Teachers’ Pension Fund $42 Billion in the Hole

Last month we warned you that CalSTRS (California teachers’ pension fund) was in a bad spot and they were hoping that nobody would notice.

Yesterday CalSTRS announced that investment losses have left the fund with a $42.6 billion dollar shortfall.

oops

Even more worrisome: the fund will be completely wiped out shortly after today’s young teachers enter retirement. To counteract that problem, the fund will need to start sucking in major contribution increases almost immediately.

Naturally the pension system wants to resolve the situation by sending more Sacramento lobbyists to persuade legislators to “take action”. And by “take action” they mean increase contributions to the fund. Since a majority of teachers’ pension contributions come from taxpayers… Well you know what that means.

34 Replies to “Teachers’ Pension Fund $42 Billion in the Hole”

  1. I have full faith and confidence in our State’s educational professionals to solve all our problems.

    My God, they’re all doctors aren’t they?

  2. I believe it is factually historically true that the Teacher’s pension benefits were literally tripled instantly by Governor Gray Davis (and the Democrat legislature) immediately after the Teachers Union made a $100,000,000 campaign contribution to Davis’ re-election campaign priot to the (stupid as Hell) Recall of Governor Davis, eight years ago.

    This was just a political favor payment in exchange for a cash bribe. It certainly was in no way justified compensation for government schools Union Teacher performance.

    I’d say that a quick and easy fix for this Teacher pension problem would be to give the Teachers Union their $100,000,000 back and cut the Teacher’s pension benefits back down to the pre-bribe levels (which their pension benefits funds could no doubt easily support).

    Oh, and aside from the $45 Billion savings, there would be absolutely ZERO other effects from this action.

    NOT ONE “teacher” would quite their jobs, nor would any of them “teach” less effectively, etc. it is just that all this phony Leftist political indoctrination of kids scandal would cost less.

    Actually, the schools might even improve because the teachers might realize after one step in the right direction might lead to further actions to actually get something of value for the money we waste on the government schools.

  3. Quoting …”Even more worrisome: the fund will be completely wiped out shortly after today’s young teachers enter retirement. To counteract that problem, the fund will need to start sucking in major contribution increases almost immediately.
    Naturally the pension system wants to resolve the situation by sending more Sacramento lobbyists to persuade legislators to “take action”. And by “take action” they mean increase contributions to the fund. Since a majority of teachers’ pension contributions come from taxpayers”.

    I’ve got a SOLUTION that’s MUCH FAIRER to the TAXPAYERS being asked to pay for this ….. END this outrageously excessive and unsustainable defined Benefit Pension Plan, and REPLACE it with a Defined Contribution (401K style) plan JUST LIKE the Private Sector taxpayers generally have for themselves.

    And … since these Private Sector taxpayers generally do NOT get subsidized retiree healthcare, THAT should be ENDED as well.

    And for those of you who think these suggestions go too far, Civil Servants are NOT “special”. They are deserving of pay and benefits equal to Private Sector workers in comparable positions, but NOT deserving of pensions & benefits vastly BETTER than those that pay for them.

  4. I cannot begin to tell you how offensive the comments are to an educator that worked hard for 36 years in a way that was positive for young Americans and gave them a strong base to become productive, caring and thoughtful Americans.
    Teaching is an honorable profession for many teachers. We began with no thoughts of finacial prowess and spent many unappreciated hours helping to make learning enjoyable, rich and rewarding. It is an art that few can accomplish. Those of us that were good teachers are not replaceable and rarely thanked by the adults (or dolts) that believe they understand what education and teaching is about. Now that I have retired, the retirement (without Social Security) that I have earned and worked for is being pulled away with your insults and inuendos.
    Thanks for your support. I suppose you supported your schools, teachers and students as well in your own world as you do on this blog. If it weren’t for the wonderful young people I served, I would not believe you deserved my hard efforts and love I gave to our nation’s young people.

