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CalSTRS lobbies for gradual increase to underfunded pension

August 16, 2011 |  4:12 pm

Jack Ehnes A plan by the giant state teachers' pension fund to ask the Legislature and governor this year to boost their financial support has been sidetracked by California's continuing budget shortfall.

As the current legislative session winds down, leaders of the $154-billion California State Teachers' Retirement System have opted to begin a lower-key, multiyear lobbying campaign to convince Gov. Jerry Brown and lawmakers to approve a gradual increase in state, community college and school district contributions for the retirement of 852,000 public school educators.

Without a contributions boost, the pension known as CalSTRS faces a projected $56-billion funding gap and could run out of money in 32 or 33 years, said Chief Executive Ehnes in a meeting Tuesday with the Los Angeles Times editorial board.

The fund now has only 71% of the money estimated to meet pension obligations. That contrasts with 110% it had at the beginning of the decade, more than enough to pay all future pensions.

Experts consider 80% to be the minimum secure level.

"We're asking the governor's office to develop a funding plan" to bring CalSTRS' funding ratio back into the 80%-100% range," said Ehnes. Such a plan "should be part of the budget process."

CalSTRS lost more than a quarter of its value during the recession of late 2007 through summer of 2009.

Since then, it rose to $154.3 billion on June 30, still off a record high of $160 billion in 2007.

CalSTRS' investment portfolio grew by 23.1% in the fiscal year that ended June 30.


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For CalSTRS, an investment bet that failed

-- Marc Lifsher

Photo: CalSTRS CEO Jack Ehnes. Credit: Peter DaSilva / For the Times.