California State Teachers’ Retirement System (CalSTRS) Chief Executive Officer Jack Ehnes issued the following statement on the Legislature’s announcement of a plan to move forward with legislation, to be amended in Assembly Bill 611, to close the $71 billion CalSTRS funding shortfall:
CalSTRS welcomes Assembly Speaker John A. Pérez (D-Los Angeles) and Assemblymember Rob Bonta’s (D-Oakland) swift action to the Governor’s invitation to develop a long-term funding solution. With costs rising by $22 million a day, having a plan in place as early as this year could result in billion-dollar savings to the state.
The Legislature’s desire to enact a full funding plan for the Defined Benefit Program demonstrates leadership and upholds the state’s promise to California’s educators. For some time CalSTRS has stated that the solution is a gradual, predictable increase in contribution rates, fair to all parties involved. As stated in our report, Sustaining Retirement Security for Future Generations: Funding the California State Teachers’ Retirement System, submitted to the Legislature last year, the definitive approach to bridge the CalSTRS $71 billion funding gap is one that occurs within 30 years. CalSTRS remains committed to assist the Legislature and the Governor as they work to address this important issue.
With a portfolio valued at $181.1 billion as of December 31, 2013, CalSTRS 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 862,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts. They are world leaders in corporate governance.