California Teachers’ Pension Fund Goes Over the Top – State Teachers’ Retirement System Fully Funded
Sacramento, CA –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.
CONTACTS: Sherry Reser (916) 229-3258 or Jennifer DuCray-Morrill (916) 229-3714