What Is CalSTRS Current Unfunded Actuarial Obligation?
CalSTRS Unfunded Actuarial Obligation was $19.6 billion as of June 30, 2006.
What Is an Actuarial Valuation?
An actuarial valuation merely provides a snapshot of the fund’s assets and liabilities over
a 30-year period. Like a home mortgage, there is no need to have all the money today, just a
structured plan in place to handle the debt over time.
CalSTRS conducts an actuarial valuation to determine its long-term ability to cover the benefits
already earned by the members of the Defined Benefit Program.
The 2006 actuarial valuation
of the Defined Benefit Program shows that the program has 87 percent of the long-term funds needed
to pay benefits due to current members, leaving a unfunded actuarial obligation of $19.6 billion.
What Is an Unfunded Actuarial Obligation?
The unfunded actuarial obligation or projected shortfall represents the additional assets CalSTRS
needs to have on the valuation date in order to meet the liabilities CalSTRS has incurred from prior
service. Based on the June 30, 2006, actuarial valuation, CalSTRS has a projected shortfall of $19.6 billion.
This figure does not include any liabilities incurred for future service or any assets received in the future.
Is It Necessary to Be 100 Percent Funded?
Like a home mortgage, there is no need to have all the money today, just a structured plan in place to
handle the debt over time. Historically, CalSTRS has been funded at both
higher and lower ratios
than the current 87 percent. While the debate over a solution continues, it’s important to remember
that CalSTRS has been providing pension security for California’s educators since 1913 and remains
a strong, stable organization serving nearly 800,000 members and their families.
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How Does CalSTRS Funding Situation Compare to Our Peers?
With a funding ratio of 87 percent, CalSTRS is among the strongest pension funds in the nation according
to a recent S&P study
concerning the fiscal health of public pension plans.
How Does This Situation Affect Me?
Whatever solution or combination of solutions is ultimately adopted into law will depend on a
variety of factors, but your basic retirement benefit will remain unchanged.
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