture
Followers of pension funding issues in the media know there are plenty of stories and opinions out there. An ongoing challenge for our staff is to make sure that reported information is factual, and not based on inaccuracies or generalities. We do our best to correct errors as they appear.
A recent article in The Christian Science Monitor called attention to pension funding. The author, former U.S. Secretary of Labor Elaine L. Chao, pointed out that private sector pensions are required by federal law to conform to pension funding rules.
ERISA (Employee Retirement Income Security Act) requires accurate measurement of pension liabilities and assets and prevents underfunded pension plans from making new promises they can’t afford. She writes that state and local government plans are not subject to these federal laws and “many failed to take it upon themselves to responsibly ensure that they would be able to make good on their promises.”
However, Chao failed to mention that there are recognized standards for accounting and financial reporting for state and local governments, established and approved by the Governmental Accounting Standards Board (GASB). GASB was established in 1984 by agreement of the Financial Accounting Foundation and 10 national associations of state and local government officials. It is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments. CalSTRS follows GASB standards.
CalSTRS made sure that with additional benefits came the ability to finance them. For example, when the California Legislature enacted benefit enhancements in 1998 and 2000, CalSTRS identified the costs. Some of these enhancements, like the Longevity Bonus, were not permanent and will sunset December 2010. Continuing these enhancements would have cost $12 billion over 30 years.
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Because CalSTRS members do not pay into Social Security for their CalSTRS-covered employment, one of two federal Social Security pension rules may reduce their Social Security benefits they have under other employment. We understand this is often disappointing news to members coming to education later in their careers.
We make every effort to get out the word through print materials as well as online. See our fact sheet, Social Security, CalSTRS and You for more information.
Here is a copy of the letter I wrote in response to an inaccurate article appearing in the San Jose Mercury News, written by Ms. Noguchi:
Subject: YOU SHOULD DO YOUR RESEARCH MORE CAREFULLY!
Dear Ms. Noguchi,
I think you should do your research more carefully before you write an inflammatory, inaccurate article such as the one you recently wrote concerning teachers' retirement and the STRS!
To my thinking, you allowed yourself to be played by right wing fanatics who are out to smear all government employees, painting them with the same brush. These are the same people who do not recognize that labor unions have been a positive balancing force in American life. Spouting slogans about less government, they want lower taxes and less "interference" from government.
These folks want us to return to "the good old days" that really weren't that good, instead of meeting the challenges of the new international world. They have little appreciation for the tremendous challenges facing today's teachers, who are meeting the needs of an increasingly diverse population, and bringing immigrant children into the main stream. Teachers are on the front line and on stage everyday, doing their unsung jobs, sometimes with little support from home and with fewer means of establishing discipline in the classroom. They need your support, not an attack on their STRS!
You were especially off track when you made up an example of a teacher retiring after 35 years, making $90,000. and retiring with $75,600. or 84% of salary. Why did you choose to use these figures? I don't know of any district paying like that, and I don't know of anyone retired with that amount! Then, you admit the average is far below that, but do not figure those more modest amounts! I'm sorry, your alarmism may attract readers, but that is not good journalism.
Instead of pandering to this group and accepting their alarmist stance, perhaps you should look into who is funding the campaign of the euphemistically named "California Foundation for Fiscal Responsibility". Perhaps it is funded by the same good folks who brought us Prop 13, undermining public funding for schools and causing the currently unfair property tax gaps in our state? I remember well, how red jacketed realtors campaigned for Prop. 13 in front of my school library, which always doubled as a polling place. The same realtors who bragged about the quality of the schools near the houses they were selling, shot down their basic funding, the local property tax. Way too late, they have realized how Prop. 13 has slowed real estate turnover.
You know, one of the most important reasons teachers stay in their very demanding, low paid jobs is the promise of a good retirement. I know. I taught for 33 years in Sunnyvale. The $3505. per month I get, after deductions, at age 72, is very welcome, but in no way can it be considered as excessive. Attacking our retirement system can have very unintended consequences, also.
I am sending by separate email, a copy of my STRS newsletter, which arrived today. If you read it, you will see that the system is in pretty good shape considering the times. It is funded until 2044! Why isn't that in your article? The STRS is one of the best operated pension plans in the world, a model to others, if the truth be known.
Please, please, check your facts before you write a diatribe presented as a factual article!