CalSTRS

Teachers' Retirement Board
Agency overview
Formed1913
Headquarters100 Waterfront Place, West Sacramento, California
38°35′04″N 121°30′34″W / 38.584426°N 121.50948°W / 38.584426; -121.50948
Agency executives
  • Cassandra Lichnock, CEO
  • Harry M. Keiley, Chair
Parent agencyCalifornia Government Operations Agency
WebsiteCalSTRS.com

The California State Teachers' Retirement System (CalSTRS) provides retirement, disability and survivor benefits for California's 965,000 prekindergarten through community college educators and their families.[1] CalSTRS was established by law in 1913 and is part of the State of California's Government Operations Agency. As of September 2020, CalSTRS is the largest teachers' retirement fund in the United States. CalSTRS is also currently the eleventh largest public pension fund in the world.[2] As of October 31, 2020, CalSTRS managed a portfolio worth $254.7 billion.[3]

Membership

CalSTRS members, as of June 30, 2019, include employees of approximately 1,778 employers:[4]

  • School districts
  • Community college districts
  • County offices of education
  • Regional occupational programs

Teachers' Retirement Fund

The Teachers' Retirement Fund is a special trust fund established by law that holds the assets of the following programs:

The assets come from contributions by members, employing school districts, investment earnings and appropriations from the State of California's General Fund.[1] The fund's investments create a stream of income to add to those assets.

The CalSTRS investment portfolio includes companies' shares, bonds, real estate and short-term investments.

Finances

As of June 30, 2022, CalSTRS managed a portfolio worth approximately $348 billion and held approximately $48 billion of liabilities, leaving a net pension position of $300 billion at that date.[5]

Governance

The Teachers' Retirement Board is responsible for maintaining the Teachers' Retirement Fund in order to pay benefits to CalSTRS members and their survivors.

Teachers' Retirement Board

The Teachers' Retirement Board sets policies, makes rules for and administers CalSTRS. The Board is also responsible for ensuring benefits are paid by the system in accordance with law.

The 12-member Teachers' Retirement Board is made up of:[6]

Executive staff

In February 2002, the board appointed Jack Ehnes as chief executive officer of CalSTRS to administer the system consistent with the board's policies and rules. The board also selected a chief investment officer, (CIO) Christopher J. Ailman, to direct the investments of the Teachers' Retirement Fund in accordance with board policy.

In June 2021, Jack Ehnes retired from the position, and chief operating officer Cassandra Lichnock filled the position.

Advisory committees

Two advisory committees meet regularly to provide forums for active participation in the formation of CalSTRS policies and procedures. The Employer Advisory Committee is composed of county and district employer representatives and CalSTRS staff and meets quarterly, and the Client Advisory Committee includes CalSTRS staff and members from various organizations representing CalSTRS members and benefit recipients and meets regularly coinciding with Board meeting dates.

Operations

The board has supported a variety of corporate governance initiatives and actions aimed at keeping the fund stable. A few of the actions taken include:[7]

  • Support of the Sarbanes-Oxley Act of 2002 that brings dramatic new standards to the corporate boardrooms and accounting profession.[8]
  • Encouragement of the SEC's efforts to adopt tough regulations to rein in lax business practices
  • Discussions with individual corporate leaders to express CalSTRS interest in good corporate governance practices.[9]
  • Litigation to pursue both financial remedies for the system as well as governance reforms

On May 28, 2009, CalSTRS announced that individual proxy votes will be publicly available online through a partnership with ProxyDemocracy.org, a nonprofit organization that offers free online investment information about portfolio companies.[10][11]

Like other large pension plans, CalSTRS had previously announced its proxy-vote intentions on selective companies. The addition of online disclosure opens the process to all CalSTRS portfolio companies, allowing other shareholders to know how the pension fund will vote.

