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K thru 12 Education
California State Teachers' Retirement System
The California State Teachers' Retirement System (CalSTRS) administers the Teachers' Retirement Fund, which is an employee benefit trust fund created to administer the State Teachers' Retirement Plan. The State Teachers' Retirement Plan is a defined benefit pension plan that provides retirement, disability, and survivor benefits for teachers and certain other employees of the California public school system. The Plan is comprised of three programs: the Defined Benefit Program, the Defined Benefit Supplement Program, and the Cash Balance Benefit Program. Within the Defined Benefit Program there is also a Supplemental Benefit Maintenance Account (SBMA), which provides annual supplemental payments in quarterly installments to retired teachers whose purchasing power has fallen below 80 percent of the purchasing power of an initial allowance.
Currently, the state makes annual General Fund contributions to the SBMA of 2.5 percent of teacher payroll for purchasing power protection. However, the 80 percent level of supplemental payments is not a vested benefit. This means that if the amount in the SBMA is not sufficient to bring purchasing power up to the 80 percent level, supplemental payments may have to be suspended or paid at a lower level. The Administration is proposing to fully vest the benefit at 80 percent purchasing power protection, which will provide increases to the future value of this program for retired teachers. An actuarial analysis performed in 2005 at the direction of the Department of Finance shows that the SBMA has more than enough money to provide the purchasing power protection for current and future retired teachers. As a result of the funded status of the SBMA, the state will be able to fully vest the purchasing power protection and reduce the state's contributions to the SBMA from 2.5 percent to 2.2 percent of salary consistent with the actuarial calculation. The savings from the reduced contribution equates to $80 million in 2008-09. The state will fund the amount necessary to maintain the 80 percent purchasing power should the 2.2 percent contribution not be sufficient in future years. In addition, payments of 1.1 percent each will be made on November 1 and April 1, instead of July 1 of each fiscal year.
The state will make a payment of $80 million in 2008-09 as the first of three payments towards the $210 million in interest from the STRS lawsuit. Another payment of $82 million will be made in 2009-10 and the remaining $48 million will be paid in 2010-11.
CHAPTER HIGHLIGHTS for
K thru 12 Education Back to Top
PRINTABLE BUDGET DOCUMENTS Back to Top
Budget Summary - K thru 12 Education (pdf * - 329K)
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Provides this entire K thru 12 Education Chapter in pdf format.
ADDITIONAL INFORMATION Back to Top
Proposed Budget Detail - K thru 12 Education
Displays Proposed Budget Detail information for K thru 12 Education.
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