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Everyday educators speak out on pensions

Spokesman says CalSTRS fund empty by 2044
By: Bridget Jones, Journal Staff Writer
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Several local retired educators want the community to know they aren’t making anywhere near $100,000 in annual pensions. Patrick Graham Patrick Graham is a Roseville resident who retired from Rio Hondo Community College in Whittier after working at the school for three years. For 15 years before that he was an adjunct teacher at Lassen Community College in Susanville. He began teaching part-time at the school and was also a full-time social worker. As an administrator in Whittier for three years, Graham was making $112,000 a year. He currently makes about $1,200 in monthly retirement from the California State Teachers’ Retirement System. Graham also makes $832 a month from a tax sheltered annuity that began as an investment fund through the company he worked for as a social worker. This money will run out in three years. Although teachers in California don’t make social security, Graham makes about $1,255 a month in social security because of his social work job. This brings Graham’s total annual income to $39,444 before taxes. Graham said he doesn’t mind some retired administrators making over $100,000 a year. “It is a tough job being an administrator,” Graham said. “I guess I don’t really object to a few administrators who worked for 40 or more years getting a decent retirement.” How are benefits funded? According to the CalSTRS website, retirement benefits are based on factors like an employee’s age at retirement, number of school years worked and paid into the retirement system, final and highest compensation and unused sick leave. Currently, on an annual basis an educator pays 8 percent of his or her salary into CalSTRS for retirement. The employee’s district or organization pays 8.25 percent of the salary into retirement and taxpayers pay 2.017 percent of an educator’s salary into his or her retirement, according to Ricardo Duran, spokesman for CalSTRS. According to the CalSTRS website, these percentages can change slightly year to year. So, an educator making $45,000 a year pays $3,600 of that into his future retirement, his district pays $3,690 into retirement and taxpayers pay $907.65 into his retirement. This happens every year. Just before retirement, educators can take their unused vacation and sick days and add it to their retirement salary as well, according to Duran. This is commonly referred to as “spiking.” “I can’t say it’s common, but it does happen,” Duran said. Duran said pension amounts usually work out to about 62 percent of an educator’s salary, averaging about $37,968 annually. “This is for an average career lasting more than 26 years of service with an average retirement age at nearly 61,” he said. Duran said whether or not medical benefits are covered through retirement is up to each individual employer. Joy Hauser Joy Hauser retired from Skyridge Elementary School last year. She worked at the school for 16 years and worked for the district for 25 years. Hauser’s salary at retirement was $70,199. She makes about $3,080 every month in retirement and for three years she will make $400 a month from an annuity account. This brings her current yearly income to $41,760 before taxes. Hauser said she retired because of health issues, and health benefits are not included in her retirement. “Because of that I have to buy this very costly insurance that costs $450 a month to keep my Kaiser,” Hauser said. Hauser said her husband is partially disabled and though he is self-employed, he can’t work as many days as he used to. “I know that for me, it’s going to be tough (to get by),” she said. “I just know it’s going to be difficult for me. I would have continued working for a number of years, so my retirement would have been higher.” Hauser said while she doesn’t think it’s unreasonable for some administrators who worked for close to 50 years to make large pensions upon retirement, she doesn’t want the public to think the majority of retired educators make that much. Hauser said she and her husband now limit their everyday trips and shop at cheaper stores. “I’m not saying I’m not having any fun at all, but we think very carefully about the money we spend and if we need to spend it,” she said. The future of CalSTRS Jim Knox is a senior organizer from the California School Employees Association, the union for classified school staff. Classified staff are those other than management or teachers such as school secretaries and janitors. Knox said most of the money education employees receive upon retirement comes from investments made by CalSTRS and CalPERS. Knox said he doesn’t disagree with the idea of putting a cap on retirement money, but he has concerns about current state legislation that asks for cutting retirement benefits by a certain percentage for retired state workers. These cuts would hurt classified employees who might make $12,000 a year in pensions, because their retirement would be cut by the same percentage as those making much more, Knox said. According to Duran, although contributions from employees, employers, taxpayers and investments can support retirement payments for several more decades, eventually CalSTRS could run out of money if something is not done to stop that. “Last fiscal year, $8.6 billion was paid in benefits,” Duran said. “The $134 billion CalSTRS fund has assets to pay promised benefits to its active and retired members for 34 years based on current assumptions. However, absent changes in contribution rates or liabilities, the program will deplete its assets by 2044. At that point, the state would be obligated to pay the difference between the funds available and the benefits owed to members. Adopting a funding strategy to provide for increased contributions would enable the state to meet its obligation at a lower long-term cost.” Graham said while his retirement allows him to live a comfortable life, it’s not comparable to someone who is making much more. “It’s nothing like the life of someone who has got $100,000 coming in and can go to Europe,” he said. Reach Bridget Jones at bridgetj@goldcountrymedia.com ---------------------------------------------------- CORRECTION: CalSTRS spokesman Ricardo Duran provided inaccurate information to the Auburn Journal for its Sept. 13, 2010 story headlined “Everyday educators speak out on pensions.” Although retiring educators can increase their service credit with unused sick leave, the California Education Code prohibits CalSTRS members from increasing their highest salary with unused vacation or sick leave to increase pension benefits.