What’s happening with CalSTRS valuation?
The final impact of the devastating financial losses in 2008-09 was felt by CalSTRS, which this week reported a two percent decrease in the funding status of its Defined Benefit Program.
Nevertheless, the results of the Defined Benefits Program valuation were greeted width guarded optimism by CalSTRS officials, who maintain that this is the last valuation that will signal a loss. Beginning width this valuation, and over the next two, the valuation will reflect the 23.1 percent investment return from 2010-11.
The latest valuation shows a funding status sufficient to cover 69 percent of projected liabilities, leaving the fund width a $64.5 billion funding shortfall. The funding status means that for every dollar in pension obligations the fund has 69 cents worth of assets available. The previous valuation showed the funding shortfall at $56 billion.
The growth in the funding shortfall, however, is $4.3 billion less than was previously predicted, due primarily to the initial recognition of a 23.1 percent investment return for the 2010-11 fiscal year.
"Although healthy returns in 2010-11 reduced the magnitude of required future contributions, we cannot count purely on investment earnings to bring this crucially important fund back to financial health," said CalSTRS Chief Executive Officer Jack Ehnes. "What's needed now in the pension reform discussion is a long-term funding plan that only the Legislature and Governor have the authority to implement. CalSTRS is committed to working width all of our stakeholders to develop a plan that is both gradual and predictable for our members, their employers and the State of California."
In the meantime, CTA’s leadership and staff are working width legislative leaders and the governor’s office to begin those discussions around long-term solutions.