On Friday, June 30, the state Legislature’s Budget Committee acted to protect the Supplemental Benefit Maintenance Account program by rejecting a proposal put forth in the Administration’s 2007-08 budget. As a result, the program was fully funded for this coming fiscal year.

The proposal would have:

• Unconditionally guaranteed the purchasing power benefit provided by the program at the current 80 percent level, regardless of the inflation rate.
• Reduced the state’s contribution to the program from the current 2.5 percent of payroll to 2.2 percent of payroll.

Committee members were persuaded that the proposal could reduce the viability of the program by guaranteeing the benefit level while reducing funding. The proposal would have decreased state contributions to the account by $75 million in fiscal year 2007-08 alone.

The Teachers’ Retirement Board had earlier voted to oppose the proposal.

SBMA Provides Critical Inflation Protection

Currently, the SBMA program provides qualifying retirees and beneficiaries with payments that supplement their regular monthly benefit to 80 percent of its original consumer purchasing power. About 61,000 of the 210,000 current CalSTRS benefit recipients will receive a supplemental benefit in 2007-08. The annual payments average $4,266.