“Spokespersons for the government unions and the government worker pension funds have long stated that “the market has just been beat up a bit lately,” and “investment professionals assure us there is no cause for concern.” But the sobering truth is starting to emerge, and according to “contract,” taxpayers are going to get hit hard.
On December 20th the CalSTRS CEO, Jack Ehnes, in a rather convoluted acknowledgement on the “Ask Jack” section of CalSTRS website, admitted that funding to CalSTRS would have to increase by $3.8 billion per year for the next 30 years. Here is what he wrote:
“Recent media reports have suggested that to solve the unfunded liability the state will have to increase CalSTRS funding by $3.8 billion a year for 30 years for a total of more than $114 billion.
Although this is an accurate statement based on current projections, achieving adequate funding can occur several ways that would be phased in over time. The CalSTRS $56 billion funding shortfall can be managed, but it will require gradual and predictable increases in contributions.””
If the increased funding is phased in, like what CalPERS is currently doing, then the annual cost will exceed 4 billion per year, in addition to the billions taxpayers are now funding, after a the three year phase-in period. Currently taxpayers are paying 7.75% interest on the CalSTRS 56 billion in unfunded liabilities, which doesn’t include another 10 plus billion they’ve lost since July 1, 2011.
Where is that money coming from? How will the PUSD absorb their share of those additional costs? The problem has been known for sometime so I hope they have adequately planned for the inevitable increase in employee pension costs. Hopefully they've been building their reserves.
CalSTRS Admits Annual Pension Funding Must Increase
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