California State Teachers Retirement System

Here in California, teachers don't pay into Social Security. No, here we pay a higher percentage of our pay into the State Teachers Retirement System, "stirs" for short, and are guaranteed a certain retirement at some distant point in the future.

Part of the reason for last Wednesday's rally, the one I wrote so much about earlier this week (scroll through the May 2005 archives if you're interested), is that Governor Schwarzenegger wants to change from a "guaranteed benefit" type retirement system, which he claims is bankrupting the state, to a "defined contribution", 401k-style pension system. Leading public unions in the state are of course balking at such blasphemy. I admit that the guaranteed retirement I'm currently promised is a pretty good deal for me personally, and I'd hate to lose it. However, I don't have a solution--and neither does the CTA--for what California should do to fund these future retirements as promised. I should have a pretty good retirement, but at what cost to my fellow Californians?

Some would say that such a retirement is the perk for years of working for comparatively low pay, and there may be some merit to that argument. Others would say that the state promised me such a retirement and should keep to its promises. I agree with that argument completely. Interestingly enough, so does Governor Schwarzenegger--his proposal would only affect workers hired after next year, putting them into a 401k-style retirement while keeping the state's promise to us older workers. Seems reasonable to me.

Then along comes an article in today's major Sacramento newspaper, certainly not a mouthpiece for any Republican administration. Here are the first two paragraphs of the article:

The California State Teachers' Retirement System learned in a new report that the gap is widening between what the pension fund must pay future retirees and what assets the fund will have.

The day of reckoning is about 20 years away, but the fund's trustees must either begin feathering the nest now or cut back on benefits for new hires. Current teachers won't see their pension benefits reduced, because the payments are guaranteed by law.

So what does the CTA say California should do about this? It says what any socialist organization says--raise taxes on the rich! And when will I currently be able to retire? In 22 years. Here's more:

The fund's projected long-term shortfall has increased to $24.2 billion, up $1.05 billion from the last year's actuarial report by the consulting firm Milliman.

California has a population of 30-some million, making this shortfall equal to $750 for every man, woman, and child in the state. Staggers the mind, doesn't it? Expect the CTA to fight this proposal as well:

But CalSTRS officials and experts aren't counting on Wall Street to pull underfunded plans out of the financial hole. Instead, consultants suggest raising contribution rates.

By law, the Legislature must approve any changes to CalSTRS contributions made by teachers, school districts and the state.

Currently, teachers contribute 8 percent of their annual payroll, while school districts put in 8.25 percent and the state adds 2 percent.

To bridge CalSTRS' gap, consultants estimate the combined contribution rate must grow by as much as 4.56 percentage points. This figure has increased along with the shortfall.

I don't mind CTA's fighting such a proposal. I just wish they'd come up with a better resolution than the typically socialist wealth-transfer notion of "tax the rich".

And now on to my personal situation.

I didn't start teaching until I was 32 years old. I paid into Social Security from the time I was 18 until I became a teacher, and with over 40 quarters of payments contributed I've earned a Social Security check when I retire. However, now that I have a state pension system, Social Security will only pay me a small fraction of what I've theoretically "earned". They don't want any double-dippers, you see.

But why shouldn't I be able to double dip? I worked and paid into that system for many years. If I had become a teacher right out of college, I'd have been able to pay into STRS for 30 years and retire with a healthy check at age 52 or 53. But since I didn't start teaching until I was 32, I won't be able to get such a retirement until age 62--and then I'll get the same retirement pay as the 52-yr-olds, because we both put in 30 years as teachers. Yes, Social Security will add a small amount, but not near what it would be if, instead of becoming a teacher at age 32, I had just stopped working altogether.

There's an inequity here. Overturning the "Windfall Elimination Provision" law, as it's called, is supposedly a goal of the NEA every year. However, no one really expects this law to change, at least not with a Republican President and Congress. So while I'll agree with the NEA on this particular issue, I fault them for their inability to change the law because all their eggs are in the Democrat basket.


