The funding liabilities of the California State Teachers Retirement System, coupled with the cost of retiree health benefits, is putting the state's budget at high risk, according to a report from the state auditor.

From 2001 through the end of fiscal 2012, the report said the proportion of future liabilities that are funded by CalSTRS – the nation's largest public teachers' retirement system with more than 860,000 members and benefits recipients – fell from 98 percent to 67 percent. That is far below the recommendation of the Government Accountability Office, which believes that such liabilities should be funded at 80 percent.

The state's history of employing short-term solutions to address long-term financial obligations puts more pressure than needed on the state's overall budget, the report said.

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