Improving CalSTRS Funding Comes at Cost for School Districts

The CalSTRS Building

The CalSTRS Building

California lawmakers acted earlier this year to improve the funding status of CalSTRS.

That means higher payments from school districts – and recent budget forecasts are forcing schools to examine how these payments will strain their budgets.

From the San Diego Union Tribune:

A state-mandated sched-ule for replenishing California’s cash-strapped teachers’ retirement fund means school districts will see their pension contributions triple by 2021 and remain high for decades, according to budget forecasts released this month by several local districts.

Administrators say they’re at a loss for how they’ll come up with the cash, which for some districts could be tens of millions per year. The forecasts come just six months after a legislative deal was struck by Sacramento lawmakers to recover billions of dollars for the California State Teachers’ Retirement System, or CalSTRS.

[…]

Administrators said that in the coming fiscal year, they may be faced with tough decisions to cut instructional programs, cut professional development or delay technology infrastructure improvements at the expense of paying their share of unfunded pension liabilities — totaling $74 billion statewide.

Officials in districts throughout California are talking about forming a coalition to explore ways to fix the teacher retirement system without cutting into their own school programs.

As the pension contributions grow, “the things you want and need for educational purposes will take a second seat to funding this retirement system, or paying for utility bills,” said Gary Hamels, assistant superintendent in charge of business services with San Marcos Unified School District.

“It’s going to hit the fan because you’ll have to make a decision — I have to pay this so you can’t buy that,” Hamels said. “We’ll have a situation where there’s demand for some academic improvement but this is where the money is going first.”

The business model to get CalSTRS on solid footing is based on economic assumptions that will force each of the area school districts to cough up tens of millions of additional dollars for decades to come, said Lora Duzyk, assistant superintendent in charge of business services for San Diego County’s Office of Education. Teachers also will see their CalSTRS contributions rise, though not as fast as school districts.

“I think you will hear moaning and gnashing of teeth from all kinds of people,” Duzyk said. “The money to pay for this are new costs that come right off the top of anything you get (from the state).”

Details on the repayment schedule are outlined in a school funding law passed in June by California’s legislature, and signed by Gov. Jerry Brown, a Democrat who marched into office in 2011 vowing to pull the state out of its budget crisis.

CalSTRS was 66.9 percent funded as of June 30, 2013.

 

Photo by Stephen Curtin

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