Update 5/30 5:01 pm: To read about some nifty ideas for social security from a man who worked in the Social Security office in 1940, click here.

Update #2, 12/14/08: Too bad the link above isn't active anymore. If anyone knows how to find that original story based only on what is now in inactive URL, I'd love to learn.

Update #3, 5/26/09: Ah, here it is!

California Teachers' Retirement Is Untouchable

On page 34 of California Educator magazine we get a full-page story on CalSTRS and CalPERS, the state Teachers Retirement System and Public Employees (non-teacher) Retirement System. One of my daily reads is NewsAlert (see blogroll), which often posts stories of underfunded public retirement systems; I've written before about troubles with CalSTRS.

California Educator, though, whistles past the graveyard. Why? Because the state won't renege on its promises to us, it'll just raise taxes to cover any money needed.

...School employees have no need to worry about their CalSTRS...pensions, which are fully protected by law. Fears that market fluctuations will affect CalSTRS or CalPERS payments after retirement are unfounded.

It gets better.

"CalSTRS benefits are not dependent on the funds in the CalSTRS investment portfolio," says Sherry Reser, spokesperson for CalSTRS. "These benefits are a contractual right protected not only by the California Constitution but also by the U.S. Constitution."

Wow, that's a whopper of a quote! First, Ms. Reser all but tells us that our retirements will be covered by the taxpayers, whether or not STRS makes good investments or has a nice new building. Then she states that my retirement is protected under the US Constitution! Try as I might, I cannot find that article or amendment that addresses CalSTRS.

A statement that huge cries out for an explanation, but none is forthcoming, at least in California Educator.

I didn't appreciate this comment:

"When CTA members retire, their pension is going to be there," says Reser.

What about those of us who are not CTA members?

I hope that my promised retirement awaits me, but I'm not very confident.

Update, 12/22/08: CalPERS will just go to the taxpayer, hat in hand.

My Retirement Is Safe

I received my (quarterly?) California State Teachers Retirement newsletter today, and what interesting tidbit did I find in it on pp 10-11?

Current retirement benefits--and the future benefits of those now working in the classroom--are protected by the California and U.S. Constitutions.

Really? I'd like to know exactly which section of the US Constitution has any relationship to my retirement benefits.

Let's skip a bit, though, and read more:

Your retirement, disability and survivor benefits are guaranteed. The State of California is the guarantor of the benefits payments...Your CalSTRS Defined Benefit does not change with the ups and downs of the economy. It is based on your age, final compensation and years of service credit at retirement.

Given California's current economic situation and outlook, I'm not sure I should rest so easy.

The "Pension Truth Squad"

Do they address the "unsustainability" of the current model? I doubt it would fit the narrative, but it's an important part of the discussion, don't you think?

With attacks against public pensions escalating, a cadre of retired CTA members is joining forces with Pension Truth Squads that have been barnstorming the state.

Retired teachers in San Francisco, Sacramento, Fresno, Chico, San Luis Obispo, Riverside and Palm Springs have shared their stories and brought the truth to the public about their retirement plans. They are not alone in fighting back. They join a coalition of retired school employees, firefighters, police and other public employees who are out to set the record straight on public employee retirement.

They are making it known that their pensions are modest — not the six-figure incomes that those who would undo the public employee pension system suggest.

“We would like to dispel some of the myths about public employee pensions,” said Alen Ritchie, a retired Redlands music teacher, who spoke at an event in Riverside in May. “Teachers do not go into the profession for money, but we do deserve a livable retirement.”

I love the "editor's note" at the end of the article:

EDITOR’S NOTE: At press time, Secretary of State Deborah Bowen gave the go-ahead for signature-gathering to begin on three antiunion initiatives. One would increase the retirement age for public employees to 65, one would increase the income tax on pensions in excess of $100,000 to 15 percent and higher, and another would eliminate bargaining rights for public employee unions altogether.

1. How is increasing the retirement age for public employees "anti-union"?
2. Don't liberals believe that "the rich", perhaps those making 100K or more, should pay more? And doesn't mentioning a 100K pension undercut the article, which discusses "modest" pensions and "liveable" retirement income?

