The CalSTRS board voted to oppose an amendment to the state constitution that would give new teachers the choice of joining a defined contribution plan or a combination of defined contribution and defined benefit plans. The amendment would affect employees hired after July 1, 2007.
A previous constitutional amendment that would have required all new employees to participate in a defined contribution plan only was withdrawn from the November ballot because it failed to provide death and disability benefits.
Board members of the $135 billion California State Teachers' Retirement System, Sacramento, opposed the new bill because it would pose a threat to the financial stability of the existing trust fund, a CalSTRS press release said. Barring new teachers from joining the existing defined benefit fund would shrink the amount of contributions, forcing CalSTRS to invest in more liquid instruments and thus reducing the system's expected return, a memo to the board said.
"We are very disheartened to see this type of legislation come before the board again as a similar bill was presented and summarily opposed by this body just last year," said Carolyn Widener, CalSTRS board chairwoman, in the press release.
"Opposing ACA 23 does not make their unfunded liabilities go away and certainly does nothing to address the long-term problem of making promises to employees that we can't afford to keep," said Dan Pellissier, chief of staff to Assembly Member Keith Richman, who proposed the bill.