    1. First of all, Teachers don’t get social security benefits on top of their retirement like the private sector. Secondly, for the tough job teachers have and the small salaries they make, you BETTER believe they want GOOD/ABOVE AVERAGE benefits and they f–king deserve it.

      My husband works his a– off everyday with 45 students, kids who are at risk of not graduating. He is helping kids that are from gangs, families in gangs, with learning disabilities/problems to become better citizens, productive citizens. That, my friend, is WHAT YOU PAY FOR and YOU BETTER consider what they do for you and your children’s future invaluable!! Ingrate.

  5. Dear “Educator”:

    The typical (non-safety-worker) pension for a Civil Servant is 2-4 TIMES that of a Private Sector worker making the SAME pay, retiring at the SAME age, and having the SAME # of years of service, and that multiple is AFTER adjusting for your contributions towards your pension.

    YOU find it OFFENSIVE that we (the Private Sector) want your pension & benefits reduced.

    Well WE find it OFFENSIVE that we as TAXPAYERS are forced to fund your OVERSTUFFED pensions & benefits !

  6. Dear “Tough Love”,
    Do you ever consider that private sector jobs of equal pay are often not requiring 5-6 years of college and teachers suffer the lowest pay per education level coming out of college? Do you think teaching requires the same talent and difficulty level as other “equal’ pay private sector jobs? I just met a man who worked private sector, corporate and other areas for 25 years. He became a teacher his last ten years before retirement and expressed that teaching, by far, was the hardest job he had ever done. Do you think you could do it? Do you understand that education is probably (not just my opinion) the most important area that a culture has in training and preparing a nation to not only compete but also to raise competent citizens that carry our traditions, hopes and standards? I had to live month to month for most of my career. Would you also argue that soldiers, fireman and police don’t deserve a better shake for the risky, difficult and important work they do? You are right, not all people are paid equally…a basketball player makes more in 1-45 minute game than I made in my best year. Oh, and I’d like to see contribution/salary/benefits vs private sector info that you expose. If I had gone into private sector with my education as my brother did, I would be a millionaire today.

  7. I know educators work hard ….. as do most people in the Private Sector.

    When you & I started working, Civil Servant pay was indeed lower than in comparable Private Sector jobs. That is no longer true. In fact, a recent US Gov’t bureau of Labor Statistics study shows just the opposite … with higher PAY levels in the Public Sector (along with VASTLY) higher pensions & Benefits.

    I’m not advocating taking away anything that has been accrued for PAST years of service. What is necessary is to reduce pension formulas for FUTURE years of service.

    That has and is VERY routine in the Private Sector (often to avoid bankruptcy), for BOTH new and CURRENT (yes CURRENT) employees.

    There is no valid reason to treat Civil Servants better than those that pay their way.

    Civil Servants argue that you cannot made such formula reductions for CURRENT employees. So …. if the concensis is that the formula is too generous, we’re stuck with it for perhaps 30 more years until these recently hired employee retire? Sorry, I don’t agree, they deserve (for comparable positions) equal pay, pensions, and benefits …. but NOT better.

    There is this pervasive entitlement mentality among Civil Servants that so aggrevates Private Sector taxpayers (like myself)….. “pay what I was promised (on the date of hire), and the taxpayer be damned”.

  8. I agree we can only pay with what resources we have. There will need to be adjustments made. Our government cannot seem to understand that. When I became a teacher I gave no thought to retirement and only a few years before I retired did I realize how rewarding my retirement would be. But I taught 36 years. After 55 years of age, you lose a significant amount for every year you retire before 62, about $600/ month for each year you retire before 62, unlike fire and police who get high amounts even at 50-55 years. Most teachers retire after 25 years, the STRS average and make less than 50% of their normal income. I live as I did but put iit took 36 years of service to reach that level, a rarity. I don’t feel more deserving, only that I contributed 8% and the system was set up as a promise I never rerally thought about. It seems pretty strange to ask for some back because the ‘private sector’ raped our country’s wealth and gambled OUR resources to enrich the greedy few. Is it my fault our government, our poilitical parties allowed the private sector to accomplish that? The STRS system was self-sustainable until our wealth was gambled away by private sector. The tax payers contribution was a way to offset the low salaries. I can tell you for a fact that most teachers never think about retirement, nor know anything about it during their careers. I do think that perhaps with ALL the extra unpaid hours, importance of work and the difficulty of the job that perhaps we do deserve somewhat better consideration than a CalTrans worker.
    But I agree, if conditions exist that we cannot pay for current levels of retirement benefits, than new design are needed. But that is true for all aspects of society, including Wall Street workers and Congressmen.

