WEST SACRAMENTO, Calif. (May 15, 2019) – The California State Teachers’ Retirement System today announced its acquisition of the majority interest in Fairfield Residential Company LLC from Brookfield Asset Management. Brookfield retained its interest in the investment manager of Fairfield’s affiliated real estate funds. Recently CalSTRS adopted a Collaborative Model for investments across all asset classes in its portfolio. This approach supports identifying and investing in strategic opportunities, such as the acquisition of real estate operating companies like Fairfield.
WEST SACRAMENTO, Calif. (May 9, 2019) – The Teachers’ Retirement Board today received the results of the actuarial valuation for the CalSTRS Defined Benefit Program as of June 30, 2018. The actuarial valuation provides a snapshot-in-time of the system’s financial health, in addition to monitoring the system’s funding status and its ability to meet long-term commitments.
Every now and again, an article filters through the pop culture clutter of the online and print community and examines an unpopular and often contentious topic. It gets attention because it asks difficult questions that may lead to unpleasant answers.
A movement to divest from fossil fuel companies stirs the emotions of many. The urgency behind such requests reflects increasing concern about global warming. While there is no doubt about the underlying devastating risks of climate change driving this advocacy, the question of divestment versus engagement as an effective strategy warrants exploration.
In the last three years, CalSTRS has experienced significant market volatility. In fiscal year 2011, CalSTRS catapulted to a 23.1 percent investment return high. The following fiscal year investment returns plummeted to 1.8 percent and then rebounded up to this year’s 13.8 percent. The good news that we’ve significantly exceeded our 7.5 percent investment assumption for three years still does not change current projections of depleting our assets in roughly 30 years.
If anyone knew the answer to that precisely, they may well be both clairvoyant and very wealthy. In reality, financial experts do seek to understand how the macroeconomic forces underlying our economy will change and how that change affects future market returns.
Every April the Teachers’ Retirement Board adopts the latest actuarial valuation. The actuarial valuation is a snapshot of the CalSTRS fund’s assets and liabilities as of June 30, 2012.
The new valuation shows an increase in the unfunded actuarial obligation or unfunded liability from $64 billion to $70 billion. This increase holds consistent with projections reported in all actuarial valuations since 2003.
Each new year brings the promise of a fresh start. For CalSTRS, 2013 marks an especially significant year for the fund when we celebrate 100 years of service to California’s educators and their families. CalSTRS began in 1913 with 16,020 active and retired members, and has grown to presently include 862,000 members with a portfolio value of more than $157 billion. One hundred years of service is an accomplishment to be proud of, and wonderful, time-honoring events are in store to commemorate this special occasion.
To the families affected by the horrific and disturbing events that took place December 14, 2012, at Sandy Hook Elementary School, we offer our deepest sympathy. Our thoughts and prayers are with you through this very difficult and troubling time. We understand there is nothing we can say or offer to make up for the tremendous losses you suffered.
Americans suffered considerable loss of assets through the devaluation of their homes during this past recession. The mortgage crisis has hurt the finances of the young and the old. Relative to seniors, however, there has been emerging data that gives some important insights.
As fiduciaries of retirement benefits for California’s 856,000 educators, CalSTRS takes its responsibility very seriously. As a public entity, transparency is critical. A significant part of this duty is the ability to appropriately address and improve business processes. A recent review by the State Controller was rightfully critical of CalSTRS history of addressing pension spiking, or the inappropriate enhancement of a member’s income to increase pension benefits.
A recent article in the Los Angeles Times says anxious investors nearing retirement are day trading with their life savings. While one can sympathize with the anxiety and desperation felt by those individuals, it doesn’t take an expert to realize this type of investment strategy comes with considerable risks.
With the recent allegations of corporate misconduct, fraud and bribery, corporate accountability has become a high-profile issue. Media reports of questionable leadership underscore the role boards of directors play in the long-term growth of publicly held companies. Concerned investors like CalSTRS, want assurance that governance safeguards and effective internal controls are put in place to mitigate any future risk.
April is an active month for CalSTRS and educators alike. Every year at this time the CalSTRS board adopts the latest actuarial valuation which captures the long-term needs of the fund. This year’s valuation of the Defined Benefit Program was adopted on April 12.
This year’s National Institute on Retirement Security conference held in early March, “Pensionomics 2012: Measuring the Economic Impact of DB Pension Expenditures,” featured a new report that demonstrates how defined benefit pensions support economic activity and how this activity keeps California’s local economies stable. There are a couple of key points made during the conference I would like to highlight.
Disturbing allegations about some Los Angeles area teachers and their unthinkable and illicit actions against students have generated a lot of media coverage recently. You have probably seen the stories.
In addition to sparking public outrage over how such things could happen in our schools, these reports have prompted some to question why a teacher who is alleged to have so seriously violated the public trust and students’ innocence should continue to receive pension benefits. We understand this frustration.
On Thursday, February 2, 2012, the Teachers’ Retirement Board voted to lower the investment return assumption a quarter of a percent to 7.5 percent. The move, based on the recommendation of outside actuarial firm Milliman, Inc., marks the second time in 14 months the board has lowered the assumed rate of return. So why is this important?
On October 27, 2011, Governor Brown unveiled his 12-Point Pension Plan. As the debate around pension reform continues, it’s important to emphasize that the most pressing need facing CalSTRS was not included in the Governor’s proposal: A plan of action to address the long-term funding needs of the system. To be clear, the authority and responsibility for this action rests with the Governor and the Legislature.
It’s important to share with you some information about a little-known organization, the Governmental Accounting and Standards Board, who sets industry standards for how government finances are reported. On July 8, 2011 GASB released Exposure Drafts which include new accounting rules for how public pension fund liabilities are reported.
As I go around the state speaking to teachers groups, I’m starting to get more questions about what CalSTRS is doing to prevent pension spiking. CalSTRS is the steward of your pension funds and we are working hard to ensure spiking is prevented, detected and corrected.
However, it’s important to recognize what the law says CalSTRS can and cannot do.
Electronic privacy is crucial for the ongoing success of the Internet as a convenient means to provide customer service. Your personal information will be used only to conduct CalSTRS-related business.
The California State Teachers’ Retirement System website has been developed in compliance with California Government Code §11135, which requires that all electronic and information technology developed or purchased by the State of California is accessible to people with disabilities. There are various types of physical disabilities that impact user interaction on the web. Vision loss, hearing loss, limited manual dexterity, and cognitive disabilities are examples, with each having different means by which to access electronic information effectively.