Maybe this lack of logic in CTA articles comes from a dearth of math and science knowledge :-) (see this post from a few minutes ago to be in on the joke)

I May Never Get To Retire

In order to help make CalSTRS (teachers retirement system) solvent, a law passed a couple years ago required California teachers, districts, and (I think) the state all to contribute more towards teacher retirement.  Even before this occurred, California teachers were paying well above what they would into Social Security, with the understanding that they'd receive more than they would under social security in retirement.  We've been promised so much, though, that we're now having to pay more to get the same retirement we were promised.

CalSTRS wants us to believe the funding crisis has passed.  I'm not so sure:

Earlier this week, CalPERS—California’s pension fund for most public employees—reported abysmal annual earnings of 0.61 percent, a tiny fraction of the seven-and-a-half percent annual returns needed to keep it solvent over the long run. And its sister fund for teachers, CalSTRS, isn’t doing much better. The Wall Street Journal reports:

The nation’s second-largest public pension posted its slimmest returns since the 2008-2009 financial crisis because of heavy losses in stocks.

The California State Teachers’ Retirement System, or Calstrs, earned 1.4% for the fiscal year ended June 30, according to a Tuesday news release. The result is the lowest since a 25% loss in fiscal 2009 and well below Calstrs’ long-term investment target of 7.5%. Calstrs oversees retirement benefits for 896,000 teachers.

As Steven Malanga has noted, both of these union-managed funds are notorious for pulling political stunts even as they face gaping shortfalls, going on a misguided “green” investing binge that flushed taxpayer money down the drain, and pulling out of tobacco companies on moral grounds just before those stocks began to rise.

I retire in 12 more years, any bets on STRS' solvency then?

It's The End Of The World As We Know It, And I Feel Fine

Some people think global warming is upon us and that we're doomed. I don't really think so; at least, I'm not yet convinced that's true. What I am convinced is true is that both California and the US as a whole are going to go broke if our spending habits don't change, and the math on that subject is airtight--much more so than the "science" of global warming.

Several years ago, Governor Schwarzenegger tried to reform California's broken, underfunded, and overpromised pension system, and he got royally trounced. Interestingly enough, Governor Brown has just proposed some of the very same things Schwarzenegger did:

Gov. Jerry Brown will propose a higher retirement age and less-generous pension benefits for newly hired state employees, sources familiar with Brown's pension plan said Wednesday.

The Democratic governor, who plans to release his pension plan today, will also propose prohibiting the purchase of additional retirement service credit, or "airtime."

The plan, as presented privately by the Brown administration to labor leaders Wednesday afternoon, includes increasing the full retirement age to 67 for most new workers not in public safety jobs.

The increased retirement age proposal is more aggressive than expected, and labor interests, which poured millions of dollars into Brown's gubernatorial campaign, are likely to bristle at the prospect.

Brown's plan includes replacing defined-benefit pensions for new employees with a mandatory "hybrid" system combining a smaller, defined benefit, Social Security and a 401(k)-style benefit.

Though Brown's pension plan includes some of the same ideas he discussed with Republican lawmakers in failed budget talks in March, Brown was thought at the time to be considering the "hybrid" system only as an option for employees.

Unions pumped millions into Brown's campaign, I wonder how they'll handle this? Here's my prediction for the California Teachers Association: they wail about how this is the end of the world, and if it passes, they'll claim it's a wonderful compromise which shows how serious Brown and the Democrats are about putting the state on solid financial ground. They'll pump millions into his next campaign.

Of course, this may never come to pass. Brown, like his predecessor, is learning that he has to work with the Legislature, and a more dysfunctional organization can scarcely be found. They'll still pump millions into Brown's next campaign.

