“We overpromised” says the head of a pension reform group, and this may well be true. The amount being paid into the California State Teachers Retirement System (CalSTRS) by teachers, schools, and the state cannot possibly meet the amount that will be owed in the coming years. But the real problem for California is that by law CalSTRS can demand that the state make up any funding shortfall they have. That’s right, CalSTRS can legally force to state to fund them. Right now, the state is paying 23% of CalSTRS expenses. That percentage is expected to increase dramatically in the coming years and the gloomy consensus is that by 2040 the fund will be broke and will rely entirely on taxpayer money.
This is just another dismal example of the sorry state of State of California finances. Problems that should have ben addressed responsibly have been ignored for years by irresponsible legislators and incompetent (at best) pension fund administrators. Now, there is no apparent way CalSTRS can remain solvent.