May 7, 2014 - This report categorizes and provides information about $340 billion in California's key retirement, infrastructure, and budgetary liabilities. In addition, this report provides a framework for the Legislature to consider in prioritizing repayment of these liabilities and makes recommendations on which liabilities to pay down first and how the state could address such costs in the future. In general, we suggest that the Legislature prioritize actions to pay down those liabilities (1) with relatively high interest rates or (2) that result in benefits for groups or entities other than the state government. Due to its massive unfunded liability and relatively high growth rate, we recommend that the Legislature make a full funding plan for the California State Teachers' Retirement System a top priority in addressing the state's key liabilities.
May 9, 2007 - The Legislature required the Controller to contract with actuaries for California's first valuation of unfunded state retiree health liabilities. On May 7, 2007, the Controller reported that the state's estimated unfunded liabilities total $48 billion. This report answers key questions concerning the valuation and identifies actions the Legislature could take to address the state's liabilities.
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.
March 10, 2021 - This report provides an overview of the 2014 California State Teachers’ Retirement System (CalSTRS) funding plan, and analyzes the various challenges and complexities of the plan that have come to light that may impede CalSTRS’ ability to successfully eliminate the system’s unfunded actuarial obligation (UAO) by 2046. We offer several short- and longer-term recommendations for the Legislature to consider to help strengthen CalSTRS’ ability to eliminate current and future UAO, achieve long-term savings, and improve legislative oversight.
February 17, 2006 - The costs of providing health care to retired state employees and their dependents—now approaching $1 billion per year—are increasing significantly. Many other public employers (including the University of California, school districts, cities, and counties) face similar pressures. This report discusses health benefits provided to retired public employees, focusing on state retirees. We find that the current method of funding these benefits defers payment of these costs to future generations. Retiree health liabilities soon will be quantified under new accounting standards, but state government liabilities are likely in the range of $40 billion to $70 billion-and perhaps more. This report describes actions that the Legislature could take to address these costs.
March 16, 2015 - Health benefits for retired state employees constitute a large and growing cost for the State of California. The state’s retiree health benefit program constitutes the state’s last major liability that needs a funding plan. As part of his 2015-16 budget, the Governor proposes one approach to address retiree health liabilities through the collective bargaining process. In our report, we recommend that the policy committees of the Legislature hold hearings to discuss the Governor’s proposal—as well as other options to address retiree health liabilities—with actuaries, employee groups, policy experts, and the public. We acknowledge that a delay in implementing a funding plan might make some elements of a funding plan more expensive; however, we think it is more important to get the plan right that to quickly set up a plan that can be implemented in 2015-16.
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
October 17, 2019 - This post describes the debt and liability payments made as part of the 2019-20 budget package.