CA's Teacher Pension Faces a $64 billion shortfall
The nation’s second biggest public pension fund, which provides retirement benefits for almost half a million California teachers, faces a projected $64.5-billion shortfall over the next three decades, according to a report in the Los Angeles Times. The fund reportedly has only 69 percent of the funds it needs to meet future obligations.
California Democratic Gov. Jerry Brown late last year described the state’s pension costs as unsustainable and unveiled a 12-point plan to change the program. In February, Governor Brown unveiled a detailed proposal that would end traditional pensions for state and local government workers hired after June 2013. The proposal would implement “hybrid” plans that combine typical payouts with a 401(k)-style component for workers hired July 1, 2013, or later.
Democrats have said they are not willing to accept Brown’s pension reform plan as it stands. However, Republicans support the plan and in February introduced a series of bills that closely match it.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, discussed the proposal, saying that plan is still in the formative stages. “We would prefer to take a different approach,” Steinberg said, that would cap the defined benefit component to a percentage of salary, then supplement that with investment income, reports The Sacramento Bee.
Like Brown, Steinberg linked pension legislation that cuts costs to gaining voter support for tax increases that the governor and Democrats hope to put on the November ballot.