Retired Teachers in California Earn More Than Working Teachers in 28 States

I came across the most recent summary report for the California State Teachers’ Retirement System (CalSTRS) and I thought its pared-down tables and graphs nicely encapsulated the pension situation in the state.

First note that the average annual salary in 2010 for active working educators enrolled in the system was $64,156. The next table states that the average retirement benefit paid out in 2010 was $4,256 per month. That’s $51,072 annually. In other words, the average retired teacher in California made more than the average working teacher in 28 states, according to the salary rankings published by NEA.

The final graph in the report provides the big picture. While the value of the pension system’s assets has increased fairly steadily over the past nine years, the accrued liabilities have grown non-stop during the same period, leaving the fund at 78% of full coverage. What’s more, CalSTRS operated on an assumed annual return of 8 percent. Last year, the pension board lowered that expectation to 7.75 percent, which means projections for the future will show even more of a gap.

Last year, the CalSTRS CEO warned that returns of 20 percent annually would be needed to fund all pensions. Without further increases in revenue or cuts in benefits, the system could be completely broke in 35 years.


11 thoughts on “Retired Teachers in California Earn More Than Working Teachers in 28 States”

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  2. Actually, these figures are perhaps understated or outdated. Consider this factoid from the NEA:

    CA public school teachers the 2nd highest paid in the nation after NY. The average 2008-09 CA educator salary was $68,093 – 5.7% higher than the previous year’s $64,424 average. Page 21, table C-18

    I find it hard to believe salaries dropped that much in 2010. Perhaps the furlough days are the reason — in which case, as soon as the furlough policy is dropped, the pension will be figured of the higher “normal” salary.

    But here’s the kicker: As generous as CA’s teacher pensions are, they are MUCH more tightfisted than the pensions of most other CA state and local employees.

    To get a full pension, CA teachers must work until age 60. MANY other CA employees, both state and local, can start drawing their full pensions as early as age 50.

    Teachers pay 8% into their STRS pension plan — many and likely MOST other govt workers in CA have part or all of their pension contribution obligation paid by their employer. And, to add insult to injury, this govt payment is later usually counted as additional SALARY for these govt workers — which increase the salary base off which their pension is calculated.

    The multiplier factor (the % used to multiply the final salary by for pension calculation purposes) for most CA state and local employees is higher. Teachers get from 2% to 2.4% times number of years’ salary — most other workers get 2.5% to 3%.

    Teachers’ pensions are usually figured on the average of the highest 3 years’ salary — most other CA state and local workers use the SINGLE highest year’s salary.

    Some CA workers get TWO pensions — a matching 401k plan up to 6% of salary, to go with their defined benefit pension. Also many other factors can boost their total salary, off which the pension is calculated.

    Most state and county workers get (and pay half of the cost of) social security, on top of their pensions.

    Bottom line: CA educators who teach 30 years get roughly 2/3 of their final salary at age 60. Most other 30 year CA govt workers get from 75% to 160% of their highest salary as their total retirement monthly payment, and start drawing some or all of their pensions as early as age 50.

    Given the disastrous state of the CA teacher pension fund (STRS), it’s hard to grasp the magnitude of the unfunded liability taxpayers owe for the REST of their “public servants.”

    CA is doomed. To learn more about how bad CA is compared to the other states on taxes, regulation and business climate, I recommend this fact sheet (constantly updated):

  3. California has over the years used band-aid tactics, bond issues and during good times without seeming to hurt the budget awarded unsustainable tenants to their collectivre bargaining agreements. Only thru a complete reorganization of both the Tax Code and Pension Plans acroos the board from State to City & County can the problem be addressed. Further we must begin now in ernest to change our energy base to a combination of renewable sources and promote the technologies of the cottage industries created thereby for sustainable employment. Yesterday’s industry is not an option nor is staatus quo, and the quality of our educational system must improve remarkably at a rapid pace.That is if we expect to maintain a quality life style with a broad middle class an reduce poverty.

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