We recommend that the Legislature reject the administration’s proposed trailer bill language to (1) guarantee teachers’ purchasing power benefits through California State Teachers’ Retirement System (CalSTRS) and (2) reduce General Fund costs by $75 million in 2007-08. There are risks in assuming that the change proposed in the budget package will generate near-term and ongoing budget savings, and we are concerned about the idea of the state guaranteeing another benefit through CalSTRS, which serves employees of local districts. We do suggest, however, that such a proposal in the context of a future comprehensive reform would warrant consideration by the Legislature.