President Signs Into Law Final $15 Million Payment to CalSTRS From Sale of Elk Hills Naval Petroleum Reserve
Proceeds support older retirees’ pension purchasing power
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System (CalSTRS) received its final $15.6 million payment of compensation from the 1997 sale of the Elk Hills Naval Petroleum Reserve as part of the $1.1 trillion budget appropriation bill signed into law today by the President.
The federal budget sets aside money to the Teachers’ Retirement Fund as the final installment of an annual payment plan dating back to 1999, under which the Teachers’ Retirement Fund will have received a total of $315 million in compensation for its interest in the Elk Hills Reserve.
“This final payment is welcome support to California’s retired educators, the oldest of whom greatly benefit from these proceeds which support efforts to safeguard retiree pensions from the erosive effects of inflation,” said CalSTRS Chief Executive Officer Jack Ehnes. “State law directs any proceeds from state schools lands, on which the petroleum reserve sat, to support retired teachers’ pensions when they fall below 85 percent of their original purchasing power.”
As of June 30, 2013, more than 43,000 CalSTRS beneficiaries were receiving inflation protection through payments from the CalSTRS Supplemental Benefit Maintenance Account, which receives proceeds from the Elk Hills Reserve sale.
“I’d like to thank U.S. House Majority Leader Kevin McCarthy and U.S. Senator Dianne Feinstein, who sponsored the language that made this final payment possible, as well as the longstanding efforts of former Rep. Bill Thomas for his tireless work in securing the original settlement legislation and the bulk of the annual payments,” Mr. Ehnes added. “Senator Feinstein also stuck with us over many years, sponsoring the appropriations language in the U.S. Senate for all the previous payments.”
The federal government began making payments to CalSTRS under a settlement agreement two years after the Elk Hills land was sold to Occidental Petroleum in 1997. The annual payments, each of which was subject to an annual Congressional appropriation, compensated CalSTRS for its interest in the state school lands that were part of the Elk Hills Reserve.
The petroleum reserve sits on 47,000 acres near Bakersfield, and the two tracts of state school lands in it were dedicated to California’s schools by the federal government upon statehood in 1850. It became a Naval Petroleum Reserve shortly before World War I, about the same time as California established the Teachers’ Retirement System in 1913.
The California State Teachers’ Retirement System, with a portfolio valued at $189.7 billion as of November 30, 2014, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.