State to Pay CalSTRS Interest on Withheld $500M Payment
California Supreme Court upholds CalSTRS’ call for state to pay $200 million in interest.
SACRAMENTO, CA – The California Supreme Court has declined to review a lower court decision awarding California State Teachers’ Retirement System’s (CalSTRS) $200 million in interest payments on $500 million withheld by the state in 2003-2004. The funds support CalSTRS’ inflation-protection program, the Supplemental Benefit Maintenance Account (SBMA).
The state paid CalSTRS the $500 million in September 2007 but appealed the Third District Court of Appeal’s decision on the interest payment. The California Supreme Court upheld the lower court on Wednesday. A legislative appropriation will be required to pay the interest.
The SBMA funds quarterly payments to about 63,000 retired educators and their survivors when inflation erodes their monthly benefits below 80 percent of their original consumer purchasing power.
“The long-delayed payment of interest owed to the Teachers’ Retirement Fund is necessary to ensure the retirement security of California educators,” said Jack Ehnes, CalSTRS Chief Executive Officer. “The SBMA serves our members who are the longest retired and most dependent on CalSTRS benefits.”
With a $176 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California’s 795,000 public school educators and their families from the state’s 1,400 school districts, county offices of education and community college districts.