As one teacher at school said today, "It's not like a $56 billion deficit isn't bad enough."
As Brown and the Legislature prepare to wrestle over pension costs, an organization that sets the industry standards for how government finances are reported, the Governmental Accounting Standards Board, is proposing new rules for calculating pension fund liabilities – the amount of money such funds owe retirees.
The proposal wouldn't have much effect on CalPERS, the nation's largest public pension fund. But it would have an enormous impact on the second largest public fund, CalSTRS.
The California State Teachers' Retirement System already faces a funding gap of $56 billion – the difference between the money it expects to have on hand over the next 30 years and what it will need to pay out in benefits during the same period.
The accountants' proposal would triple the gap – on paper – to around $150 billion, said Ed Derman, deputy chief executive officer at CalSTRS.
"It complicates things," Derman said. "People are going to see this other number … and they're going to say, 'Oh my gosh, it's a much bigger problem.' "
Derman said CalSTRS' financial problem won't actually worsen. It will just look worse to accountants – and maybe elected officials. That could complicate CalSTRS' efforts to plug its funding gap.
Tuesday, October 18, 2011
Just What Every California Teacher Wants To Read
Outlook goes from bad to worse for CalSTRS under proposed accounting standards