  9. Poor donkey! He’s innocent. He didn’t do anything. It’s not his fault. It’s the donkeys who are asking for exhorbitant retirement benefits and the local, state and federal governments which are bankrupting us all. Can you say Ponzi scheme? Yes, Ponzi scheme! Some will say public pensions are not a Ponzi scheme, but when it comes time to pay up the trillions of dollars due, too many retirees will find out that they are exactly that. It’s easy for governments to promise to pay, but following through on those promised is going to prove impossible.

  10. Typical of the elephants to point the finger away from their responsibilty for most of the financial mess we are in. We weren’t talking about these problems when Clinton was in office. So now you are hurting you are lookung for scapegoats in someone else’s backyard when you elected the goats and handed over our nation’s prosperity to them. Not many donkeys in corporate board rooms or Wall Street.

  11. 5-6 years of basketweaving classes in college regurgitating pseudointellectual gibberish back to the overpaid and underworked Marxist professors of Womyn Studies and other “soft science” (try flavor of the day b.s.) courses is all that one needs for a fat pension? Oh, I forgot to add the actual first four years of paperwork that is recycled for the next 21 years until retirement. Add in the “no actual learning need take place because concrete measurable results do not matter a whit” and four months paid vacation per year into the equation helps round out the picture.

    Sell the poor, overworked, underappreciated, servant of the people, and selfless shaper of future generations b.s. for the local Donkey Party fundraising gala because the non-morons know better. The vast majority of teachers and other civil servants should be asking “would you like fries with that” but of course that job actually requires intelligence and a work ethic.

    Most of the financial mess we are in is due to Barney Frank, Chris Dodd, Bill Clinton, and the Community Reinvestment Act. Force the banks to make bad loans to their constituents and use taxpayer monies to buy up the loans and shove them into Fannie Mae. Wall Street and corporate boardrooms LOVE Big Government and the Donks. Checked out Obama’s Cabinet lately? How about who has what wealth and where they got it in the Congress?

    Educator, what you don’t know are FACTS, HISTORY, and REALITY! I hope the taxpayers stand up and cut all of you rentseekers off the gravy train.

  12. Wow, FACTS, HISTORY and REALITY is exactly what you lack. I can see how an ignorant ill-informed person like Palin can get on a national stage with haters like you running amok. I can pretty much guarantee you support Palin. Anyone willing to elect someone who does not even have a rudimentary knowledge of our working government should not be allowed to choose elected officials. I tried very hard to help my students understand that we all have an obligation for our democracy to become informed and inteligent problem solvers in order to choose leaders that will help create and maintain a healthy democracy. Your choices seem to stem from hate and anger, not FACTS, HISTORY and REALITY. Your pick of the previous 8 years did a lot of good.
    Funny how you only know how to blame the same people and never find any fault with your ilk. You are clearly about us vs them, not the truth and not an unbiased willingness to find truth and find solutions. Gee, party of no…no room for anything outside the tracked “party” line. You must have never had a good teacher or never learned that intelligence is being able to look at what is, uncolored, and responding in a positive direction toward solutions.
    Interesting again that you choose one aspect of the Clinton era and in such a simple-minded way call that the cause of all the financial mess, never making the people pulling the triggers culpable. Have you ever found blame in ‘one of your own’? Bush could NEVER say he made any mistakes.
    I taught hard all my career, not resting on laurels. Are you projecting “your’ work ethic on everyone else you hate?

