WEST SACRAMENTO, Calif. – California State Teachers’ Retirement System (CalSTRS) today announced the promotion of Lisa Blatnick to Chief of Administrative Services, an executive position focused, in part, on attaining business goals outlined in CalSTRS 2014-15 fiscal year business plan. Ms. Blatnick’s position was effective August 1, 2014.
The Governmental Accounting Standards Board issued two new accounting standards that significantly change the way pensions are reported. Statement 67, Financial Reporting for Pension Plans, becomes effective for CalSTRS in fiscal year 2013-14. Statement 68, Accounting and Reporting for Pensions, becomes effective for plan employers in fiscal year 2014-15.
Among the specific issues identified for cost-sharing, multiple-employer plans, such as CalSTRS, is use of a blended discount rate. The new blended rate considers a long-term rate of return on plan assets, which reflects a pension fund’s long-term investment strategy, and a high-quality, non-taxable municipal bond index rate, to account for the potential need to borrow funds to pay pension benefits after net assets have been fully depleted.
Using this new blended discount rate may cause plans that are projected to run out of assets, like CalSTRS, to appear to have an increased unfunded liability. However, although the liability may be reported on a financial balance sheet as a new, significantly higher amount, the actual current shortfall of approximately $74 billion projected by CalSTRS will not change as a result of the new standards.
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