Funding Gap Threatens Retirement For
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[April 04, 2014]
SACRAMENTO, California (Reuters) — The pension fund for public school teachers in California faces a
long-term shortfall of $74 billion, threatening its ability to pay for
the retirement of nearly 1 million teachers and administrators in the
nation's most populous state, officials said on Thursday.
The gap is growing by about $15 million per day, the California
State Teachers Retirement System said in a written statement, and
the system could run out of money in 32 years.
"CalSTRS has slightly less than 67 cents on hand for every dollar it
owes its members," CalSTRS spokeswoman Gretchen Zeagler said in a
The system's investments grew at a rate of 13.9 percent in the
fiscal year 2012-2013, nearly twice what was anticipated but not
enough to close the gap, she said.
To make up the difference, participants — whether teachers, school
districts or the state — will have to contribute more toward
members' retirement, said CalSTRS Chief Executive Officer Jack
"Since at least 2006, we've said that CalSTRS cannot rely solely on
healthy investment returns to make up the ground lost to the
economic downturns and market volatility of the past 14 years,"
Ehnes said in a statement.
A decision to increase contribution levels would have to be made by
the legislature and approved by Governor Jerry Brown.
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The resurgent stock market has put off the system's reckoning
slightly, extending by about three years to 2046 the date at which
it will run out of money if nothing is done.
(Reporting by Sharon Bernstein; editing by Alex Dobuzinskis and Lisa
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