A new report says the pension fund for California’s public school teachers is facing a much bigger hole than anyone expected — it's ballooned to $64 billion.
Investments by the California State Teachers Retirement System (CalSTRS) generated a whopping 23 percent return in the last fiscal year. But one good year can’t make up for 2009, when the market crashed and the fund lost nearly a quarter of its value.
Deputy Chief Executive Ed Derman said the fund would now have to earn 10 percent every year, for 30 years, to meet its pension obligations.
"The situation has gotten better, but we are still in a situation where we cannot reasonably ever expect to invest our way out of it," Derman said. "So contributions would have to increase in order to fully fund the system."
According to Derman, those contributions will need to rise to 13 percent of teachers’ payroll over the next 30 years.
The state Legislature has to approve any changes to the contribution rate. The last time they did, 12 years ago, they cut the state’s contribution from 4.6 percent to 2percent.