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Auditor: Teachers' Retirement at Risk
The latest financial morass buffeting the state is the severely underfunded California State Teachers' Retirement System, which has not raised employee contribution rates in decades and could ultimately force taxpayers to make up a growing shortfall, the state auditor reported Thursday.
With 852,000 current and future retirees, the nation's largest pension plan for public school teachers will be depleted in 30 years, California State Auditor Elaine Howle said in a 64-page report issued Thursday.
In part, that is because teachers and administrators have contributed just 8 percent of their salaries since 1976. The contribution rate can only be adjusted by the Legislature. Last year, the pension plan was 29 percent underfunded, up from 2 percent underfunded in 2001.
Among the other "high-risk" areas identified by the auditor were various state agencies that have put stimulus funds at risk because they may not spend them by the deadline, the state's budget shortfall, prison overcrowding that has made the California Department of Corrections and Rehabilitation the target of lawsuits, and deficiencies in infrastructure, emergency preparedness and electricity production.
The state's high-risk audit program, established in 2005, identifies state government programs that are at risk for waste, fraud, abuse and mismanagement.
Jennifer Gollan covers regional politics and government oversight for The Bay Citizen. She joined the organization from the South Florida Sun Sentinel, where she produced watchdog stories involving 35 local governments and Broward County schools. ...
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Gordon
A good start would be putting a cap on pensions of $50,000 per year, anyone above that needs to save more of their own money, like the rest of us...
John Colombero
WOW! I hate articles like this when the facts are manufactured. fact is that STRS teachers pension fund is over 80% funded not 29% underfunded as Howle states. The assets of the fund have been diligently protested in spite of repeated attacks by governors to raid the fund. STRS meets the standards of "Fitch."{the rating agency) STRS is working toward raising the participant contribution levels if they have not already done so.
The fund is extremely well managed and because of its size and financial impact has done more to keep fund managers in line that congress has ever done. As of June 2011, the fund has increased its net worth 30 billion from 2010. Over the last 20 years the fund has had an annual return of 8.2%. Now, if the economy collapses completely we will all go to economic hell together and this argument is moot.
The attack on pension funds originated with a Stanford study. Some professor needed to get his graduate students into a meaningful project. The resultant research substantiated a predetermined conclusion which others have played upon.
Incidentally, the average teacher retires at 60% of salary. Compare this payout to fireman and police that retire at 80 to 95% of salary and go out on disability. (nontaxable) I will venture that more teachers have been abused by students and rendered disabled by their duties (breaking up fights, etc) than police or firemen doing their job. (I was a teacher for 37 years.)