WHEREAS,       Eliminating the existing CalSTRS benefit programs for future employees and replacing them with a Defined Contribution (DC) plan will have the following negative effect:  Currently, the Defined Benefit (DB) Program is set in statute; there is no local discretion.  Under the proposal, subject to limitations imposed by the proposals, the employer contribution rate into the DC plan will be a subject of collective bargaining; and

WHEREAS,       Eliminating the existing CalSTRS and CalPERS benefit programs for future employees will create a need to replace the existing disability and survivor benefit programs supplied by those systems.

WHEREAS,       CalSTRS and CalPERS have fiduciary responsibility for actions associated with the administration of the retirement systems, however, under these proposals, the employer is responsible for the provision of the retirement plan for its employees.  The employer will have the fiduciary duty to make a prudent selection of the plan administrator and the selection of investment options; and

WHEREAS,       Requiring future CalSTRS educators to participate in a DC plan will have a fundamental change in their financial security.  Their financial security will be largely dependent on the market.  Because these California public educators do not participate in Social Security for their public service, they do not have that safety net.  Participation in Social Security would result in further increased cost to the employer and the employee.  For employers, the total contribution rate would be as much as 48 percent higher than the rate they are currently paying; and

WHEREAS,       The lack of new member contributions to CalSTRS will require additional employer and General Fund contributions.  The CalSTRS' consulting actuary estimates this increase at 3.051 percent of future compensation.  The CalSTRS' consulting actuary further estimates these proposals would increase total employer and General Fund contributions until the end of  2019-20, and there would not be a cumulative net savings until 2028-29.  In the long run, assuming the employer paid the maximum allowable contribution rate, employer costs would again be higher because the maximum allowable contribution rate under the proposed DC plan is higher than the 8.25 percent contribution rate currently imposed on employers in the DB program; and

WHEREAS,       Replacing the existing DB program with a DC plan will likely reduce the supply of qualified, experienced teachers and classified support staff.  Therefore, be it

RESOLVED,     That the Santa Monica College Faculty Association hereby opposes all of these proposals.

(1)     Prohibit all non-federal public employees in California hired on or after July 1, 2007 from    enrolling in a defined benefit plan;

(2)      Permit enrollment in an employer-sponsored defined contribution retirement plan; and

(3)      Allow current public employees to rescind membership in their existing defined benefit retirement plan by transferring assets to the new DC plan.

All proposals would establish maximum employer contributions rates and

allow employers to select their DC plan provider.