The California State Teachers Retirement System pension fund has a $64 billion shortfall in its defined benefit program, according to a report.
CalSTRS said in a report to its board this week that if the current economic and demographic assumptions hold, the program would be penniless by 2046, when the state would then be on the hook for the benefits to its members.
According to the Sacramento Bee, CalSTRS issued the report in response to a state Senate resolution asking it to come up with at least three options to address long-term funding needs for the defined- benefit program.
“The most effective means to provide long-term stability to the [defined benefit] program is to increase contributions made by members, employers and-or the state,” CalSTRS said.
It said the contribution rate from all sources would have to increase by 12.1% starting in 2014 to fund 80% of the liabilities in 30 years, a projected $3.6 billion annual increase.
By only increasing the contribution rate by five percentage points beginning in 2014, CalSTRS said it would just push out the date when assets would be finally depleted to 2058, at a cost of $1.5 billion annually.