February 2, 2016 - This post is the second of a series looking at the implementation of the CalSTRS funding plan. In this post, we critique the complex calculation central to the funding plan.
February 2, 2016 - This post is the third in a series looking at the implementation of the CalSTRS funding plan. In this post, we describe how the abstract calculation upon which the funding plan is based has increased the district share of CalSTRS’ unfunded liabilities while decreasing the state share.
May 5, 2017 - The CalSTRS board recently acted to change assumptions used to estimate its unfunded liabilities, including the key assumption about future investment returns--sometimes referred to as the "discount rate." These and other recent developments have eroded CalSTRS' funding situation. This brief details these changes and describes how they will affect the state, school and community college districts, and teachers
February 2, 2016 - This post is the sixth in a series looking at the implementation of the CalSTRS funding plan. In this post, we describe how the plan might fall short of meeting the principle of “shared responsibility,” a key goal of the Legislature in passing the plan. Specifically, we explain how the state may not incur higher costs under the funding plan.
February 2, 2016 - This post is the fifth in a series looking at the implementation of the CalSTRS funding plan. In this post, we describe how the state’s share of CalSTRS’ unfunded liabilities will be more sensitive to investment gains and losses than the district share.
July 19, 2018 - In May 2018, the California State Teachers’ Retirement System (CalSTRS) released an update on the financial position of the pension system, which was largely in line with expectations. This post summarizes the update, which contains the latest estimates of the unfunded liability and contribution rates required for districts, employees, and the state.
March 20, 2013 - Last year, the Legislature asked CalSTRS to submit a report detailing at least three options for addressing the unfunded liabilities of the pension system's Defined Benefit (DB) Program, which are now estimated by system actuaries to total about $70 billion. This handout for the Legislature's Public Employment and Retirement Committees (1) describes the risks of waiting to address CalSTRS' unfunded liabilities, (2) compares CalSTRS' unfunded liabilities to California's other long-term liabilities, (3) and examines possible sources for additional funding. We recommend that the Legislature adopt a plan that aims to fully fund CalSTRS' unfunded liabilities in about 30 years. A companion video further explains our findings and recommendations.
March 28, 2019 - Senate Budget Subcommittee No. 1 on Education
March 10, 2020 - Over the next decade, the state will be required to allocate an additional $12 billion to $21 billion to accelerate the pay down of state retirement liabilities under the provisions of Proposition 2 (2014). This represents a key and unique opportunity for the state. The Governor offers one strategy to prioritize these funds over the next few years. Notably, the Governor focuses on the state’s share of the unfunded liability for teachers’ pensions. While we agree this focus makes sense, the amounts the Governor proposes dedicating to this purpose are not connected to the specific actuarial needs of the teachers’ pension system. In this report, we present a method the Legislature could use to tie these payments to the system’s actual needs, which would better target the funding.
March 12, 2019 - Assembly Budget Subcommittee No. 2 on Education Finance
November 8, 2011 - The Governor’s 12-point pension and retiree health plan would result in bold changes for California’s public employee retirement programs. His proposals would shift more of the financial risk for pensions—now borne largely by public employers—to employees and retirees and would, in so doing, substantially ameliorate a key area of long-term financial risk for California governments. Despite the proposal’s strengths, it leaves many questions unanswered, such as how his hybrid plan and retirement age proposals would work and how the state should cope with large unfunded liabilities already affecting the California State Teachers’ Retirement System, the University of California Retirement Plan, and the health benefit program for state and California State University retirees. The Governor’s proposal to increase many current public employees’ pension contributions also raises significant legal and practical issues.