It's not just California that's going broke:

So, in order to prevent the debt situation from expanding, and depending upon which economist you trust concerning the multiplier effect, federal spending must be reduced to somewhere between $2,085 trillion on the high end and $1.344 trillion on the low end. And here are the current big-ticket items:

$761 billion - Social Security
$468 billion - Medicare
$269 billion - Medicaid
$598 billion - Unemployment/Welfare
$679 billion - Department of Defense + Foreign Wars

So, this is why the Tea Party and the Republican Party cannot possibly salvage the situation They're not proposing the end of ANY of these major programs even though the nation can only afford to keep two of them, three in the unlikely event that both Defense and Social Security are entirely junked. Since that's not going to happen, given the way in which the incompetence of politicians presently inhabiting Washington aren't willing to even consider such drastic action, the financial collapse of the US federal government is assured.

The numbers don't lie. And there's no unexplained/not-yet-understood science here to cause doubt.

Update, 10/28/11: And it starts:

Even as Gov. Jerry Brown announced his plan Thursday to reduce pension benefits for public employees across the state, its prospects of passing intact appeared dim.

California's powerful labor interests objected to major parts of the plan, and the leaders of the Democratic-controlled Legislature – neither of whom attended Brown's announcement – reacted warily...

Brown's record of legislative accomplishment does not suggest great likelihood of success. Republican lawmakers blocked his bid for a bipartisan budget deal and for passage of a tax and jobs plan this year.

Opposition to his pension plan is likely to come primarily from fellow Democrats.

Update, 10/29/11: Uh oh.

What about CalSTRS?

Despite two years of lobbying from the teachers' retirement fund, a plan to shore up CalSTRS' finances was missing from Gov. Jerry Brown's pension reform proposal this week.

The California State Teachers' Retirement System faces a long-term shortfall of $56 billion – the gap between assets and estimated liabilities. The fund has been quietly pushing a plan to increase taxpayer contributions, and has stepped up its campaign in recent weeks.

How Much Am I Willing To Pay For A Life Change?

Holy crap.

I just went to the CalSTRS retirement calendar and ran two different calculations; the first involved my monthly retirement check if I "retire" in 2020 and go teach in an international school, and the second was my monthly retirement check if I actually wait until 2028 to retire (and forego the international school route).  In the first place my monthly retirement pay would be about $2000/month, in the second place it was $5000/month.

Granted, in theory I could put that entire $2000/month into an IRA and not draw on it until I actually retire in 2028 or so, but dang, I'm gambling with 60% of my retirement.

What to do?

California Teachers Pensions

Recently I wrote about CalSTRS, the California State Teachers Retirement System, and its plans to build yet another building with my retirement money despite being underfunded.  Well let's see what the major Sacramento newspaper has to say about STRS:

CalSTRS will consider lowering its official investment forecast in a move expected to require higher contributions from state taxpayers once again for the teachers’ pension fund. The cost to the state could be an additional $153 million starting with the next fiscal year.

The board of the $196 billion California State Teachers’ Retirement System will consider the change to its “discount rate” at a meeting next week in San Diego.

A staff recommendation released late Wednesday, citing economic conditions and other factors, calls for lowering the rate from 7.5 percent to 7.25 percent. Keeping the rate at 7.5 percent “is not recommended since the probability of achieving this return is less than 50%,” the report said...

Public pension funds have been lowering their investment forecasts in recent years to reflect expectations of reduced returns. But the moves have come slowly and somewhat reluctantly because of political concerns: The less money they make from investments, the more the pension funds need from taxpayers and employees. That could intensify calls for pension reforms that could result in lower retirement benefits.

Three years ago, the Legislature agreed to raise contributions to CalSTRS by billions of dollars a year. Assembly Bill 1469 affected the state, local school districts and teachers themselves. For example, the annual contributions from school districts is growing from $2 billion to $6 billion, although the increases are being phased in over several years.

The 2014 law does give CalSTRS some latitude to impose higher rates on state taxpayers without going back to the Legislature for permission. According to the staff report, Gov. Jerry Brown’s budget proposal for the new fiscal year includes an additional $153 million for CalSTRS, bringing the annual contribution to $2.8 billion.

