Ask Jack

Ask Jack

Overview
Chief Executive Officer of CalSTRS, Jack Ehnes

Ask Jack is an online communication channel offered by CalSTRS CEO, Jack Ehnes. This Web forum solicits questions about the sustainability 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.

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Ask Jack Jack Ehnes

Does CalSTRS provide protection from creditor attachments like federal ERISA plans?

Although CalSTRS is not subject to the anti-assignment rules of ERISA or Internal Revenue Code Section 401 (a)(13), the Teachers’ Retirement Law does provide protection from creditor attachments, or what is referred to as an anti-assignment provision under Section 22006. This section of the law offers an exemption from creditors attempting to seek payment for debt by using a member’s pension benefit as payment.

Ask Jack Jack Ehnes

How does changing school districts within the state of California affect my retirement eligibility and benefits?

CalSTRS is the only pension system for California’s public school and community college educators. All public schools, community colleges and some charter schools participate in the CalSTRS comprehensive hybrid system. Retirement benefits and eligibility for full-time members are the same for all California public schools and do not change from district to district.

Ask Jack Jack Ehnes

Can working summer school count as years of service credit?

How you accumulate service credit depends upon your employment status, specifically whether or not you are a full-time or part-time educator. Service credit is the accumulated period of time, in years and partial years, during which you receive creditable compensation and make contributions to the Defined Benefit Program. Full-time educators typically earn one year of service credit for working one school year. For part-time educators, service credit for one school year is the hours or days actually worked compared to the full-time equivalent, or what would be required if employed full time in that position.

Ask Jack Jack Ehnes

Has a determination been made on what the contribution rates increase will be in response to CalSTRS’ $74 billion funding gap? If so when will that information be made available?

Although a plan to address CalSTRS’ approximately $74 billion funding shortfall has yet to be enacted, recent activity suggests one may be forthcoming within the year. For some time CalSTRS has said closing the funding gap can occur through a gradual and predictable increase in contribution rates, fair to all parties involved. However, because the Teachers’ Retirement Board lacks the authority to adjust contribution rates, the Legislature and Governor must act to adopt a plan.

Ask Jack Jack Ehnes

I was wondering how much I can make in retirement with a school district and not be penalized. Is there a certain dollar amount?

During the first 180 days of retirement, any compensation you earn from CalSTRS-covered employment, either as an employee of the school district, an independent contractor or as an employee of a third party performing service for a school district, will be offset by a reduction in CalSTRS benefits paid during that time. In addition, there is an annual limit on how much you can earn after retirement for such employment.

Ask Jack Jack Ehnes

What is the purpose of the actuarial valuation?

Valuations operate akin to a measuring stick. They guide appropriate changes and decisions necessary to sustain the long-term viability of the fund. More specifically, the primary purpose is to analyze the sufficiency of future contributions from members, employers and the state to meet current and future obligations of the Defined Benefit Program.

Ask Jack Jack Ehnes

What exactly is the reason for the separation from service for 180 days or six months?

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.

Ask Jack Jack Ehnes

Why does Governor Brown say CalSTRS’ unfunded liability is $80.4 billion and CalSTRS say it is $71 billion – which is correct?

Both the $71 billion and $80.4 billion CalSTRS unfunded liability values are accurate, as reported in the June 30, 2012 valuation report. The $80.4 billion, referenced in the Governor’s 2014-15 Budget Proposal, represents the difference between the market value of assets and actuarial liabilities as of June 30, 2012. The $71 billion value of the unfunded liability cited by CalSTRS represents the difference between the actuarial value of assets and actuarial liabilities as of June 30, 2012. Both could be used to determine the cost of addressing the funding shortfall as either figure would result in the same required increase in contributions.

Ask Jack Jack Ehnes

Can I borrow or cash out any of my CalSTRS retirement benefits while I am still working in CalSTRS-covered employment?

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.

Ask Jack Jack Ehnes

Who is responsible for the six-month wait to work after retirement? Is this a CalSTRS policy?

The six-month separation from service, or zero dollar earnings limit, is a legally mandated provision found in the California Public Employees’ Pension Reform Act of 2013, (PEPRA) passed by the Legislature and signed by Governor Edmond G. Brown in September of 2012. The law became effective on January 1, 2013.

Ask Jack Jack Ehnes

What can CalSTRS members do to make sure the retirement fund is sufficiently funded and to address the current shortfall?

What is needed to provide stability to the Defined Benefit Program is an increase in contributions made by members, employers and the state. Right now, those contributions are set in statute and the Teachers’ Retirement Board has no authority to adjust the contribution rates. For many years, contribution rates have been remarkably stable; member rates have not increased since 1972, employer rates have not changed since 1990, and the state’s rate is lower than it was since 1997.

Ask Jack Jack Ehnes

Why was the longevity bonus ended on 12/31/2010? Will it be reinstated?

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.

Ask Jack Jack Ehnes

Why hasn’t CalSTRS submitted proposed legislation to the legislature to deal with the unfunded liability? The legislature seems to be unwilling to act on its own, and the problem grows daily.

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.

Ask Jack Jack Ehnes

I teach in K-12 full time and began teaching college courses; does this additional income count when calculating retirement service credit?

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 retirement benefit.