    I never had a basketweaving class and was encouraged to think independently by my college professors. Keep up your distorted, hatred driven mentality and you might need the basketweaving class, if they ever open them up.
    I am sorry you have such a low opinion of ALL teachers. Racists and hate mongers all lump every person in any group under the same hateful slang. It the simple way to see things.

  13. Oh, and I never got even ONE day of paid vacation. That does not exist. I waspaid ONLY for the contracted days I signed on for.

  14. Educator …. (& I was at least polite) … you see, there is a great deal of hostility towards career Civil Servants, many of whom can retire at 55-60 (sometimes even 50), with very comfortable (if not VERY generous) pensions and with heavily subsidized (if not free) retiree healthcare, while MOST in the Private Sector (whose taxes paid for perhaps 75% of your pension) don’t get subsidized retiree healthcare (and therefore cannot even consider retiring before Medicare age 65), and if they have any pension, it is (as a % of pay) likely less than half of yours.

    Just doesn’t seem fair ………

  15. Tough Love,
    Yes you are polite and my last response was not to you. A couple of facts. Teachers in CA cannot retire before 55. If they do, after say 30 years, their pension is not lavish, it’s under 50% of their salary with NO Social Security. And, truth be told, the healthcare I get is not free, in fact most districts do not provide any health benefits any longer. My wife will retire soon with no benefits from taxpayers at all.

    My retirement account was 55% funded by other than my direct deposits. My understanding when hired young was that the taxpayer’s contribution to my retirement account (via district and state contribution) was a way to bring teachers’ compensation more equal to private sector and I was glad to have it untouchable and leading to a strong retirement. Would you rather I got that added 10% in direct payment so that I could invest as other higher paid private sector people did for their later years? When I was hired, private sector people with similar educations were making well over 10% more than me. Imagine what that 10% invested over 36 years would have brought. I could imagine that that amount invested that long would provide anyone with a comfortable retirement.
    Thank you for your polite response.

  16. Interesting … Yes, in the early 70s you probably did make 10% less. But if you were in the Private Sector getting that 10% as additional salary in the pre-401k days with the VERY high pre-Regan-era marginal tax rates, you would have only kept (after federal/state/local taxes at your highest marginal rate) maybe 50-60% of it).

  17. So, we get closer yet. Add my own 8% contribution to the state and district’s total 10%, then 18% savings from my salary towards a 401 or perhaps stocks even at that tax rate would be a huge bundle after 36 years…probably way more then the interest in STRS. But at least you might admit that we teachers were not given a golden egg much apart then other potentially equal earners with financial discipline with similar education doing important work. I cannot apologize for my good fortune. I did important work few others could do and it was not motivated by financial interests, I can assure you of that.
    I was one year from an architectural degree when I told my father, an architect, that I felt a calling to teach. He only said that he admired that but don’t ever expect to be in the money. I never was. I don’t like being cursed and scolded because I don’t have to worry about my finances. Thanks for the thoughts.

  18. Educator,

    I was away for awhile and almost missed this exchange. You appear to be quite conversant in the particulars of your retirement compensation package-sources.

    Would you be so kind to respond, refute or elaborate on my original point that your pension was tripled as the result of an actual $100,000,000.00 cash bribe paid by the CA Teachers Union directly to the Gray Davis re-election campaign fund back just prior to the Davis Recall?

    Taxpayers NEVER demand or desired inadequate compensation for government employees, but also, NEVER did anyone fail to recognize the HUGE “compensation” benefit of “job for life” employment security aspect of a government employee’s career choice.

    Government employees should NEVER earn as much as private sector employees – who face the risks of market economic swings. You never had a “bad year” as in job loss through business failure or general economic recession.

    Your only “risk” and gripe was “no raise” (and THAT merely meant nothing over and above the FOR SURE “cost of living adjustment” which is an almost theatrical-fictional concept in private industry).

