Source: CalSTRS

CalSTRS' defined benefit plan for teachers and administrators, now ii-thirds funded, would reach 70 percentage of funding in 2024 and full funding in 2046, under Gov. Brown'southward plan.

Source: CalSTRS

CalSTRS' defined do good plan for teachers and administrators, now two-thirds funded, would reach seventy percent of funding in 2024 and total funding in 2046, under Gov. Brownish's programme.

Gov. Jerry Brown'due south plan to immediately start paying off the $74 billion shortfall in funding for teacher pensions was, for school districts that would bear the brunt, the large May budget surprise. On Thursday, ii key lawmakers responded to districts' calls for full relief next twelvemonth by urging legislators to meet them halfway.

The defined benefit plan for teachers and administrators, now two-thirds funded, would reach 70 percent of funding in 2024 and full funding in 2046, under Gov. Brown's plan. Source: CalSTRS.

CalSTRS' defined do good plan for teachers and administrators, now two-thirds funded, would reach 70 percent of funding in 2024 and full funding in 2046, under Gov. Brown's plan. Source: CalSTRS.

Assemblyman Rob Bonta, D-Oakland, and Sen. Norma Torres, D-Pomona, who chair committees looking into the pension issue, endorsed an alternative payment plan proposed by the California State Teachers Retirement System. Instead of paying $350 meg to CalSTRS in 2014-15, which is the increased amount Brown proposed, school districts would pay one-half that. They would brand upwardly the deviation with college payments in future years. The alternative plan would get out intact the central elements of Chocolate-brown'southward plan to eliminate CalSTRS' deficit, which he outlined in the revised state upkeep.

During a ii-hr hearing in Sacramento, education groups generally praised Brown'due south overall partition of responsibleness amid schoolhouse districts, teachers and the state for making the CalSTRS alimony plan for teachers and administrators whole at the end of 30 years. Merely they said that the plan to start phasing it in on July 1 caught them unaware just when they were completing the planning process under the country's new Local Control Funding Formula. In January, Brown had suggested college payments would begin in 2015-16; districts built their budgets around those assumptions, representatives said.

Brown's plan would exist a $35 million hit on the budget, Leilani Aguinaldo Yee, the deputy director of government relations at Los Angeles Unified, testified. As the new funding police requires, she said the district has drafted a "robust" planning document, the Local Command and Accountability Programme (LCAP), after coming together with parents and community groups.

"So now, as of 10 days ago, we take to go back to the same individuals and say a significant corporeality is off the table," Yee said.

Brian Rivas, managing director of policy and government relations for The Education Trust-West, a nonprofit advocacy group, seconded the worry that diverting money so belatedly in the process of writing the LCAP would "jeopardize trust between communities and districts."

"Trust is very fragile," he said.

Investment income to CalSTRS, in green, plummeted in 2008-09. Though rebounding since, lost income created a $74 billion shortfall in assets needed to meet retirement payments over the next 30 years. Contributions from teachers and administrators, the state and school districts into the system meanwhile remained constant. Source: CalSTRS.

Investment income to CalSTRS, in greenish, plummeted in 2008-09. Though rebounding since, loss in assumed income created a $74 billion shortfall in avails needed to meet projected retirement payments over the side by side xxx years. Contributions from teachers and administrators, the state and school districts into the system, in ruby-red, meanwhile remained constant. Source: CalSTRS.

Brown has proposed increasing spending for districts by $iv.5 billion; $350 meg more than in CalSTRS payments would swallow 8 percent of the total. The ratio would ascension every bit higher contribution rates are phased in, diverting more money that would accept been bachelor for the classroom nether the Local Control Funding Formula.

Jeff Vaca, deputy executive director of governmental relations for the California Clan of School Business Officials, was amid those who called for either a one-yr delay or a respective increase in district funding to encounter the higher CalSTRS costs for districts.

There are other alternatives, several people testified. Since the Legislative Analyst's Role is predicting the country would take in as much as $2.7 billion more in funding for K-12 schools and community colleges than Brownish'southward budget projects, they said that some of that money could exist a downwardly payment for meeting CalSTRS' obligations.

CalSTRS' divers benefit program for its 860,000 members is funded through contributions from the land, employers (school districts) and employees, with contributions determined as a per centum of employees' pay.

CalSTRS lost nearly twoscore percent of the value of its investments in 2008 in the stock market freefall. As a result, the pension programme is just about two-thirds funded to see projected pension payouts over the next 30 years. If zippo were done, it would run out of money in 2046, according to CalSTRS.

Nether Brown'due south plan, total annual contributions would increment past about $5 billion per yr, to $10.five billion, divided in the following ways:

  • Districts would shoulder about $3.vii billion of the increase, with their share more doubling, from 8.25 percent of payroll to 19.1 percentage. The increases would exist fully phased in over seven years, and that wouldn't change under CalSTRS' culling, but would but be shifted – less in the first 3 years, more in the concluding four years.
  • Teachers' and administrators' contributions would ascension from 8 percent to 10.25 percent, phased in over three years. Court rulings have limited the Legislature'due south power to enhance employees' rates, and the 10.25 per centum would be the maximum, brusque of challenging court rulings.
  • The state'south share, now 3 percent, would rise to half-dozen.3 per centum, also over iii years. That would increment the state's costs from $1.4 billion this year to $ii.4 billion – coin that would come from the General Fund, non the state's share of funding for schools, Proffer 98.

"We're appreciative of that," said Estelle Lemieux, a lobbyist for the California Teachers Clan, which endorsed Brownish'due south plan. "The country is willing to contribute more than we idea information technology would."

Wiping out the $74 billion deficit, bringing CalSTRS to full funding in xxx years, would require $237 billion in full increased contributions. Districts would bear nigh two-thirds of the total, employees well-nigh one-tenth and the state about a quarter.

John Fensterwald covers education policy. Contact him at jfensterwald@edsource.org and follow him on Twitter @ jfenster . Sign up here for a no-price online subscription to EdSource Today for reports from the largest education reporting team in California.

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