Gov. Arnold Schwarzenegger’s endorsement for reforming the retirement system for state employees may have an impact on the retirement options of future Sacramento State faculty.

Schwarzenegger formally announced his approval of doing away with the current public pension system, known as the California Public Employee Retirement system (Calpers), on Jan. 5 during his State of the State address.

New state employees, including CSU faculty, hired after July 1, 2007, would not be guaranteed pensions under the proposal.

Currently, all full-time faculty at Sac State and the 22 other CSU campuses are members of Calpers.

Under this system, CSU faculty members are guaranteed a certain amount of retirement pay from the state, based on tenure and salary. This is known as a defined benefits system.

In its place, Schwarzenegger would like to see a defined contribution system, similar to a 401(k)-type plan that many employees in the private sector use. In this system, a new CSU faculty member’s retirement would depend upon the performance of his or her investment portfolio.

Republican Assemblyman Keith Richman introduced the idea as a constitutional amendment in an attempt to save the state money and to chip away at the state’s $9 billion budget deficit.

With Schwarzenegger’s backing, the amendment proposal may gain momentum to collect enough signatures for a special election, where voters would decide on it as a proposition this summer.

“Like the budget itself, our state pension system is another financial train on another track to disaster,” Schwarzenegger told Californians in his State of the State address.

“For new employees, we must move from a defined benefit to a defined contribution system,” Schwarzenegger said.

Calpers has 1.4 million members total, and of those, 23,000 are CSU professors, lecturers, athletic coaches and other faculty. It is the largest public pension fund in the nation.

The California Faculty Association (CFA), the union that represents CSU faculty, has spoken out against the proposal.

“Gutting the pension benefits of teachers and other public workers does nothing to solve the fiscal crisis,” said John Travis, president of the CFA, in a press release.

“But private investment companies will make a killing off the fees they collect for making the investments,” Travis said. “It’s a bad proposal.”

Jim Chopyak, Sac State music professor and president of the campus’s CFA chapter, shares the same sentiments.

“I think the governor’s proposal is awful,” Chopyak said. “Although only new hires would be directly affected at first, long term we would all be affected by these proposals. If fewer people come into the existing system, there will not be enough money to support people who are already retired.”

Chopyak said that only a few Sac State faculty members have come to him with questions since Schwarzenegger publicly addressed the idea.

On March 10 George Diehr, a CFA member who sits on the Calpers board, will visit the Sac State campus to hold a briefing with faculty on the implications of these proposed changes, Chopyak said.

For this 2005-2006 fiscal year, CSU faculty will also see a change in salary. Schwarzenegger’s recently revealed budget proposes an increase in faculty pay.

A total of $71.7 million, a three-percent increase, would be added to the CSU general fund for faculty and staff salaries and their medical benefits.

These increases are in accordance with the Higher Education Compact, an agreement signed between Schwarzenegger, the CSU and UC systems in May 2004 to increase college funding for the next six fiscal years.

In return, the CSU and UC systems have agreed to improve accountability in a variety of student performance indicators.

Frank Whitlatch of Sac State’s public affairs department said the 3 percent salary increase would not be across the board for all CSUs, but would instead be divided up many ways depending on the contracts of the various unions.

The CSU must still negotiate to figure out how the salary increases will be dispersed to Sac State and the other universities.