Teachers’ pension costs to escalate

01-31-2011

Blog by John Fensterwald/Educated Guess

CalSTRS, the pension system for teachers and school administrators, had a good year in 2010, with a 12.7 percent return on investments. But that’s far from enough to make up for the huge hit the system took during the recession two years ago. As a result, the state, school districts, and teachers themselves can expect to pay billions of dollars more annually into the system to keep it solvent for the next three decades. Those added costs, coming at a time of severe budget cuts for education, will add to the arguments of those calling for pension system reform, like a switch to a 401(k) instead of a defined benefit program for new members. Gov. Brown has yet to reveal his ideas for pension changes, but some Republicans are saying that reform will be a precondition for them to vote to place any increased taxes on the June ballot. (more...)

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