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SACRAMENTO - -The California State Teachers' Retirement System has hit
the goal of every pension plan. The Teachers' Retirement Board learned
today CalSTRS has enough money to cover the benefits already earned by
California's current educators without outside funds from the state.
The actuarial valuation presented to the board shows that as of June
30, 1998, CalSTRS had 104 percent of the funds needed to pay the cost
of the benefit plan in effect in 1998.
"The attainment of this long-sought landmark is both gratifying
and energizing," said TRB Chairperson Emma Zink. "The strong
funding status provides opportunities for CalSTRS and its members without
jeopardizing the foundation of the Teachers' Retirement Fund."
Previously, each year the state gave CalSTRS 4.3 percent of the statewide
public school teacher payroll to pay the retirement obligations not covered
by teacher and school contributions. In the next fiscal year, this would
have cost the state's General Fund more than $715 million.
This milestone was reached ahead of the 1997 valuation's prediction.
In 1997, the actuary estimated the unfunded liability would be paid, or
amortized, in three years. The valuation process measures the Teachers'
Retirement Fund's unfunded liability using demographic information, economic
assumptions and CalSTRS member statistics.
A higher than anticipated investment rate of return is the primary reason
for the quicker than expected fully funded status. The market value of
the CalSTRS investment portfolio reached more than $88 billion on June
30, 1998. This is an increase of 18 percent and more than $13 billion
from the previous year. The investment portfolio's current market value
exceeds $96 billion.
"The outstanding performance of the investment portfolio and the
success of our asset allocation policy are major contributors to this
good news," said CalSTRS Chief Executive Officer James Mosman. "Benefits
are now assured without relying on future generations of Californians
for past liabilities."
Established by law in 1913, CalSTRS provides retirement benefits to California's
public school teachers from kindergarten through community college. As
of June 30, 1998, CalSTRS had 447,378 members and 157,747 benefit recipients,
including retired members, survivors and disabled members.
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