SACRAMENTO, California (Reuters) - The pension fund for public school teachers in California faces a long-term shortfall of $74 billion, threatening its ability to pay for the retirement of nearly 1 million teachers and administrators in the nation’s most populous state, officials said on Thursday.
The gap is growing by about $15 million per day, the California State Teachers Retirement System said in a written statement, and the system could run out of money in 32 years.
“CalSTRS has slightly less than 67 cents on hand for every dollar it owes its members,” CalSTRS spokeswoman Gretchen Zeagler said in a statement.
The system’s investments grew at a rate of 13.9 percent in the fiscal year 2012-2013, nearly twice what was anticipated but not enough to close the gap, she said.
To make up the difference, participants - whether teachers, school districts or the state - will have to contribute more toward members’ retirement, said CalSTRS Chief Executive Officer Jack Ehnes.
“Since at least 2006, we’ve said that CalSTRS cannot rely solely on healthy investment returns to make up the ground lost to the economic downturns and market volatility of the past 14 years,” Ehnes said in a statement.
A decision to increase contribution levels would have to be made by the legislature and approved by Governor Jerry Brown.
The resurgent stock market has put off the system’s reckoning slightly, extending by about three years to 2046 the date at which it will run out of money if nothing is done.
Reporting by Sharon Bernstein; Editing by Alex Dobuzinskis and Lisa Shumaker