10/15/2019

What delaying a big rate increase cost CalSTRS

To show the importance of acting quickly, the report to the Legislature will have a calculation of where CalSTRS funding would be if the rate increases enacted in 2014 had been promptly adopted after the 2008-09 financial crisis.

“If we had been able to raise the rates, we would now be about 70 percent funded instead of about 63 percent,” David Lamoureux, CalSTRS deputy actuary, told the board last week.

“And more importantly, although the employers and the state would have had to start contributing more earlier, today the contribution rates would be lower than they are this fiscal year, and they would be projected to remain at those levels,” he said.

Lamoureux added: “Every year that goes by when you don’t fund the unfunded liability it grows, in our case at 7 percent, and it compounds quickly.”

View Article