California teachers: how confident are you that you'll get the retirement you've been promised, the one that you've paid into on the expectation that you'll get what you've been promised? I would suggest that we should all be a little less confident today than we were last week.

California Pensions

I've been saying it forever--California's government is stifling our economy, thus making our pension promises unsustainable:

Gov. Jerry Brown this week predicted that his 2012 pension law will survive union challenges in court and blow a hole in the so-called “California rule” that has restricted changes to public employee retirement plans for half a century.

“When the next recession comes around, the governor will have the option of considering pension cutbacks for the first time in a long time,” Brown said at a news conference this week where he unveiled his 2018-19 budget plan.

Brown has been working to strike out the California rule, a precedent dating back to the 1950s that holds public agencies cannot reduce pension promises without offering workers new incentives to offset the loss of retirement income.

Note that this comes from the left-leaning major Sacramento newspaper, so you lefties can't scream that the right is just trying to scare you.

The worst-case scenario for public employees would be a reduction in the rate they accrue their pensions, say advocates who want to limit the state’s pension liabilities. Potential changes would not affect pensions that current retirees already receive, unless a government agency goes bankrupt and stops paying its bills. 

Is that an incentive to retire early?

Brown’s pension law required public employees hired after Jan. 1, 2013, to contribute more money toward their retirements and capped their benefits by eliminating generous benefits the state gave to public workers during the dot-com boom. Brown’s administration says the law put the state’s two largest public pension systems, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, on a path to long-term stability.

Still, both pension funds are considered seriously underfunded because they owe tens of billions of dollars more in benefits than they have on hand. Local governments and school districts, meanwhile, have been drawing attention to their rising expenses on pensions, complaining that the costs are “crowding out” their ability to fund public services.

That's CalSTRS, my retirement system. *sigh*

How Will Teachers React?

I think California teachers are soon to take two financial hits.

First, I've posted about a zillion times that the California State Teachers Retirement System--in other words, the pension that I've been promised--is in deep financial doo-doo.  There was talk early in the Schwarzenegger administration about increasing the amount paid into it by teachers, school districts, and the state, but that talk came to nothing as it was poo-pooed by those on the left.  Now that someone on the left is bringing it up, it may happen, and that's a good thing.  On the other hand, California teachers (so many of whom vote for the Democrats) may scream when those same Democrats reduce their take-home pay as well as the ability of the school districts to offer raises:

With California facing a massive teacher pension shortfall, Assembly Speaker John A. Pérez, D-Los Angeles, unveiled an effort Wednesday he hopes would fully fund the system.

An influx of revenue has allowed California to emerge from years of yawning deficits and protracted budget fights, and the pressure is mounting for the state to do something about an avalanche of liabilities that runs into the hundreds of billions.

Of those looming obligations, a substantial chunk comes from the gap between how much the California State Teachers Retirement System takes in and how much it will owe retired educators. Gov. Jerry Brown estimated in his budget this year that the liability has grown to $80.4 billion and would require a $4.5 billion annual infusion to balance the books.

"While we know our revenues will fluctuate up and down, our long-term liabilities are enormous and ever growing," Brown said in his State of the State speech earlier this month.

Pérez calculates the liability at $71 billion, somewhat lower than Brown. And on Wednesday, the speaker called for a plan that potentially includes increased contributions from all three contributors to the system -- the state, school districts and individual teachers (boldface mine--Darren)...

"Since the contribution rates for CalSTRS are set by the Legislature and not the retirement board," as is the case with the California Public Employees Retirement System, "it is the responsibility of the governor and the Legislature to determine the best way to address the funding shortfall," (Assemblyman) Bonta said.

The second big hit will be Obamacare.  My W-2 has some interesting new additions on it, including a 5-digit number that I believe is the value of the cost of my health/dental insurance that my school district pays.  I think we're to be taxed on that, if not this year (I'll soon find out, as I'm ready to start my taxes) then soon.

If I'm correct it would amount to a 20% increase in my taxable income, which would surely be a serious hit to me come tax time.