As of May 2009, CalSTRS holds stock in over 3,800 North American companies.[10]

After the December 14, 2012 Sandy Hook Elementary School shooting, California's treasurer, Bill Lockyer, considered ordering CalSTRS to eliminate investments in gun manufacturers.[12] On January 9, 2013, the Teachers' Retirement Board Investment Committee directed staff to "begin the process of divestment from firearm companies that manufacture weapons that are illegal in California," and CalSTRS divested from Sturm Ruger and the American Outdoor Brands Corporation, (formerly Smith & Wesson).[13][14]

In January 2018, CalSTRS issued a public letter to Apple Inc. alongside JANA Partners, LLC called "Think Differently About Kids". The letter encouraged Apple to find new ways to limit the effects of smartphone use on children.[15]

CalSTRS is among the signatories of the "Principles for a Responsible Civilian Firearms Industry," which seeks to engage firearms manufacturers, dealers, and retailers in promoting gun safety.[16][17][18]

Since the mid-2010s, activists have increasingly called for CalSTRS to cut financial ties with fossil fuel companies.[19][20][21][22][23] In 2015, Kevin de León introduced CalSTRS and CalPERS coal divestment legislation and the California Democratic Party passed a resolution in support of fossil fuel divestment.[24][25] Kevin de León's bill passed and CalSTRS was required to sell all holdings in companies that received at least 50% of their revenue from thermal coal.[26] State Senator Lena Gonzalez introduced broader fossil fuel divestment legislation in February 2022.[27][28][29] The CalSTRS board opposed this legislation.[30] It passed the California State Senate but was halted in the assembly by Jim Cooper.[31][32][33] As of 2022, CalSTRS has about $4.1 billion invested in oil and gas companies.[19]

Headquarters

CalSTRS headquarters in West Sacramento, California

Opened in June 2009, the CalSTRS headquarters building in West Sacramento is expected to meet members' needs through 2049. Growth in membership, the difference and complexity of the needs of a new generation of retiring teachers, and the need to operate more efficiently and sustainably led to the decision to build a new headquarters. The building, a $266 million, 13-story office tower above two levels of public space,[34] is part of the Sacramento Riverfront Master Plan.

The headquarters was designed to meet the Gold certification LEED designation set by the U.S. Green Building Council.[35] Its construction was done by numerous Local Unions and with the aid of Architectural Glass and Aluminum which served as the Glazing Contractor on the project.[36] It is expected that construction of the CalSTRS headquarters will add momentum to former California Governor Arnold Schwarzenegger's push for "green" buildings and speed up a similar movement in private construction.[37] A few of the features[37] designed into the building to qualify for LEED Gold certification are:

  • Water: low-flow plumbing, efficient irrigation to water native plants that don't need a lot of water.
  • Materials: At least 10 percent of construction materials include recycled content.
  • Reduced construction greenhouse gas emissions: At least 20 percent of construction materials come from within 500 miles (800 km) of the project site.
  • Natural light: At least 90 percent of people in the building have a direct line of sight to a window to reduce lighting needs and attempt to increase productivity.

In October 2011, the building received USGBC's Platinum certification in Existing Building and Operations Maintenance.[38]