    I’ve taught (in university, a VERY easy job) and in industry (a VERY difficult high pressure job, for me) and I think your notion of difficulty of teaching “without Social Security” experience is utterly ridiculous! I’ve done both (and a whole lot more) while evidently you never bothered to work a real job during those four months annual Summer vacations, so as to have (mandatorily) earned Social Security retirement benefits.

    Plus, your great work product is evident all over America with double digit dropout and failure and illiteracy rates in every grade of government (Teachers Union) schools.

  19. Rain,
    Wow, so much you appear to know, or think you know. Firstly, my pension NEVER changed in my career. The tables and equations never varied. The only part of the equation was salary changes at district level over the years, never the formulas for retirement calculation. I could calculate my retirement thirty years ago using the same formula. Tripled…man your data source and interpretations are quite strange.
    Secondly, your comparison of your college teaching experience to my public school 7-8th grade experience are not, at ANY level comparative, it’s laughable. I have several professor friends who readily agree that their job is nowhere near the demand and stress level present in the public schools. They were all originally public school teachers. I had to be in charge of the focus of 30+ 12-14 year old children that varied from highly autistic to genius, most of whom would choose not to be there. Some were drug babies and many had parents with no parenting skills raising children that each day had to be given reasons to learn and cooperate. I had no breaks other than a small 10 minute break and 35 minute lunch. I had no prep time. I had to teach 7 classes per day. I had to create lessons, talk to parents and grade 6-12 sets of papers every day on my time. There were no office hours. I had to try and teach children algebra or other mathematics to groups that had a few bright children and some who never learned their times tables. Their learning AND behavior had to be managed all the time.
    The fact that you say that teaching is easy clearly tells me you know nothing about the job. And grading my job ability on some general condemnation of national scores and dropout rates is a simple minded set of excuses. Students don’t drop out if they are parented properly. To blame ALL teachers for out of control children is ludicrous. Your comment that “you never real had a real job” is not only insulting, it is flat wrong. I’d bet at high odds you would not last a week in the public school forum. Teaching in college is a country club compared.
    I am wondering why you feel to create a class of scapegoats to explain away your pain.
    I will admit that there are a majority of teachers that are not very good. It is not the kind of job most people can do or are able to do well, especially with the kind of young people being sent to school these days. It is sad you have such a low opinion of teachers. If you had a grasp of our nation’s reality you might understand that our children’s ability, focus and ethics are a confluence of many societal realities and evolutions that are unhealthy. It’s ALL the teachers’ fault. I hope you understand the the most important teachers are the parents. Any problems with parenting in the last 35 years?

  20. Oh and Rain,
    How dare you accuse me of indoctrinating my students. What a classless hater comment. I can tell you I may have know perhaps 2 teachers in 36 years that seemed to have any agenda other than trying to teach an imposed curriculum. What a ridiculous commonly shared idea about American teachers.

  21. Dear Educator …

    I certainly agree … If the parents aren’t SUPPORTIVE/ACTIVE participants in the education process, the odds of real learning are substantially diminished.

  22. We all know California schools suck!
    But like a bad drug habit we cannot leave, the beaches, the excellent weather and real Mexican food.
    We all know California politics have put the screws to all taxpayers, we still have legislators not willing to give up the perks, committees , etc.
    A question, How can people with 5-6 years of education think that the taxpayers are willing to support the Multi-level marketing ponzi scheme retirement package. I work my arse off in the public sector and when my pension is is in the yellow zone I have to contribute to my fund to keep it solvent.
    I know in the depth of your intelligence you all knew it was too good to be true yet you teachers and public employees turned a blind eye hoping it was true.
    There is no free lunch and you must be the bearer of your retirement not the taxpayer, we have our children, our granchildren and now we have our elderly parents to take care of , we should not have to take care of you when you knew the numbers would never add up.

  23. Actually, the numbers have added up just fine until the recent financial meltdown, like it was for many people.. Who could have/ would have predicted that things would get this bad, this fast. Why do you assume teachers are asking for any help? I hear rumors that they will be asked to contribute higher amounts and restructure retirement formulas. Free lunch huh? It felt like a ton of work for a very long time. It does not feel unearned.