You Democrats brought this on us; remember, not a single Republican voted for Obamacare in either the House or the Senate.  This debacle, and the financial hit we'll all take because it, is your fault.

Update:  According to this article the health insurance tax doesn't kick in until 2018:

Excise Tax on Comprehensive Health Insurance Plans($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family).  CPI +1 percentage point indexed.

There's still time to repeal the entire disaster before that provision kicks in.

Rate Hikes for the Retirement Fund

I've written several posts about the California State Teachers Retirement System, or CalSTRS (Cal-stirs) for short. In this post from over 2 years ago I discussed potential raises in my "contribution" that were being considered in order to keep the fund solvent.

Nothing happened on that front in the last two-plus years, but now that times are bad, such ideas are on the table again:

CalSTRS, hit with significant investment losses in the past year, is preparing to ask the Legislature for billions of dollars in higher pension contributions from the state, school districts and teachers.

The request might not come for another year or so, and the higher rates might not kick in until even further down the road. But the California State Teachers' Retirement System is laying the groundwork now, prepping lawmakers and lobbyists on an issue that could meet with considerable resistance as the state struggles with a historic deficit and school districts are laying off teachers...

The process of seeking approval kicked into gear Tuesday, when Cal-STRS staff revealed that the fund's long-term funding gap had grown to $22.5 billion as of last June, up from $20.7 billion a year earlier. That's an annual measure of how much more CalSTRS says it needs to fund its pension benefits over the next 30 years.

I wonder if I'll get that retirement villa on the French Riviera after all.

Teacher Retirement, the Big Picture

A newly published journal issue offers analyses of how reform of teacher retirement benefit systems could affect not only school finance, but also teacher quality.

University of Arkansas professor Robert Costrell co-edited the special issue of the journal Education Finance and Policy that focuses on teacher retirement benefit systems. Education Finance and Policy is the official journal of the Association for Education Finance and Policy, formerly the American Education Finance Association...

Previous research by Costrell and Podgursky shows that teacher pension plans provide strong incentives to follow a specific career path that may be well-suited to some teachers but not others. Benefits are typically structured to “pull” teachers to work until their early or mid-50s and then “push” them into retirement. Some teachers in their 40s may find themselves better suited to a career change but hang on for their pension, while some in their 50s may still have good years to offer but retire prematurely, Costrell and Podgursky wrote.

In their contribution to this special issue, Costrell and Podgursky show that the distribution of pension benefits is highly unequal: approximately half of an entering cohort's pension wealth is often redistributed from those who leave prior to their 50s to those who retire in their 50s, as compared to the uniform distribution under cash-balance plans. In addition, current systems impose large penalties – worth hundreds of thousands of dollars – on teacher mobility between states.

A number of states are trying to deal with large unfunded liabilities that threaten to absorb large shares of K-12 education budgets. Because this crisis may force policymakers to consider reforms for fiscal reasons, the authors suggest now is the opportune time to examine consequences of these systems on school staffing and educator quality.

Not exactly a page-turner, but so few of the truly important reads are.

The State Agency That Oversees My Retirement Doesn't Want Me to Have Retirement Pay

That's the most charitable explanation for this stupidity:

California's teacher pension fund is stepping up its efforts to persuade major national retail companies to quit selling assault-type weapons that are illegal in the state.

The $225 billion California State Teachers’ Retirement System plans to use its clout to nudge retailers to drop their remaining stock of guns that the California Department of Justice considers to be "assault-type weapons." 

If the retailers stay in the gun business, CalSTRS would attempt to unseat members of their boards of directors, and would consider divesting from the companies under a new policy it approved on Wednesday. CalSTRS plans to hire two new employees to carry out the program.

Unless there's a market I don't know about for unicorn farts,  I want my pension money invested in legal businesses that make lots and lots of money.

STOP PLAYING POLITICS WITH MY RETIREMENT MONEY, A-HOLES.

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article210803839.html#storylink=cpy

120%

We got an interesting email at school today.

