Retirement Roulette

Don't Gamble With My Pension

Education Will Lose if Retirement Becomes the New Lottery

A successful educational system requires good teachers, adequate funding, and the respect and support of the public. The Schwarzenegger/Richman proposals threaten all three.

Without secure retirement, California will lose its teachers

California teachers are a rare breed when it comes to pensions.

Unlike almost all other employees in the private and public sectors, California’s K-12 and community college teachers are not in Social Security. They have no guaranteed retirement income other than their CalSTRS pension plan. In most other states, teachers retire with both Social Security and a state-sponsored pension plan. The Schwarzenegger/Richman proposal to leave teachers with only a 401(k)-type plan is the most extreme pension change proposed in the country. Even President Bush’s Social Security proposal is voluntary and leaves some guaranteed benefit for those who choose to participate.

Who will want to enter our profession — and stay in it — if it leaves them among the most vulnerable of all working Americans? If teachers are forced to play retirement roulette changes pass, mid-career teachers will be encouraged to leave teaching or go to another state — to take a job where they have more retirement security. Experienced life-time career teachers will become a rarity.

A drain on school resources

School districts and community colleges are already underfunded in California compared to what other states spend on education. Imagine the negative impact on our already struggling education systems if districts are forced to cope with new costs. Where will the money come from to

  • hire and train new employees to cope with the increase administrative complexity of multiple systems?
  • provide new employees with disability insurance and death and survivor benefits?
  • pay into Social Security for those who would otherwise have only DC retirement accounts?
  • increase employer contributions to the traditional plans if these plans see their liabilities increase without contributions from new employees?

One thing seems certain: money that otherwise would go to salaries health benefits, and instruction will be diverted instead to cover these additional costs.

CalSTRS is worthy of the public’s trust

Teachers have not abused their defined benefit retirement system. On the contrary, the system has succeeded in encouraging experienced teachers to work longer — to reach thresholds of 30 years of service and 63 years of age.

No teacher retires with 3% at 50 or 2% at 55. The average STRS pensioner receives about $3,000 per month.

Few teachers file for disability, and those who are on disability pay taxes on their benefits. Employers have paid the same 8.25% contribution into the system on each teacher’s salary for the last 15 years — an amount that can only be changed by the legislature. The 2% simple COLA that retirees receive is the most modest of any major retirement system. The state’s direct contribution to CalSTRS has been shrinking and is now half of what it was in 1998. The state makes no contribution to retired teachers’ health care; where it exists, it was negotiated locally district by district.

CalSTRS retirement is a fair deal for California taxpayers, who have demonstrated time and time again that education is their top priority. It’s also a fair deal for teachers — who at least they know they will get a monthly amount, based on a formula, for their lifetime after they leave a full career of decades in the classroom. It’s a minimum floor the Governor and all of us need to preserve — on which to build the dream of excellent public schools in California.

The struggle to protect and improve public education in California has been difficult and is ongoing. The Schwarzenegger/Richman retirement lottery scheme is the last thing this state needs to improve its public schools,

As trustees, we are greatly concerned about the impact this change would have on the future of our teachers. Under the CalSTRS Defined Benefit Program, our members cannot outlive their benefit. Changing to a defined contribution plan would rob them of that security.

— Gary Lynes, CalSTRS Board President

We’ve witnessed attempts to eliminate defined benefit plans in other parts of the country. However, our Defined Benefit Program meets the retirement, disability and survivor benefit needs of our members and the public’s need for experienced, able teachers at a reasonable cost. We have a strong, sound system and California’s educators need it to stay that way.

— Jack Ehnes,CalSTRS CEO

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