  24. Pissed Off: I am glad that your husband works hard. Perhaps he should petition his union to allow hardworking teachers like himself to be rewarded and lazy teachers to be fired.

    That would resolve a lot of issues.

    Of course, the district is still $10 million in the red this year. What is your solution? How would you pay for our unfunded pension liabilities?

  25. I agree that lusy teachers need to be removed easily with fair practices. I have seen the worst never get touched. Perhaps the companies and execs who created this crisis by being myopic and self-serving should help rebuild what they broke instead of giving themselves high profits and bonuses. That would be a good start. Then start electing responsible , not bought politicians who can design and implement good government by the people and for the people. Who keeps electing these jerks! We will all need to suck it up for awhile and contribute to the rebuilding, but it is not the teachers’ fault that we are in this mess.

  26. I say increase all public servants pay and retirement benefits. Also decrease their taxes. Decrease corporate taxes and increase corporate executives pay and benefits. Decrease the taxes of rich liberal politicians. We should then increase the taxes on the remaining workers and small business owners. That should solve our economic crisis.

  27. I sense to much anger in these messages. If we would all just get along, i think everything would be just fine. Why can’t we just get along? Why?

  28. I dont like it one bit. I dont think it’s fair and I think we should fix it immediately! If not there may be a ripple effect to other states and foreign countries. Stop the rippling know!

  29. I am currently working on a teaching credential in special education. My credential will allow me to work with children with autism, which is my goal. For those of you who don’t know about children with autism, teaching in this area is very intensive, and the teacher is often bitten, kicked or otherwise physically assaulted. In other words, it’s not the easy or “cushy” job that people seem to envision. Our job is to take children at this behavioral level (often non-verbal and non-social as well), and work with them so they do not bite, kick or physically assault YOUR CHILDREN or other teachers when they are mainstreamed into YOUR CHILD’S class. In addition to this, we try to teach these children to communicate while teaching as much of the academics as we can to bring them up to a point where they can be mainstreamed. We also spend a lot of time outside of the classroom carefully monitoring each child’s progress and adjusting their individual curriculum accordingly, to maximize each child’s success. And then there’s the huge overhead of paperwork, late meetings, continuing education, etc. This is a vital and time-consuming job that affects the future of these children and their families, other children, other teachers, and society as a whole. I’m surprised people don’t value it more…When I have earned my credential, I will continue on to earn my master’s degree to help my salary at least a little bit. All told, I will have earned two bachelor’s degrees (both in the sciences, not basketweaving as someone suggested), 65 graduate units and a master’s degree when I am fully credentialled. In my area, this translates to a teacher’s salary of about $40,000, which is less than I was earning in private industry 20 years ago with just a bachelor’s degree. It will take 15 years of teaching for me to achieve a salary of about $65,000, which is the “average salary” that is so often reported for teachers in California, and which people seem to confuse with the starting salary. What other industry requires that much education for that low of a salary? As a career changer, I am doubly cursed because I won’t be able to put in 25 or 30 years to get to a better salary, and now I learn that the Windfall Elimination Provision of Social Security (“Windfall”, is that a joke?) will reduce any teaching pension that I get by the amount of the social security I have ALREADY EARNED in my private sector jobs up to this point. Now it appears teachers may lose their pensions altogether. I love teaching children with disabilities, but this is a matter of survival. No wonder there’s a shortage of teachers.

  30. I feel that teachers are entitled to every dime of their pensions. Our public schools have produced the most well adjusted and well learned youth in the world. Moreover, our school districts are models of organization and fiscal responsibility. The proof is in the pudding!

  31. Let’s be honest. Our lobbyists did a hell of a job in juicing Gray Davis! Regardless of the economy, the citizens of the state of California are legally obligated to pay my pension.Raise taxes or cut services, but pay my pension.

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