At my school we teach 5 periods and have 1 prep period per day.  Next year we're anticipating 200 more students than this year, so today we received an email asking us to consider giving up our prep period and teaching 6 periods.  It was the offered pay that was interesting.

First off, it was listed as a "stipend" instead of pay.  If I understand the intricacies well enough, retirement "contributions" on that money go into a different retirement account; stipends, like those of coaches and department heads and the like, do not count towards "highest year earned" for retirement pay calculations. 

Second, the pay was graduated depending on how many years you've taught.  For someone as seasoned as I, the offered stipend was $26,000.

That's right, $26,000.

Yes, that's much more than 20% of my current pay.  It's well more than 1/3 of my pay.  It's enticing.

It makes sense for the district to offer this money.  Paying that much is still cheaper than hiring a new teacher, what with retirement contributions and health insurance and all.  $26,000 is a nice middle ground--good money for the teacher who takes it, yet still a bargain for the district.

But next year is the last year of my master's program.  And at the end of that program, instead of a thesis, I have a comprehensive exam to take--an exam that covers the material I'll have learned over the 5 years I've been taking those classes.  I won't have time to do extra work at school--which means all grading and administrivia would have to be done after school--and also take master's classes and study for that test.

But $26,000.  I actually considered it, however briefly.

Retirement

They already have a gleaming glass tower overlooking the river and Old Sacramento.  Now my retirement system needs another building?  How many people, how much real estate, is actually required to manage the California State Teachers Retirement System?

California’s teacher pension fund wants to pay for a $300 million office tower on the Sacramento River with green bonds, a type of investment used to finance projects that meet environmental sustainability standards.

CalSTRS is issuing $281 million worth of the bonds to finance the expansion of its West Sacramento headquarters, according to bond documents.

The $246 billion California State Teachers’ Retirement System is adding a 10-story tower next to its 17-story headquarters on Fourth Street. The fund’s board approved spending up to $300 million on the project in November 2018 to accommodate future growth in its workforce.

I'm sure CalSTRS has plenty of extra money lying around for new buildings. That must be why I'm having to pay more and more for the same benefits I've been promised for 20+ years.

Well, There Goes My Retirement

As long as the crazy lefties in California pay for the retirement they've promised me, I guess I shouldn't care what silliness they do--but they won't be able to pay me if they keep up silliness like this:

The California State Senate has passed legislation that would require the state’s two powerful public employee pension funds to stop investing in fossil fuel companies. It would also force them to liquidate close to $15 billion in holdings to aid the nation’s transition to clean energy and reduce greenhouse gas production.

The bill, SB 252, would prohibit the California Public Employees' Retirement System, or CalPERS, and the California State Teachers' Retirement System, or CalSTRS, from making or renewing investments in the 200 largest publicly traded fossil fuel companies beginning Jan. 1.

By July 1, 2031, both funds would have to liquidate investments in those 200 companies, which are defined by the carbon content in their proven oil, gas and coal reserves. Because of underground reserves, companies on the list of 200 are deemed to have the most potential for future emissions if enabled by investment capital.

The bill next must be approved by the state Assembly and then signed by Gov. Gavin Newsom. Supporters say they are confident both will happen.

What Are We Supposed To Invest In, Unicorn Farts?

Not in Israel.  Not in firearms.  Not in tobacco.  Not in coal.

And now, not in locking up people who are in the country illegally:

California’s teacher pension fund is pulling its investments out of two private prison companies that have contracts to house immigrants detained at the Mexican border.

The California State Teachers’ Retirement Board last week voted to withdraw about $12 million it had invested in CoreCivic of Nashville, Tennessee and Geo Group of Boca Raton, Florida.

The retirement board’s 6-5 vote Wednesday to divest from the companies followed intense activism from teachers and left-leaning organizations that wanted the $229 billion pension fund to dissociate itself from private prisons.

Their calls for divestment led the pension fund to conduct its own investigation, which it published in a 28-page report that did not include a formal recommendation. CalSTRS staff reported that they visited immigrant detention centers and consulted with the companies before providing their report to the teachers’ retirement board.

