Oct. 7 (Bloomberg) -- The California State Teachers’ Retirement System, the second-largest U.S. public pension, said now is the best time to ask lawmakers for an increase in taxpayer contributions toward employee pension benefits.
Calstrs, as the $146.6 billion fund is known, wants to include the step in a pension proposal Governor Jerry Brown has said he plans to roll out as early as this month, said Jack Ehnes, the system’s chief executive officer. The increase would be the first in 21 years and may be as much as 14 percent, though that likely would be phased in over years, he said.
The pension’s unfunded liability, or what it will owe compared with projected assets, has more than doubled since 2008 to $56 billion, in part because of investment losses. That’s something that state Auditor Elaine Howle has said is a “high- risk issue” since California is on the hook for the difference.
“We think we’re at the right moment where it’s time to move on the funding strategy politically,” Ehnes said yesterday at a board meeting in Huntington Beach. “We’re going to see where we come out on this. There may be competing priorities, educational and otherwise.”
Any increase could be divided among teachers, districts and the state, Ehnes said. The fund hasn’t expressed a preference as to how the burden should be spread.
Contribution rates for teachers and school districts haven’t changed since 1990. Teachers pay 8 percent of their salaries toward retirement. Districts add 8.25 percent of pay, and the state pitches in 2.017 percent.
Without additional revenue, the pension plan may run out of money in the early 2040s, managers said in April, citing an actuarial report.
The fund in January 2010 said it would wait until this year to seek a rate increase from taxpayers because lawmakers at the time wouldn’t have been receptive while trying to find a way to erase a $20 billion gap in the state budget.
“What’s different now is that people are getting their arms around the funding situation,” Ehnes said.
Increased public attention to the growing costs of government-worker retirement benefits and to pay-to-play scandals at other pensions also would have made it more difficult to win contribution increases before this year, the fund’s overseers said in early 2010.
Three Brown representatives didn’t immediately respond to e-mailed messages requesting comment on an increase.
--Editors: Ted Bunker, Pete Young.
To contact the reporters on this story: Michael B. Marois in Sacramento at email@example.com; James Nash in Huntington Beach, California at firstname.lastname@example.org.
To contact the editor responsible for this story: Mark Tannenbaum at email@example.com