The Blog at CTA

Pension legislation signed

Educators may notice a little extra going out of their paychecks into to the California State Retirement System (CalSTRS) beginning this month, but that’s a good thing since the money will not only come back to them at retirement, it will stabilize the retirement system into the future.

After years of attempts to close a shortfall in the teachers retirement system that has mounted to $74 billion, the Legislature in June approved Gov. Jerry Brown’s pension plan that provides increased contributions from educators, school districts and the state.

“For roughly the last 10 years our highest priority and our members’ most pressing concern has been to secure the long-term stability of the Defined Benefit Program,” said Harry Keiley, chair of the Teachers’ Retirement Board and member of the Santa Monica-Malibu Classroom Teachers Association.

The historic action calls for member contributions to increase from 8 to 10.25 percent over the next three years. School and community college district contributions will increase from 8.25 percent to 19.1 percent over seven years while the state’s portion would increase from the current 3.041 percent to 6.3 percent in the next three years. The increases began to take effect July 1.

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Police Officer Seeks Truth: False Claims Tinge Reed Pension Lawsuit

Leave it to a trained investigator to run down the truth behind false claims. 

In an incisive op-ed,  Jim Unland, the president of the San Jose Police Officers’ Association, takes on claims by San Jose Mayor Charles Reed that the public retirement “reform” initiative the mayor’s been pushing won’t “eliminate” the public pensions of law enforcement and public safety personnel, including firefighters.

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Where We Stand: Educators Support Finding Solutions to CalSTRS Unfunded Liability

As the governing board of the California State Teachers’ Retirement System (CalSTRS) begins its two-day meeting today, our CTA members will be among those expressing the organization’s ongoing commitment to work with the pension system and other stakeholders to ensure its long-term viability.

A great deal is happening in Sacramento on a key issue affecting the public pension system and its members, the issue of “unfunded liability.”

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Assembly Speaker, Retirement Committee Chair Pledge to Keep Teachers’ Pensions Secure

Accompanied by Assembly Public Employees, Retirement, and Social Security Chair Rob Bonta (D-Oakland), Assembly Speaker John Perez (D-Los Angeles) tells reporters at a Wednesday morning Capitol news conference that the Assembly is committed to having the California State Teachers’ Retirement System (CalSTRS) 100% funded.  The lawmakers said they would be convening hearings beginning Feb. 19 to determine the exact size of the currently unfunded liability and the proportion of increased contributions that should come from school districts, individual teachers, and the state to ensure the system’s continued viability. (Photo by Len Feldman.)

Assembly Speaker John Perez (D-Los Angeles) and Assembly Member Rob Bonta (D-Oakland) pledged during a Capitol morning news conference to fully fund the California State Teachers’ Retirement System and protect teachers’ retirements.  The legislators said all options are “on the table” except the “ostrich” option of pretending a problem doesn’t exist.

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San Jose Mayor Carries Out Threat – Files Promised “Pension Reform” Initiative

As San Jose Mayor Chuck Reed promised last week during a presentation to the conservative Hoover Institution think-tank, he and some of his fellow mayors have filed a new “pension reform” measure that threatens to undermine the promise made to firefighters, teachers, police officers, school bus drivers and other public employees by allowing their retirement benefits to be slashed in mid-career.

Mayor Reed and the mayors of San Bernardino, Santa Ana, Anaheim and Pacific Grove say they are aiming to put on the November 2014 ballot a measure that would allow reductions in the pension benefits that current employees would otherwise earn during the balance of their working lives.

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Good News from CalSTRS: Investment Return Rate Better than Expected

The California State Teachers’ Retirement System (CalSTRS) is reporting some good news to its members and the public: the system’s investments earned 13.8% over the past year—a drastic comparison to earnings in recent years.

“The reality is that even good investment performance addresses only part of the long-term needs of the fund, which suffered a severe setback in the crash of 2008,” said CalSTRS Investment Committee Chair Harry Keiley, a high school teacher and CTA member.

CTA and its members – who have partnered width CalSTRS since its founding in 1913 – are committed to working width CalSTRS to find a long-term funding solution, as noted in the association’s retirement position papers.

CalSTRS’ earnings in the 2012 fiscal year handily outpaced its “assumed rate of 7.5%.” The assumed rate is the factor used in estimating the fund’s long-term earnings, the financial resources that help cover its projected costs – including the funding of retirees’ pensions. CalSTRS has earned at a 12.6% rate over the past three years and at a 7.5% rate over the past 20 years. Over the past five years – due to the impact of the Great Recession – the system’s earnings rate hit only 3.7%.

CalSTRS board members and staff caution that investment earnings fluctuate, and the stock market’s volatility in recent years spotlights the need for the legislature and the governor to help the system achieve long-term stable funding. CalSTRS is responsible for making pension payments to 862,000 California educators and their families.

Both Keiley and CalSTRS Chief Executive Officer Jack Ehnes point out that good investment earnings are just one element needed to keep CalSTRS on solid ground. “The Legislature and the Governor must implement a long-term funding plan that includes gradual, predictable and fair contribution increases for all parties involved,” Ehnes advises.

CalSTRS staff note that the governor and legislature alone have the power to change the system’s contribution rate, the amount employers and employees pay into the pension fund each month.

CalSTRS is the largest teacher pension fund and the second largest pension fund in the U.S.

Check the CalSTRS news release about the system’s earnings and the CalSTRS Investment Overview for more information.

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Capitol News: Everything They Wanted to Know About Pensions – But Might Have Been Afraid to Ask

On Feb. 14, CTA Legislative Advocate Jennifer Baker and Ed Derman, Chief Deputy Executive Officer of the State Teachers' Retirement System (CalSTRS) helped lawmakers' staff members get a better understanding of how the teachers' pension fund works and the challenges facing it in the years ahead.

These staff persons will be responsible for advising the legislators they work for on these very important issues.

The task ahead will be addressing how the State will handle the CalSTRS unfunded liability.

For more information about the retirement system and pension issues, see the retirement section of


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Capitol News: State Teachers' Pension System Releases Report on Making Ends Meet

The California State Teachers' Retirement System (CalSTRS) Board has just released its report about how the multi-billion dollar pension system can continue funding its defined benefit plan.

The report, which the legislature requested by passing SCA 105 (2012), has been posted on the retirement system's web page as the CalSTRS Final Draft, SCR 105 Report.

You can also read more about retirement at Retirement section.

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Capitol News: Most Pension System Changes Affect New Hires

The effective date of laws "reforming" the state's public pension systems – CalSTRS and the California Public Employees' Retirement System (CalPERS) -- is January 1, 2013.  These changes generally impact new employees, although some of the revisions will also affect employees hired on or before December 31, 2012.

Please visit the CTA website, which provides more information on retirement legislation.

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CalSTRS to question corporations on political spending

The California State Teachers’ Retirement System (CalSTRS), the 2nd largest pension fund in the country, has just announced it may push corporations to disclose their political donations, under a policy adopted by the CalSTRS investment committee.

The new CalSTRS policy would declare that corporate boards are responsible for political spending by their companies and that contributions should be “in the best interest of shareholders".

CalSTRS hopes to set the standard and that other pension systems will follow their lead in adopting this policy.

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