CalSTRS board against Schwarznegger DC proposal

The CalSTRS board today voted to oppose California Gov. Arnold Schwarzenegger's proposal to shift the responsibility of $469 million in state contributions to school districts and teachers. Mark O. Johnson, consulting actuary with Milliman USA, said, "This proposal is unsound," adding that the $126 billion California State Teachers' Retirement System would eventually require more funding. The proposal, which is part of the governor's state budget, would also allow teachers to opt out of a supplemental hybrid retirement plan. Board members at the Sacramento-based plan said the proposal would create an administrative nightmare because of the varying contribution rates and benefit levels it would create.