April 2014 Advocate – Legislature looking at CalSTRS shortfall

In the News

Legislature begins looking at how to deal with CalSTRS shortfall 

The California legislature has begun hearings on how to fix the $71 billion dollar funding shortfall for teacher pensions. Without an increase in contributions, CalSTRS predicts its assets will be depleted in about 30 years.

The CFT has formed an advisory committee that has begun analyzing the issues facing CalSTRS solvency and at possible reasonable and equitable solutions.

Although CalSTRS investments grew at a rate of 13.8% in 2013, which increased their portfolio by about $550 million, there is general agreement that the gap cannot be bridged by investment returns alone.

The governor has called for a new CalSTRS plan that would be enacted in the 2015-16 fiscal year and phased in over several years.  A key question is how much each of the three CalSTRS contributors—teachers, school districts and the state–would increase their contributions. Currently teachers pay 8%, districts pay 8.25% and the state pays approximately 5%.