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

Can you explain what CalSTRS is doing about reports of pension spiking?

CalSTRS takes pension spiking very seriously, which is why we have, and continue to aggressively pursue instances of suspected spiking. Our internal controls and processes to identify and resolve instances of spiking include regularly conducting school district audits and analyzing employer compensation reports to identify excessive increases that could affect the member’s final compensation factor.

Ask Jack Jack Ehnes

What is CalSTRS doing in response to the California State Auditor’s label of the Defined Benefit Program as a ‘High Risk Issue?’

CalSTRS has been very transparent in providing the Legislature and Administration with financial data that illustrates the need to address a $56 billion funding shortfall, the gap between projected future assets and obligations to retired educators. CalSTRS assisted the State Auditor in developing the information for the report which further underscores that, absent any thoughtful action, the fund is projected to be depleted in the early 2040s.

Ask Jack Jack Ehnes

I understand that CalSTRS is funded until 2043. What percent is CalSTRS funded?

The last actuarial valuation, a snapshot of the CalSTRS fund’s assets and liabilities, as of June 30, 2010, shows the fund is 71 percent funded. Another important number from the actuarial valuation is the amount of the funding shortfall. This difference between projected future assets and future benefit payments is currently $56 billion.

Ask Jack Jack Ehnes

Will CalSTRS ever get involved in providing health benefits to retirees?

CalSTRS does not provide health care benefits as they are collectively bargained at the local school district level. Although CalSTRS primary focus is the pensions of California’s educators, the availability of affordable health care can have a tremendous impact on the ability of members to maintain their standard of living in retirement.

Ask Jack Jack Ehnes

What is the latest news about Social Security and my CalSTRS benefits?

The good news is that the CalSTRS Defined Benefit pension is not affected by Social Security and any funding shortfalls Social Security might experience. There is no decrease in the CalSTRS pension amount if a retiree is also receiving Social Security. However, California educators did not pay into Social Security for their public school employment covered by CalSTRS, therefore any Social Security benefits paid to CalSTRS members earned from other employment or from a spouse’s income will likely be reduced due to two provisions in federal law.

Ask Jack Jack Ehnes

CalSTRS has historically been a most reliable money manager. Given the recession, what are you doing to get back to the top?

Thanks for the observation about how CalSTRS is a sophisticated professional investment management operation. CalSTRS acted to manage market volatility and to take advantage of opportunities presented by the financial meltdown. CalSTRS investments are poised for recovery following the economic crisis. Proactive steps, such as adopting a more diversified investment mix, taken at the height of the crisis have helped prepare CalSTRS for the emerging economic recovery.