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LAO on Pension Reform - Feb. 11, 2011


February 11, 2011

Dear Colleagues,

This morning I wanted to share with you a presentation released yesterday by the Legislative Analyst's Office. The LAO is the nonpartisan official advisor to the Legislature and is generally seen to be the "honest broker" between the Democrats and Republicans in the Capitol.

With this backdrop, yesterday's video report encouraging state pension reform caught a lot of people by surprise, as described by respected longtime Capitol reporter Ed Mendel, who now writes a blog on pension issues.

Now, the League doesn't have a formal position on pension reform, but I think we will have to discuss it soon. Nevertheless, the facts pointed out by the LAO are quite frightening, and I encourage you to watch it.

For example, for the California State Teachers Retirement System to be made "whole," CalSTRS says it needs $3.8 billion more in contributions per year to keep the fund liquid with existing obligations. The community college share is likely in the $500-$700 million range. So, we could either 1) cut the community colleges by that amount, 2) add the amount onto the state deficit to either require more program cuts elsewhere or larger tax increases, 3) change the program for future employees and make current employees contribute more, 4) a combination of the above or 5) ignore it.

As described in the 15-minute video, there are similar issues with both CalPERS and the UC Retirement System.

In a normal year, I'd bet that the state would continue to ignore it. However, this is anything but a normal year, and this may be the issue Republicans use to offer up their votes for letting the voters consider taxes on a June ballot.

At the end of the day, current employees will likely be okay, although we may all be asked to contribute more. Nobody is going to take away your retirement security, although we will likely all have to come to the table to figure out how to finance this system going forward in a way that doesn't result in deep cuts to the services our students and communities expect.

I look forward to seeing the nearly 100 Californians who will be in Washington, DC starting Sunday as we advocate for our community colleges on the federal level. This year, the weather looks great!


Scott Lay
President and Chief Executive Officer
Community College League of California
2017 O Street, Sacramento, California 95811
916.444.8641 . www.ccleague.org

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Last Updated: 2/11/11