By Ed Mendel
"A day of reckoning may be coming for a huge CalSTRS shortfall: an "unfunded liability" estimated to be $56 billion over the next three decades, requiring a contribution increase of $4 billion a year to close the gap.
The CalSTRS board was told last week that new rules proposed by the Governmental Accounting Standards Board will require school districts and other employers in the system to begin reporting pension liabilities on their balance sheets.
"It's not a drop in the bucket," said Robin Madsen, the California State Teachers Retirement System chief financial officer, who gave a hypothetical example.
"It might change a balance sheet from being a number in terms of total liabilities of about $300 million to a number in terms of total liabilities of about $600 million or $700 million," she said.
Madsen said early versions of the pension accounting proposal had little detail on unusual "cost-sharing" systems such as CalSTRS, but updates are revealing more. CalSTRS has been working with the accounting board to field test proposed changes.
At a GASB hearing in San Francisco on Oct. 13, CalSTRS may request a one-year delay in the changes, now scheduled for fiscal 2013-14. That would allow more time to prepare the 1,042 school districts, 72 community college districts and other employers.
CalSTRS is different from most California public pension systems in several ways. The pension board cannot set contribution rates that must be paid by employers, and teachers do not collectively bargain through unions for pension benefits.
Instead, the CalSTRS contribution rates and pension benefits are set by legislation. Another way CalSTRS says it's different: The pension "plan sponsor" is not the employer, as is usually the case. It's the state.
How costs are shared in the unusual retirement system, particularly for covering the huge unfunded liability, may soon become more than an accounting issue...?"
The original question, "Who pays CalSTRS debt: state, schools, teachers?", is wrong. The taxpayers will pay, the students will suffer loss of programs, and the teachers union will be looking for more revenue. The unfunded liability of the Calstrs pension fund isn't a new issue. It has just been ignored, defered, hidden, and even denied. The people that have been paying attention won't be surprised. If the PUSD claims they've been caught off guard - don't believe them.
The link to the rest of this excellent article that addresses many issues the public isn't aware of (not all). A must read: Web Link
This story contains 419 words.
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