Modest-seeming CalSTRS pension estimate lacks key context

Modest-seeming CalSTRS pension estimate lacks key context

orwell.quoteThe California Teachers Association and the California Federation of Teachers do a good job of promoting the narrative that state teacher pensions are very modest at best. It’s true that there aren’t the same type of outrageous stories that we see in local and state government about police chiefs, fire battalion commanders and city managers retiring with an annual benefit of $200,000 or more. But this narrative is somewhat undercut by a new CalSTRS’ demographic analysis. Calpensions.com has details.

A new look at how CalSTRS members changed during the last 15 years shows the average teacher working fewer years, retiring at an older age and collecting a pension that grew faster than pay or inflation.

Retirees grew much faster during the period than active workers, increasing from 27 percent to 36 percent of total membership and raising questions about the impact of longer life spans on projected pension costs.

The new CalSTRS demographic report issued last week, done in part to show differences among employer types, covers a period beginning in fiscal 1997-98 as a stock-market boom yielded big earnings for pension fund investments.

A brief pension fund surplus helped prompt legislation in the late 1990s and 2000 that increased pension benefits in several ways, while also cutting the annual employer and employee contributions to the pension fund.

According to the new report, the average final compensation of a K-12 teacher increased 54 percent during the 15-year period, growing from $52,200 in 1997-98 to $80,500 in 2012-13.

The average CalSTRS pension benefit for a K-12 teacher increased 70 percent during the same period, growing from $28,309 in 1997-98 to $48,094 in 2012-13. The California consumer price index grew 48 percent.

Some public employees are more equal than others

At least compared with public safety retirees’ pensions, those pensions look reasonable. But as with the oft-touted claim that the average CalPERS pension is under $30,000, the number needs context. It includes anyone who ever became eligible for a CalSTRS pension — $48,904 is the average for all teachers in the retirement system. But what about teachers who worked 30 years or 35 years, as is common? What is their average pension? That’s the number that’s more telling on the question of fairness.

And the CTA and CFT are never going to convince other public employees that their pensions are fair. Under Gov. Jerry Brown’s initial 2011 pension reform proposal, the state would have been legally committed to having employees share an equal or much closer to equal share of total pension costs by the end of the decade. That got watered down. But what was adopted in 2012 still committed public employees to paying a great share of pension costs.

Except for teachers. The CalSTRS funding overhaul approved earlier this year actually reduced teachers’ relative share of their pension costs. I wrote about this for CalWatchdog here.

The theory was that if employees had to share equally in the huge cost of their pensions, they’d be more amenable to plans to reduce them going forward so as to increase their take-home pay.

But when it came to enforcing this provision — and triggering a fight with the CTA and the CFT — Brown sized up the Sacramento landscape and doesn’t appear to have even tried. The provision in his 2014-15 budget shoring up funding for the California State Teachers’ Retirement System requires that taxpayers foot 90 percent of the [new additional contributions to CalSTRS] and teachers just 10 percent.

It’s an “Animal Farm” thing, you see. Some public employees are more equal than others.

I’ve never seen this special treatment for teachers over public employees detailed in an MSM newspaper story. It’s one more juicy story that the Sacramento set chooses to ignore.

(Editor’s note: The description of the 2012 pension law was corrected after a reader pointed out problems with the original version.)

10 comments

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  1. LetitCollapse
    LetitCollapse 11 November, 2014, 09:34

    “I’ve never seen this special treatment for teachers over public employees detailed in an MSM newspaper story.”

    We never see lots of stuff in the MSM news. It’s become just another arm of the government and Wall Street. No different that what Pravda represented in the old Soviet Union. Hell, I get more insightful and worldly news from Russia Today (RT) than I could ever hope to get from the NY Times or the Washington Post or the LA Times. And I’m dead serious! Who would’ve ever thought back in 1970 that in 2014 Russia would provide more transparent and accurate news reporting than the achors on the 6 o’clock news??? lol. Everytime I see Tom Brokaw or Brian Williams I want to stick my middle finger down my throat and gag. All of them are lapdogs for the ruling class. We spent trillions of dollars to defeat the Soviets and now we’ve morphed into them!!! lol!!! 😀

    Reply this comment
  2. Queeg
    Queeg 11 November, 2014, 11:48

    Beater subject.
    Move on bro!

    Reply this comment
  3. bob
    bob 11 November, 2014, 12:29

    Our rulers think we are stupid, Chris…and they could be right.

