Update on the Progress of the CalSTRS Funding Plan

Nov 18, 2021 - This update is based on CalSTRS ’ most recent actuarial valuation (for the fiscal year ending June 30, 2020), which reflects investment returns of 3.9 percent, while also considering future impacts of CalSTRS ’ historic investment returns in 2020-21 of 27.2 percent.
https://lao.ca.gov/Publications/Report/4475

A Review of the CalSTRS Funding Plan: Funding Plan May Not Meet Principle of “Shared Responsibility”

Feb 2, 2016 - We note that state contributions could also be much higher than under prior law if CalSTRS lowers its assumption concerning future investment returns. Near-Term Investment Returns Will Not Settle This Issue.
https://lao.ca.gov/Publications/Report/3337

A Review of the CalSTRS Funding Plan: Theoretical Investment Gains Have Shifted Unfunded Liabilities to Districts

Feb 2, 2016 - This is important because when CalSTRS records investment gains in the real world, the calculation gives the state the benefit of additional, theoretical gains off the fictional portion of the investment portfolio.
https://lao.ca.gov/Publications/Report/3334

A Review of the CalSTRS Funding Plan: Recent Policy Change Increases District Rates

Feb 2, 2016 - Figure 1 illustrates district contributions under scenarios in which investment returns consistently fall far short of investment returns. As shown in the figure, the state rate could be expected to increase steadily through the period in response to bad investment returns, but district rates would not change significantly.
https://lao.ca.gov/Publications/Report/3338

CalSTRS Funding: An Update

May 5, 2017 - Investment Return and Other Economic Assumptions Investment Return Is Most Important Assumption. Actuarial valuations are premised on various assumptions about economic and demographic factors. The most important assumption concerns future investment returns.
https://lao.ca.gov/Publications/Report/3662

A Review of the CalSTRS Funding Plan: State’s Future Responsibility for CalSTRS Uncertain

Feb 2, 2016 - Investment Return Simulations Illustrate Relative Volatility in State Share. In June 2015, CalSTRS ’ consulting actuaries provided the CalSTRS board with a simulation of 1,000 possible future investment return scenarios.
https://lao.ca.gov/Publications/Report/3336

A Review of the CalSTRS Funding Plan: Background

Feb 2, 2016 - This is because a larger investment portfolio allows a greater share of future benefits to be paid with investment returns rather than contributions from governments. In addition, aiming for anything less than 100 percent full funding shifts “unfunded liabilities ” to future generations.
https://lao.ca.gov/Publications/Report/3332

A Review of the CalSTRS Funding Plan: Conclusion

Feb 2, 2016 - Over the long term, if investments consistently underperform assumptions —or if CalSTRS reduces its investment return assumption —the state ’s share of the unfunded liability could increase substantially and state contributions could be several billion dollars higher by the 2040s.
https://lao.ca.gov/Publications/Report/3339

CalSTRS Funding Update

Jul 19, 2018 - The change in investment return and other factors were expected to result in a $111.5  billion unfunded liability as of June 30, 2017. The May funding update reflects a somewhat smaller estimated unfunded liability ($107.3  billion) due largely to stronger than assumed investment returns.
https://lao.ca.gov/Publications/Report/3873

A Review of the CalSTRS Funding Plan: Treatment of Teacher Contributions Also Increase District Unfunded Liabilities

Feb 2, 2016 - When investments underperform the 7.5 percent assumption, however, higher teacher contributions will be first used to cover the that year ’s shortfall with the remainder, if any, applied to the district share.
https://lao.ca.gov/Publications/Report/3335