Action taken by the Governor and legislature last year to enact a funding plan for CalSTRS have ensured this organization will continue to provide a modest retirement benefit to educators for years to come,” said CalSTRS Chief Executive Officer Jack Ehnes
WEST SACRAMENTO, Calif. (PRWEB) April 02, 2015
The board of the California State Teachers’ Retirement System (CalSTRS) today adopted the actuarial valuation of the Defined Benefit Program as of June 30, 2014. The gap between current assets and the obligations facing the system—known as the unfunded actuarial obligation, or funding gap—has shrunk slightly to $72.7 billion—a nearly one billion dollar decrease from the previous years’ $73.67 billion.
The decrease of the funding gap means that the system is now 68.5 percent funded, up 1.6 percent from the 66.9 percent identified in the previous year’s valuation. In short, CalSTRS has slightly less than 69 cents on hand for every dollar it owes its members.
“We’re confident that the actions taken by Governor Brown and the legislature last year to enact a funding plan for CalSTRS have ensured this organization will continue to provide a modest retirement benefit to California’s educators for many years to come,” said CalSTRS Chief Executive Officer Jack Ehnes.
CalSTRS actuarial consultant, Milliman, projects that future revenue from contributions to the Defined Benefit Program are sufficient to finance its future obligations based on meeting its assumed annual investment return of 7.5 percent. The finding reflects increases in contributions from members, the state and school districts as required following the passage of AB 1469 (Bonta), which outlined a 32-year plan to bring CalSTRS to full funding by June 30, 2046.
“Funding status operates much like a measuring stick to track our progress,” said Mr. Ehnes. “It is an actuarial methodology used to guide appropriate changes and decisions needed to sustain the program’s long-term viability. Actuarial valuation reports forecast long-term projected costs and revenues. Detailed analyses of these reports assist CalSTRS in determining the sufficiency of future contributions from members, employers and the state to meet current and future obligations of the Defined Benefit Program.”
The recently adopted actuarial valuation is a snapshot of CalSTRS financial status as of June 30, 2014. Over the past 20 years, CalSTRS has earned an 8.4 percent return on investments, well above the actuarially assumed 7.5 percent.
The California State Teachers’ Retirement System, with a portfolio valued at $190.8 billion as of February 28, 2015, 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 879,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.
Follow us on Twitter @CalSTRS