Public employees’ retirement.
This bill has a direct influence on state laws regarding the funding mechanisms for the STRS. It increases state appropriations while establishing a framework that reduces immediate financial burdens on local employers, who will benefit from lower contribution requirements in the near term. Furthermore, the bill seeks to lessen unfunded liabilities by mandating portions of these appropriations to address these liabilities, thereby strengthening the long-term financial health of the retirement system and ultimately ensuring better compensation and benefits for teachers.
Senate Bill No. 90, approved on June 27, 2019, addresses funding for public employees' retirement systems, specifically the State Teachers Retirement System (STRS). This legislation mandates significant appropriations from the General Fund to enhance the financial stability of the Teachers Retirement Fund, ensuring sustainability for pensions owed to educators. Notably, it assigns $2.246 billion for the fiscal year 2018-19 for based contributions while introducing provisions that reduce the employer contribution rates for the following two fiscal years by 1.03 percentage points and 0.70 percentage points, respectively.
The sentiment surrounding SB 90 has generally been supportive among educational organizations and some government officials who believe that bolstering the retirement fund is essential for attracting and retaining quality educators in California. However, there are some concerns regarding the balance between short-term savings for employers and the long-term impacts of unfunded liabilities, which could burden future budgets. Some critics argue that while the bill addresses immediate needs, it may not sufficiently deal with the root issues of pension underfunding in the longer run.
Debates regarding SB 90 have focused on the balance of funding state obligations to public retirement systems and the fiscal responsibility of local governments. Some stakeholders contended that reducing employer contributions could lead to a deferred fiscal crisis if the unfunded liabilities are not effectively managed. The division stems primarily from concerns about whether the financial strategies put forth will adequately safeguard the retirement benefits of state employees against future economic downturns, particularly in terms of investment performance and state revenues.