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Sacramento, CA –The Teachers' Retirement Board announced at its
meeting today that, for the first time in its history, the Teachers’
Retirement Fund exceeds $100 billion in assets. To reach this financial
milestone, the fund’s investment portfolio grew more than $13 billion
since June 1998, continuing a five-year trend of annual returns of more
than 14 percent.
With an investment portfolio of more than $101.1 billion, the California
State Teachers' Retirement System is the third U.S. public pension plan
to reach this historic point, behind the public employees’ retirement
systems for California and New York.
"Reaching this epic mark is exciting news as we go into the new
century," said Teachers' Retirement Board Chairperson Emma Zink.
"I’m grateful for the collaborative efforts by the board, teacher
organizations, staff, elected officials and plan participants that made
this financial success possible."
News of reaching the $100 billion mark follows a CalSTRS announcement
in April about the latest actuarial valuation. It showed CalSTRS, as of
June 1998, was "fully funded" or had enough money to cover the
retirement benefits in effect at that time without additional outside
funds from the state.
"When I started teaching it was a pay-as-you-go system with little
in reserve, now we have more than $100 billion," said Jim Hull, president
of California Retired Teachers’ Association. "This huge accomplishment
shows the strength and security of the fund for the benefits of current
and future retired educators. Congratulations go to the CalSTRS board
and staff for their efforts."
"This is watershed financial news for teachers," said Wayne
Johnson, president of the 295,000-member California Teachers Association.
"All parties should be commended for placing the retirement interests
of teachers at the forefront of all investment decisions."
The investment policies used by CalSTRS are similar to those recommended
for individual investors: plan carefully, invest for the long term and
diversify to reduce risk, according to CalSTRS Chief Investment Officer
Patrick Mitchell.
"With its investment management plan, the board has thoughtfully
addressed the risk/reward riddle," said CalSTRS’ Chief Executive
Officer Jim Mosman. "This plan is our foundation for investment strategies
to respond to market volatility. The plan is kept current and responsive
through review and revision every two years."
CalSTRS plans to hold its assets for decades and continues to buy even
during market downturns. This long-term investment strategy works because
markets historically move upward over time, Mitchell stated.
CalSTRS spreads out, or diversifies, its investments over a variety of
asset categories to reduce the risks of a rollercoaster market. Domestic
stocks are targeted for about 38 percent of the total assets. Domestic
bonds and international stocks have a 26 and 25 percent target respectively.
Real estate and alternative investments are kept to about 5 percent each.
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 active and inactive members and
157,747 benefit recipients, including retired members, survivors and disabled
members.
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