The state makes General Fund payments to the California State Teachers' Retirement System (CalSTRS).

Effective July 1, 2003, the annual General Fund contribution to the CalSTRS Defined Benefit Program is based on 2.017 percent of members' creditable earnings of the fiscal year ending in the immediately preceding calendar year. Current law also provides for an additional state contribution when the State Teachers' Retirement Fund has a normal cost deficit or unfunded obligation for benefits that were in place on July 1, 1990. This contribution is 0.524 percent of members' creditable earnings of the fiscal year ending in the immediately preceding calendar year. If the unfunded obligation continues, the 0.524 percent factor may be adjusted upwards annually in increments of no more than 0.25 percent and is capped at 1.505 percent of members' creditable earnings of the fiscal year ending in the immediately preceding calendar year. The state contributions are not appropriated through the annual Budget Act.

The Supplemental Benefit Maintenance Account (SBMA), established in 1989, provides annual supplemental payments (in quarterly installments) to members whose purchasing power has fallen below a specified percent of the original purchasing power allowance. Chapter 751, Statutes of 2008 (AB 1389) increased the amount of supplemental purchase power protection payments from the SBMA to up to 85 percent of the value of the original benefit. The CalSTRS Board is required to set SBMA benefits between an amount necessary to preserve 80 to 85 percent of retirees' purchasing power pursuant to CalSTRS regulations and subject to the availability of funds. The General Fund provides a statutory transfer to the SBMA of an amount equal to 2.5 percent of the members' creditable earnings of the fiscal year ending in the immediately preceding calendar year, less a specified amount that is currently capped at $72 million. Payments are made on October 15 and April 15 of each year. If, at anytime, the funds in the SBMA are insufficient to support 80 percent purchasing power, the CalSTRS Board can: (1) transfer funds from the Teachers' Retirement Fund if no CalSTRS unfunded obligation exists, (2) increase employer contributions, or (3) reduce the SBMA benefit payment. The state's contributions are not appropriated through the annual Budget Act.