    Obamacare Architect Explains “Stupidity of American Voter” Needed to Pass ACA

    The truth on Obamacare is finally out: The bill was purposely written to trick the CBO (congressional Budget Office) into believing the bill was not a tax. Moreover, the bill also depended on the “Stupidity of the American Voter”.

    Many of us knew that long ago. But those are the words of Jonathan Gruber, a numbers wizard at M.I.T., who was courted by the Obama administration, and paid $400,000 for his efforts to see that the bill made its way through Congressional obstacles.

    http://globaleconomicanalysis.blogspot.com/2014/11/obamacare-architect-explains-stupidity.html

    Reply this comment
    • LetitCollapse
      LetitCollapse 11 November, 2014, 17:02

      Ain’t that special, bob? They knew that they were hoodwinking the American people from the very start. They tossed out the bait and the dummies swallowed it! lol. Not me. I warned everyone from the beginning. I always agreed that our healthcare system (even before ObolaCare) was corrupted and overpriced. ObolaCare made it even worse. It transferred all the cost to the middle class producer. And you ain’t seen nothing yet. Wait until the penalties go up for not having healthcare and watch the premiums start to rise 12% to 15% each year. Now they’re really in a pickle. Look how much money they spent on implementing the ACA law and the process – now there are discussions about going back to the corrupted system we had before. Until the dirty legislators stop giving the medical industry monopoly protections we will continue to spend 20% plus of our GDP on healthcare – which is a travesty and will end up bringing the whole country down in financial flames. But it was trickery from the get-go. What a bunch of corrupted scoundrels. Consent of the governed and ‘of, for and by the people’ my butt!!! 🙁

      Reply this comment
  4. S Moderation Douglas
    S Moderation Douglas 11 November, 2014, 16:15

    “Under Gov. Jerry Brown’s 2012 pension reform measure, the state is legally committed to having employees share an equal or much closer to equal share of total pension costs by the end of the decade.”

    We’ve been here before.

    A. It is abundantly clear that PEPRA requires 50% of the “normal” cost. Not the unfunded liability.

    B. “However, the employee contribution may only be increased up to an 8% contribution rate for miscellaneous members, a 12% contribution rate for local police officers, local firefighters, and county peace officers, or an 11% contribution rate for all other local safety members.”

    C. it “‘Permits’ public agencies and their employees to agree to share the cost of the employer contribution with or without a change in benefit. These contributions are paid in addition to the member contribution rate.”

    D. Bargaining unit 12, for example, raised their employee contribution to 10% (it was 5% previously.) They “agreed” to share more of the employer costs.

    Reply this comment
    • Ted E Mind of your Godhead Ted
      Ted E Mind of your Godhead Ted 11 November, 2014, 17:52

      Douglas–

      PLEASE do not interrupt the orgy of stupidity out here!

      Reply this comment
    • Chris Reed
      Chris Reed Author 11 November, 2014, 20:12

      SMD: This is from Brown’s pension reform blueprint in 2011:
      1. Equal Sharing of Pension Costs: All Employees and Employers While many public employees make some contribution to their retirement – state employees contribute at least 8 percent of their salaries – some make none. Their employers pay the full amount of the annual cost of their pension benefits. The funding of annual normal pension costs should be shared equally by employees and employers. My plan will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits. Given the different levels of employee contributions, the move to a contribution level of at least 50 percent will be phased in at a pace that takes into account current contribution levels, current contracts and the collective bargaining process. Regardless of pacing, this change delivers real near-term savings to public employers, who will see their share of annual employee pension costs decline.

      You’re right, Brown didn’t get all that he sought. But it doesn’t change the fact that Brown has set up a system in which public employees pay a closer to even share of pension costs EXCEPT FOR TEACHERS.

      Reply this comment
      • Donkey
        Donkey 14 November, 2014, 07:27

        The RAGWUS system for pensions is a sham, and no matter how you try to fix it the underlying problem of over compensation, over benefitted, and over pensioned feeders will always exist until the labyrinth of lies is dismantled. In short, there is no logical way to correct an injustice as ugly as public employee pensions without starting over by riding ourselves of the public unions. Trying to correct this problem within the current morass of lies and deception is futile. 🙂

        Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 11 November, 2014, 21:15

    One thing constant….misery posts….ugh!

    Reply this comment

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