Posted on 12/03/2004 8:36:20 AM PST by NormsRevenge
With a massive funding shortfall looming, trustees of the California State Teachers' Retirement System began grappling Thursday with the painful task of either boosting pension contributions or slashing benefits for newly hired teachers.
Ultimately, officials predicted, benefits for future retirees will have to be cut by $50 to $500 a month to erase a funding gap expected to be $23.1 billion in three decades. Pension plan executives laid out a series of possible cost-cutting and revenue-generating steps:
* The state could sell pension obligation bonds. CalSTRS would then use the proceeds to increase investments, hoping to generate hefty returns to pay off the bonds and close the shortfall. * Trustees could pay off the $23.1 billion pension obligation over 40 years, instead of 30 years. This would siphon off investment returns and contributions over a longer period, rather than investing them.
* Benefits could be reduced for teachers hired after Jan. 1, 2006. This includes basing the final pension on the highest three years of compensation instead of the current one year. Credit for years of service and unused sick leave would no longer be used to calculate benefits. Retirees would pay for Medicare coverage.
* Officials could ax an annual cost-of-living adjustment of 2 percent.
"It's going to have some impact for somebody or anybody," said Ed Derman, the fund's deputy chief executive officer.
The Legislature must approve most changes, including higher contributions paid by new teachers, school districts or the state.
By far, raising contributions would be the quickest way to wipe out the shortfall. But officials say that could be tough because the state and school districts are wrestling with budget deficits and teachers are being hit by rising costs, including higher health-care premiums. Teachers groups Thursday cautioned trustees about slashing benefits.
(Excerpt) Read more at sacbee.com ...
Being a resident, and after watching CA go from number ONE in the US to the BOTTOM in education performance due to the incompetence-protection afforded by the teacher's union, I would say give them the percentage of their pension money, according to CA's student performance ranking in the US.
That will solve the problem immediately.
But not for everybody.
Let's not forget that Gray Davis looted the STRS trust fund to the tune of $950 million.
It seems like just yesterday.. ;-)
They should have saved their union dues.
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