Time for a Reality Check

Mar. 1, 2011 Jack Ehnes
in

Recent media reports have brought attention to the funding challenges facing CalSTRS. They inaccurately suggest, however, that CalSTRS is on the brink of running out of funds and cannot meet its obligations.

While it is true that the system has a funding shortfall, current projections show we have assets to pay benefits for at least the next 30 years. Your CalSTRS pension fund is not in immediate crisis.

Even if in the unlikely event that CalSTRS does run out of money in the 2040s, the benefits would continue to be paid because the state would be obligated to pay the difference between the benefits paid and the contributions received.

Long-term solution for a long-term problem

However, the funding shortfall is a long-term problem and can be managed. The solution requires thoughtful action. The Legislature and Governor must adopt a responsible funding plan that will protect the state General Fund and uphold the state’s promise to teachers.

What is needed is an increase in contribution rates, which can be gradual and predictable. Those rates have not increased in decades and can only be changed by the Legislature and the Governor.

CalSTRS is working with the stakeholders – school district employers, members, legislators and the Governor -- to facilitate development of a solution to ensure the long-term sustainability of CalSTRS.

Enduring security

For more than 97 years CalSTRS has provided retirement security for generations of California educators while never missing a payment—even through the Great Depression. That rock solid dependability is secure.

Comments

Submitted by Edward Mooney (not verified) on Apr. 1, 2011.
Thanks for some rational words in an atmosphere of fear, misinformation and manipulation of facts to further political gains. CalSTRS has been there and will be there for decades to come. The panic, however, will ebb and flow. Solutions will be found, as they have in the past. No, I do not work for CalSTRS and no, I am not living in a fantasy land. I have been around for 55 years and I've seen the ups and downs of the economy. This, too, shall be overcome. Panic does not add to the solution. Rational, thought out adjustments will get us through.
Submitted by woodcreekguy (not verified) on Mar. 7, 2011.
Knowing that the system will run out of money in 30 years IS an immediate crisis. My wife is a teacher that plans to retire in 30 years. Will she pay into a system during her entire career only to see it go belly up once its her turn to retire? We are more than willing to pay twice what we are contributing now if it means having a sound retirement waiting for us that we can count on. Your stance of "we are ok for 30 years" is completely unacceptable.
Submitted by Jack Ehnes on Mar. 8, 2011.

Please be assured that no matter when a CalSTRS member retires, the core benefits (retirement, disability and survivor benefits) are guaranteed and will be paid.

True, without a plan of action, it is projected the CalSTRS fund will be depleted in 30 years. However, the state, as the plan sponsor, would pay the difference between the contributions received and the benefits paid.

Submitted by D (not verified) on Mar. 11, 2011.
Looking at the current financial status of CA and banking on that, is no reassurance. If the state goes bankrupt, how would they be able to pay? I have little faith in that. How about our state politicians stop overspending?
Submitted by rbixler (not verified) on Mar. 21, 2011.
The state, unlike a private entity, cannot go bankrupt. It has the power of taxation. Indeed, deficits are simply uncollected taxes. Politicians may campaign against them, and people may object to paying them, but the power to collect them is vested in the state.