The Blog at CTA

Active and Retired Educators Urge Lawmakers to Help Shore Up CalSTRS

(From r.) Maggie Ellis, an elementary educator from Elk Grove and chair of CTA State Council’s Retirement Committee, stresses to members of the Senate Public Employment and Retirement Committee that a secure retirement is critical to attracting and keeping quality teachers in the profession. Ellis and Paula Weiss, a retired educator, reminded lawmakers that the CalSTRS shortfall didn’t occur overnight and can’t be addressed overnight.

Two dozen retired and active educators are spending Wednesday in the state Capitol pressing their legislators to take the steps necessary to ensure the stability of the State Teachers’ Retirement System (CalSTRS) into the future.

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CTA Urges Lawmakers to Protect Retirements and School Funding

(Photo above) Maggie Ellis (c.), an Elk Grove educator who chairs the retirement committee of the CTA State Council, CTA Board Member Toby Boyd, a kindergarten teacher, and Legislative Advocate Jennifer Baker discuss retirement issues with Assembly Member Rob Bonta  (D- Oakland ), who co-chaired the committee meeting. (Photos by Len Feldman)

CTA representatives testified before a second Joint Informational Hearing of the Assembly Public Employees, Retirement and Social Security Committee and the Senate Public Employment and Retirement Committee on Wednesday about maintaining the stability of the State Teachers’ Retirement System (CalSTRS).

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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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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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