Ask Jack is an online communication channel offered by CalSTRS CEO, Jack Ehnes. This Web forum solicits questions about the funding and administration of the CalSTRS Defined Benefit Program. Not all will be posted directly, but Jack's responses will be inclusive of views and perspectives.
AB 1933 (Strom-Martin) was enacted in 2000 to encourage members
to stay in the profession longer to address shortages in the
classroom that were occurring at that time. The bill included a
sunset date, which means that provisions of the bill would not
apply to members who achieved at least 30 years of service after
December 31, 2010.
The Legislature and the Governor must tackle the challenge of
crafting a funding plan for the CalSTRS Defined Benefit Program.
Unlike other California pension plans, the CalSTRS board lacks
the authority to raise contribution rates – only the Legislature
and Governor have the authority to do so.
Full-time educators typically earn one year of service credit for
working one school year for creditable service performed. This
service credit is applied to your traditional Defined Benefit
Yes, compensation earned from extra duty assignments, summer
school, overload or extended contract teaching is credited to the
cash balance component of your retirement benefit known as the
Defined Benefit Supplement Program if you otherwise work in a
full-time assignment. This compensation is not included in final
compensation used to establish pension benefits associated with
the traditional Defined Benefit Program. At retirement,
disability, death or six months following termination of
CalSTRS-covered employment, the funds in your account will be
available to you or your beneficiary, whichever is applicable.
CalSTRS membership is mandatory for full-time California public
school preK-12 teachers, community college instructors and public
school administrators. Regardless of any previous
employment, California public school educators do not contribute
to Social Security. Thus, they do not receive Social Security for
their CalSTRS-covered employment.
If you are a part-time, substitute or temporary employee
performing creditable service in the California public school
system, you can choose to belong to the Defined Benefit Program
or an alternative program offered by your employer, such as the
Cash Balance Benefit Program.
Recent media articles that state CalSTRS needs $4.5 billion more
annually to meet future obligations lack context, but accurately
cite the cost of a particular approach. The needed increase
refers to the CalSTRS projected $70 billion funding shortfall and
represents a total dollar amount necessary close this gap by
increasing contributions in 2014 up to the amount needed to fully
fund CalSTRS over 30 years.
Yes, you can return to teaching after retirement. If you return
to work after service retirement while still collecting a CalSTRS
benefit in a position with the California public school system as
an employee, an employee of a third party, or an independent
contractor, there are restrictions.
The separation from service requirement seeks to curb the
practice of retiring from a position and drawing a pension
benefit from that service while returning to the same or similar
position and earning a salary in that position. This practice is
often referred to as double dipping and was a major concern of
the Legislature and the Governor as they discussed pension
legislation last year.
You may be eligible to purchase permissive service credit for
past employment or an approved leave of absence for which you did
not make retirement contributions to CalSTRS. The cost of
the service credit depends on your age and your highest annual
earnable compensation during your last three years of creditable
No, California law does not allow you to take a partial refund or
borrow against your accumulated contributions and interest on
account with CalSTRS. Under the law, only members who are no
longer employed by a CalSTRS-covered employer are eligible for a
refund of accumulated retirement contributions. If you are
eligible for a refund, the consequences should be carefully
considered as you’ll no longer be a CalSTRS member.
Although this is an accurate statement based on current
projections, achieving adequate funding can occur several ways
that would be phased in over time and fair to all parties
involved. Many of the media stories follow recent developments on
how the Legislature is beginning to address the funding needs of
If a member has completed their full-time load, the compensation
earned from extra duty assignments, summer school or overload
teaching is credited to the cash balance component known as the
Defined Benefit Supplement Program and is not included in final
compensation used to establish pension benefits associated with
the Defined Benefit Program. (If a member earns less than a full
year of service, such as when they retire in the middle of the
school year, this additional service will be credited to the
Defined Benefit Program, and will affect the final compensation.)
A cash balance plan acts like a hybrid plan that contains
features of a 401(k) plan and defined benefit plan. Contributions
to the cash balance program component are made by both the
employer and employee.
Under current pension codes, 125/Cafeteria plans apply to active
members and are not a viable offering for retirees. However, in
2008-09 CalSTRS explored the implications of offering health care
reimbursement plans and programs that would allow active members
to set aside money for health care expense reimbursement for use
By law CalSTRS has a fixed contribution rate, thus the
responsibility to adopt a funding solution rests with the
Governor and the Legislature—not the CalSTRS board. Moreover,
only the Legislature and the Governor can change the benefit
structure, not the board. As a result, CalSTRS has been
working for some time to raise awareness of the Legislature and
successive governors of our funding shortfall, the cost of
waiting to address it and the ultimate risk failing to do so
presents to the state’s General Fund.
If your final compensation for retirement purposes is based on
your highest average three consecutive years of compensation and
your highest three consecutive years of compensation are not the
last three years you worked, CalSTRS would then use your highest
three consecutive years of compensation instead of your last
three to calculate your final compensation amount.
CalSTRS administers a qualified retirement plan. A qualified
retirement plan satisfies specific requirements of the Internal
Revenue Code in both form and operation, and receives special
certification by the IRS. Requirements for qualified plans set
forth by the Internal Revenue Code include things such as
participant eligibility, the tax treatment of contributions and
corresponding interest, the payout of distributions, the rollover
eligibility of funds, etc.
Electronic privacy is crucial for the ongoing success of the
Internet as a convenient means to provide customer service. Your
personal information will be used only to conduct CalSTRS-related