*Cross posted from Teacherpensions.org’s blog.
California’s pension debt is dizzying. The state’s collective unpaid pension debt is now $198 billion, up from $6.3 billion in 2003. The California Teachers’ Retirement System (CalSTRS) makes up over a third of this debt, $74 billion unfunded. (These numbers look even bigger depending on what discount or interest rates are used.)
Complicating matters, the state can’t reduce any future benefits under an obscure, rigid legal doctrine known as the California Rule. Under the rule, workers are basically promised the same or better benefits as laid out on their first day of work; workers get what they’ve earned so far as well as future earnings. (A new ballot initiative may allow for structural reform and better public accountability, but is still up in the air.)
Put this together and it means that a younger generation of workers are stuck with the state’s massive bill. As we write in our new TeacherPensions.org report, pension reform cuts typically fall on new workers, and now is the worst time in the past three decades to be a new teacher.
See TeacherPensions.org for more info on California and other states, including interviews with former San Jose Mayor Chuck Reed and current Executive Director of the California School Employees Association, Dave Low.