FOR IMMEDIATE RELEASE: March 19, 2014
CONTACT: Everett Rice (Walters) @ (916) 651-4037, Betsey Hodges (Gaines) @ (916) 651-4001
Senator Mimi Walters Proposes $2 Billion Emergency Funding to Teacher Retirement Program
“State Must Act Now,” GOP Senator Says
State Senator Mimi Walters (R-Irvine) said today that the California State Teachers’ Retirement System (CalSTRS) falls behind $22 million per day, and California must act now before the shortfall becomes even more catastrophic. In response to the shortfall, Senator Walters proposed SB 984, new legislation appropriating up to $2 billion in emergency funding over the next two years, and concurring with the Governor’s 2014-15 Budget proposal in forming a working group to look at long-term solutions. The announcement came just before a joint informational hearing by the Assembly and Senate Public Employees and Retirement (PE&R) Committees. Senator Walters is the Vice-Chair of the Senate PE&R Committee.
“CalSTRS has a $71 billion unfunded liability and so far no one has taken any action,” Walters said. “The Governor and Democrat leadership have all publicly expressed concerns about finding a solution and that’s a good start. The Legislature has held multiple informational hearings, but has yet to implement a solution. According to CalSTRS the liability is growing $22 million each day, and unless the Legislature acts, the fund will be insolvent in 2043. My proposal provides $1 billion now, increasing to $2 billion if excess revenue is collected in the state general fund. The savings to taxpayers are undeniable: $1 billion now saves almost $9 billion on a 30-year unfunded liability payback and $2 billion now saves $17.5 billion.”
SB 894 proposes to:
Appropriate $1 billion in 2014-15 Budget
Appropriate another $1 billion in 2014-15 Budget if Governor’s May Revision indicates there are sufficient unanticipated revenues
Create a working group to propose solutions to the Legislature for long term funding solutions for CalSTRS unfunded pension liability and evaluate the state’s long-term role as a direct contributor to the pension plan. The working group shall include, but not be limited to, representatives from the Governor’s administration, the Legislature, school districts, teachers, and CalSTRS.
CalSTRS serves California’s 862,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts. Teachers pay into the fund each year until they retire. The plan is a legal contract with the State of California, protected by the California and U.S. Constitutions. As the pension plan guarantor, or sponsor, the state is obligated to ensure that benefits are paid and contributions are received.
CalSTRS executives stated recently that they would be bankrupt by 2043. Failing to fund the teachers’ retirement program now places an undue burden on California families, school districts, teachers, and generations of future Californians. In addition, as the unfunded liability grows, the cost of extinguishing it will severely affect funding for other government programs such as education, public safety, court system, health care, and the social safety net.
“Last year the Governor successfully campaigned to raise taxes, creating a budget surplus,” Walters said. “That’s one-time money that should be used to pay down current debts, not for creating new programs. The Legislative Analyst’s Office (LAO) says CalSTRS needs $4.5 billion annually for the next 30 years to close the deficit. We must take advantage of the opportunity before us now in order to address the short and long-term needs California will face once again. A return to huge budget and pension shortfalls is not acceptable.”
Senate Republican Leader Bob Huff (R-Diamond Bar) said that SB 984 is a priority for the Republican Caucus this year. Senator Ted Gaines (R-Roseville,) who also serves on the Senate PE&R committee, offered his support for Senator Walters’ bill.
“It is our duty to be fiscally responsible by paying down debt and relieving taxpayers from larger future debt. In addition, we are obligated to provide our dedicated teachers with a retirement that they have been promised,” Gaines said.