Seek sensible adjustments to CalSTRS contributions
March 25, 2018


Whereas, the financial crisis of 2007 caused by unethical lending practices of America’s largest financial institutions negatively impacted the health of CalSTRS; and

Whereas, in order to rectify a projected $74 billon unfunded liability within CalSTRS, the California Legislature passed and the governor signed AB 1469 (Bonta, D-Oakland) in June 2014; and

Whereas, AB 1469 was passed with limited open, public debate; and

Whereas, AB 1469 attempts to fully fund (100 percent) CalSTRS by the year 2046; and

Whereas, AB 1469 is an extreme conservative reaction to a projected financial problem with the fiscal health of CalSTRS and was the most aggressive, but not the only, scenario presented to the Legislature in 2013; and

Whereas, in responding to Senate Concurrent Resolution 105 in 2013, CalSTRS expressed a desired outcome of full funding within the shortest period of time possible, but also presented other viable scenarios that would keep the fund healthy long term, including funding the plan at 80 percent over a 30-year period; and

Whereas, AB 1469 troubleshoots CalSTRS, a defined benefit program, as if it is a private sector pension plan, which it is not, however, under the federal Pension Protection Act (2006) large private sector pension plans are considered at risk of defaulting on their liabilities if they have less than 80 percent funded ratios under standard actuarial assumptions and less than 70 percent funded ratios under certain additional “worst case” actuarial assumptions; and

Whereas, AB 1469 has placed a heavy burden on employers to meet their enacted CalSTRS fund contributions that is fast approaching over 19 percent of employers’ total certificated staffing expenditures; and

Whereas, the implementation of AB 1469 will ultimately place many districts and Local Education Agencies (LEAs) in receivership across California and/or result in the reduction of programs and services to California’s students despite increased funding to schools through the Local Control Funding Formula (LCFF), which will likely be fully funded by 2018-19; and

Whereas, AB 1469 has already resulted in the stagnation or reduction of employee compensation, including cost-of-living adjustments, during a time when districts and LEAs are unable to fully staff their classrooms; and

Whereas, funding CalSTRS at 80 percent, without changing the state and employee contribution increases enacted in AB 1469 would have decreased the burden placed upon employers to meet their fund contribution obligations; and

Therefore, be it resolved, that the California Federation of Teachers advocate for legislative budgeting of increased CalSTRS contributions for districts and LEAs; and/or

Be it further resolved, that the CFT lobby with partner organizations and businesses (including but not limited to, the California Teachers Association; the Association of California School Administrators; the California Parent Teacher Association; the California School Boards Association; the California Association of School Business Officials; the California School Employees Association; Service Employees International Union; the American Federation of State, County, Municipal Employees; School Services of California, Inc.; and Capitol Advisors Group, LLC, in advocating for long-term and/or short-term solutions to decrease the burdens placed upon employers in order to meet their CalSTRS and CalPERS contributions; and/or

Be it finally resolved, that CFT sponsor legislation that would adjust AB 1469 by decreasing employer contributions at a rate that will fund CalSTRS at 80 percent by 2046.