CalSTRS releases valuation for 2019
Funded ratio improves slightly; board adopts state contribution rate
WEST SACRAMENTO, Calif. (May 11, 2020) – In its first-ever virtual meeting, the Teachers’ Retirement Board received the results of the actuarial valuation for the CalSTRS Defined Benefit Program as of June 30, 2019. The valuation provides a snapshot-in-time of the system’s financial health and is part of the ongoing effort to monitor and assess the system’s ability to meet its long-term commitments.
While important, the actuarial valuation through June 30, 2019, does not account for recent market volatility experienced in global markets. CalSTRS continues to monitor the developing economic impacts from COVID-19 and will report back in the fall once the investment return for fiscal year 2019–20 is known. While the future is uncertain, because of the adoption of the CalSTRS Funding Plan in 2014, CalSTRS is better positioned today to handle volatility than it was a decade ago.
This actuarial valuation found that the unfunded actuarial obligation, known as the funding gap, decreased from $107.2 billion at the June 30, 2018, valuation to $105.7 billion as of the June 30, 2019, report. The funded ratio—the amount of assets at hand to pay benefits—improved from 64% to 66% during the same time period. To ensure the system continues to progress toward its long-term full funding goals, the board adopted an increase in the state’s contribution rate effective July 1, 2020.
“CalSTRS continued to improve its funded status in the previous fiscal year, so we are stronger now in the face of current market volatility,” said Chief Executive Officer Jack Ehnes. “While we are long-term investors, in the short-term, we are focused on protecting the health of our staff, our members and also the fund during these unprecedented times.”
Overview of contribution rate changes from the June 30, 2019, actuarial valuation:
- Member contributions:
- CalSTRS 2% at 60 members (those first hired before January 1, 2013): Contributions are set in statute and will remain at 10.250% of payroll.
- CalSTRS 2% at 62 members (those first hired on or after January 1, 2013): Contributions will remain at the current rate of 10.205% of payroll on July 1, 2020.
- Employer contributions: The employer contribution rate is scheduled to increase from the current 17.10% to 18.40% of payroll for fiscal year 2020–21.
- State of California contributions: The Teachers’ Retirement Board adopted an increase of 0.5% of payroll in the state’s contribution rate, adjusting from the current rate of 10.328% of payroll to 10.828% of payroll, effective July 1, 2020.
CalSTRS provides a secure retirement to more than 964,000 members whose CalSTRS-covered service is not eligible for Social Security participation. Members retire on average after more than 24 years in the classroom with a monthly benefit of approximately $4,547. Established in 1913, CalSTRS is the largest educator-only pension fund in the world with approximately $226.9 billion in assets under management as of March 31, 2020. CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative Sustainability Report. For more information, visit CalSTRS.com.