CalSTRS turned a 20% profit in fiscal 2010-11
By Dale Kasler
Published: Wednesday, Jul. 13, 2011 - 12:00 am | Page 6B
The Sacramento Bee
CalSTRS, still trying to recover from the market crash of 2008, earned a 20 percent profit on its investments in the just-ended fiscal year.
But the staff of the teachers' pension fund warned that it will be tough to duplicate these latest results.
Complete results on fiscal 2010-11, which ended June 30, will likely be released next week. But in a report earlier this week to its governing board, the CalSTRS investment staff said it recorded a gain of around 20 percent, which was "the second or third highest of all time."
But it's far from certain that the investment gains will be enough to completely restore CalSTRS to financial health. While it has done well the past couple of years, California State Teachers' Retirement System has insisted for some time that it eventually will need more money from taxpayers.
The pension fund had unfunded liabilities – the gap between assets and future obligations to retirees – of $56 billion as of June 2010.
As a result, CalSTRS' investment performance becomes a politically sensitive issue, particularly as Republican lawmakers and others press for an overhaul of public employee retirement. While CalPERS can impose higher taxpayer contributions on its own, CalSTRS must petition the Legislature for a rate increase and has been talking for the past year about doing so.
The state's contribution to CalSTRS in the current fiscal year is around $688 million.
In the year ended June 2009, which included the market crash, CalSTRS' portfolio shrank by 25 percent. The following year, it earned more than 12 percent.
Gains of 20 percent in the most recent fiscal year will surely help, but the CalSTRS staff said a repeat performance is unlikely.
"We know very well in the investment business that the top is more of a mountain peak than a plateau," the staff wrote in the report to the board. "If our concerns for the next fiscal year prove out, we will be playing defense for most of the year."
But the staff of the teachers' pension fund warned that it will be tough to duplicate these latest results.
Complete results on fiscal 2010-11, which ended June 30, will likely be released next week. But in a report earlier this week to its governing board, the CalSTRS investment staff said it recorded a gain of around 20 percent, which was "the second or third highest of all time."
But it's far from certain that the investment gains will be enough to completely restore CalSTRS to financial health. While it has done well the past couple of years, California State Teachers' Retirement System has insisted for some time that it eventually will need more money from taxpayers.
The pension fund had unfunded liabilities – the gap between assets and future obligations to retirees – of $56 billion as of June 2010.
As a result, CalSTRS' investment performance becomes a politically sensitive issue, particularly as Republican lawmakers and others press for an overhaul of public employee retirement. While CalPERS can impose higher taxpayer contributions on its own, CalSTRS must petition the Legislature for a rate increase and has been talking for the past year about doing so.
The state's contribution to CalSTRS in the current fiscal year is around $688 million.
In the year ended June 2009, which included the market crash, CalSTRS' portfolio shrank by 25 percent. The following year, it earned more than 12 percent.
Gains of 20 percent in the most recent fiscal year will surely help, but the CalSTRS staff said a repeat performance is unlikely.
"We know very well in the investment business that the top is more of a mountain peak than a plateau," the staff wrote in the report to the board. "If our concerns for the next fiscal year prove out, we will be playing defense for most of the year."
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