Can't invest in anything that makes money. How am I supposed to have a guaranteed retirement benefit if my money can't make money?

No Problem, The Government Is Taking Care of My Retirement

There's a dip in the stock market and you no longer trust those "greedy Wall Street types" whose praises you were singing last year as your 401(k) was flying high? Perhaps you want something guaranteed, like a government pension?

Not so fast.

Many pensions are backed by the Pension Benefit Guarantee Corporation. It insures the pensions of 44 million workers. Just last week it agreed to take up the obligations of bankrupt lumber company Pope & Talbot.

But the PBGC is facing its own problems. The agency last week said it lost $5 billion dollars in stock investments and expects a deficit of $10 to $12 billion this year. It has $68 billion in assets and $83 billion in liabilities.

And there's more.

First, many Americans and politicians have an erroneous view that stocks are for “rich people” and not them. Wall Street remains a mysterious world, operated largely behind closed doors by mad scientist math wizards. The pension problem proves nothing could be farther from the truth. The teachers, cops and other government workers who trust their retirement to companies such as CalPERs may suddenly take a keen interest in equities.

The other reality is that many Americans will have to work longer than planned. Companies and governments may not have the ability to cover costs for people retiring at 62 and living another twenty years. The math of early retirement + living longer / awful stock markets simply will not add up.

And this is in addition to the ponzi scheme of increased entitlement spending.

Will California renege on its promise to me regarding retirement, will it just modify the rules a bit, or will it tap the taxpayers to make up the expected shortfall?

Myths About Defined Benefit Plans

California's teachers do not pay into social security. Rather, we pay a higher percentage of our pay into CalSTRS, the State Teachers Retirement System. It, like social security, is a "defined benefit" plan, meaning that what we pay into it has only the slightest bearing on what we might get out of it in retirement; our benefit is defined by a formula. This is different from a 401(k) plan, wherein the amount you receive in retirement is based on how much you paid in and how much your investments increased.

Today I received the Winter 2008 newsletter from CalSTRS, and boy, is it a whopper! The first headline is "Study Busts Myth About Cost Burden of Defined Benefit Plans: Your Pension is Well-Managed and Efficient". While that's nice to hear, nowhere does it say how much value CalSTRS has lost due to bad investments and the market downturn. Here are some of the key sentences that just jumped out at me:

*Defined benefits, like yours with CalSTRS, can deliver the same level of retirement income to groups of employees at a lower cost than individual 401(k)-type accounts.
*Public Pensions Unfairly Blamed for Financial Woes
*...(D)efined benefit pension plans are better, more economical, and efficient.
*Remember, your defined benefit is safe. It's mandated by law and guaranteed for your lifetime. Your pension is based on a formula, not on how much you've been able to invest as an individual.

Uh, I ask again, how much money has CalSTRS lost lately? You say this is efficient, and I like the security of this pension, but might someone not in CalSTRS view this situation as a potential budget black hole?

This newsletter strikes me as the captain of the Titanic telling everyone that everything's fine. It doesn't offer any real facts. I am not reassured.

The Giving Of Gifts Upon Retirement

At the end of this school year we have 4 retirements occurring at my school.  It's not uncommon for a collection to be taken in order to get retirees some nice gifts.  Assuming I survive this business I've got 10 years to go until retirement, so until then I'm going to enjoy receiving retirement gifts.

The retirees are starting to go through their desks and closets and bestowing upon those of us remaining the bounty of what they find.  Several years ago a fellow math teacher, upon his retirement, bequeathed to me his 8+ feet long, demonstration-model slide rule.  Today one of our science (chemistry and AP Environmental Science) teachers brought me these:

Slide rules are one of the most creative and practical of non-electronic scientific instruments.  A few years ago a former math and physics teacher gave me her K&E, which had been a high school graduation gift from her father for her use at Purdue.  Now I have a Lafayette (made in Japan!) and another book about how to use such ingenious devices.