CalSTRS staff proposed setting Californias pension contribution to the system at $1 billion for the coming fiscal year, covering both a $448 million normal pension contribution and a $555 million payment to CalSTRS inflation account. Gov. Gray Davis had earlier proposed funding the normal contribution through a pension obligation bond or through a loan from CalSTRS. Mr. Davis had proposed cutting the cost-of-living payment, however, by $500 million; in the event of a shortfall, contributions would be made up through July 1, 2036.
Legislation would have to be passed and bonds issued before July 1, and the tight timetable motivated CalSTRS officials to issue the proposal. "Although the issuance of bonds to fund the (inflation) contribution is not currently being considered by the Department of Finance, including that obligation in the (CalSTRS) resolution maintains flexibility for such a change to occur prior to the issuance of the bonds, a staff memo said.
Anita Gore, spokeswoman for the California Department of Finance, said it would be premature to comment on the proposal before adoption by the board of the the $90 billion California State Teachers Retirement System, Sacramento.