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.