Capitol Alert

The trust fund that provides pensions to retired teachers has a $64 billion deficit and would need a $4.5 billion per year infusion of revenue to become fully solvent, according to a new internal study.

The California State Teachers Retirement System produced the report in response to a legislative resolution.

Its release came just days after the Legislature's budget analyst, Mac Taylor, indirectly chided Gov. Jerry Brown for ignoring "huge unfunded liabilities associated with the teachers' retirement system and state retiree health benefits" in his new budget.

STRS receives money from the state, from local school districts and from teachers themselves, but is also highly dependent on investment earnings, which were clobbered during the recent recession. And while its larger cousin, the California Public Employees Retirement System, has the power take money from the state treasury as it sees fit, STRS must receive specific appropriations from the Legislature.

While fully funding teacher pensions would require $4.5 billion more a year --excluding projected investment earnings -- the system says in its report, the burden would be eased by setting lower funding targets and./or stretching out contributions. The most important decision, STRS said, is to begin closing the deficit, rather than allowing it to widen further.

The California State Teachers' Retirement System isn't keeping a close eye on pension spiking, according to a new audit of the state's second-largest pension fund.

CalSTRS CEO Jack Ehnes responded that the organization is committed to cracking down on pension spiking.

"CalSTRS agrees with the Controller's recommendations and will take additional actions to further strengthen its controls," Ehnes said in a press statement release shortly after the audit was made public today. "In fact, many of the recommendations in the report have been initiated within the last year."

The review by State Controller John Chiang's office found CalSTRS, with more than 1,900 employer-members, averages just 40 audits per year.