See also

References

  1. ^ a b "CalSTRS at a Glance" (PDF). CalSTRS. Archived from the original (PDF) on October 17, 2020. Retrieved November 20, 2020.
  2. ^ "Global top 300 pension funds". Thinking Ahead Institute. Retrieved November 20, 2020.
  3. ^ "Current Investment Portfolio". CalSTRS. Retrieved November 20, 2020.
  4. ^ "Comprehensive Annual Financial Report". CalSTRS. Retrieved November 20, 2020.
  5. ^ "CalSTRS Annual Comprehensive Financial Report 2022" (PDF). Retrieved 2023-11-25.
  6. ^ California Education Code § 22200
  7. ^ "Corporate Governance Overview". CalSTRS. Retrieved September 13, 2013.
  8. ^ Ehnes, Jack (June 4, 2003). "RE: File No. S7-10-03" (PDF). Letter to Jonathan Katz, Secretary of SEC. Archived from the original (PDF) on August 21, 2012. Retrieved September 13, 2013.
  9. ^ "CalSTRS Pushes for Executive Pay Policies". Compliance Week. May 6, 2009. Archived from the original on July 22, 2012. Retrieved June 12, 2009.
  10. ^ a b "CalSTRS Improves Proxy Vote Transparency" (Press release). CalSTRS. May 28, 2009. Retrieved September 13, 2013.
  11. ^ Burr, Barry B. (May 28, 2009). "CalSTRS to disclose proxy votes in advance". Pensions & Investments. Retrieved June 12, 2009.
  12. ^ Hsu, Tiffany (December 17, 2012). "Gun company's shares are in line of fire". Los Angeles Times. Retrieved September 13, 2013.
  13. ^ "CalSTRS Statement on its Decision to Divest of Certain Firearms Holdings" (Press release). CalSTRS. January 9, 2013. Retrieved January 14, 2013.
  14. ^ Noguchi, Yuki (February 26, 2018). "Pension Funds Under Pressure To Sell Off Investments In Gun-Makers". All Things Considered. NPR. Retrieved April 2, 2019.
  15. ^ Benoit, David (2018-01-08). "iPhones and Children Are a Toxic Pair, Say Two Big Apple Investors". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-05-22.
  16. ^ Moyer, Liz (November 14, 2018). "Funds managing $4.8 trillion press the firearm industry to accept new principles on gun safety". CNBC. Retrieved April 2, 2019.
  17. ^ McElhaney, Alicia (November 14, 2018). "$5 Trillion Investor Coalition to Pressure Gun Companies on Safety Measures". Institutional Investor. Retrieved April 2, 2019.
  18. ^ Wood, Christianna; Ailman, Christopher; O’Hara, John; McCauley, Michael; Reali, Peter; Kumar, Rakhi (December 6, 2018). "Principles for a Responsible Civilian Firearms Industry". Harvard Law School. Retrieved April 2, 2019.
  19. ^ a b "Young Oakland climate activists want fossil fuels out of the teachers' pension fund". The Oaklandside. 2022-03-21. Retrieved 2022-05-27.
  20. ^ Reinders, Sienna, Students protest CalSTRS' investment in fossil fuels, retrieved 2022-05-27
  21. ^ "Youth Activists Call on California State Teachers Retirement System to End 'Toxic Relationship' With Fossil Fuel Companies". EcoWatch. 2020-02-02. Retrieved 2022-05-27.
  22. ^ Venteicher, Wes (February 20, 2022). "State Senate proposal would force CalPERS, CalSTRS to sell oil and gas holdings". The Sacramento Bee. Retrieved May 27, 2022.
  23. ^ Sheeler, Andrew (January 30, 2020). "Teens drench themselves in fake oil in climate change protest at California pension fund". The Sacramento Bee. Retrieved May 27, 2022.
  24. ^ "California calls on pension funds to divest from coal in climate change push". the Guardian. 2015-02-11. Retrieved 2022-05-27.
  25. ^ Hirji, Zahra (2015-05-22). "California Democrats Approve Sweeping Fossil Fuel Divestment Resolution". Inside Climate News. Retrieved 2022-05-27.
  26. ^ Starkman, Dean (2015-10-19). "CalPERS set to divest from thermal-coal companies". Los Angeles Times. Retrieved 2022-05-31.
  27. ^ "State Senator Lena Gonzalez Introduces Fossil Fuel Divestment Bill in CA Legislature". Daily Kos. Retrieved 2022-05-27.
  28. ^ "Senator Lena Gonzalez Announces Fossil Fuel Divestment Bill to Advance California Climate Goals". Senator Lena A. Gonzalez. 2022-02-23. Retrieved 2022-05-27.
  29. ^ "Proposed Bill Would Require CalPERS, CalSTRS to Divest Fossil Fuels | Chief Investment Officer". www.ai-cio.com. Retrieved 2022-05-27.
  30. ^ "CalSTRS' board opposes state bill to divest from fossil fuels". Pensions & Investments. 2022-03-04. Retrieved 2022-05-27.
  31. ^ "Fossil fuel divestment bill passes California Senate". Financial Standard. 2022-05-27. Retrieved 2022-05-27.
  32. ^ "California bill requiring CalPERS, CalSTRS to divest halted by committee chair". Pensions & Investments. 2022-06-21. Retrieved 2022-07-03.
  33. ^ "'Moral Failure': California Dem Pulls Plug on Fossil Fuel Divestment Legislation". Common Dreams. Retrieved 2022-07-03.
  34. ^ "CalSTRS Headquarters Facts" (PDF). CalSTRS. Archived from the original (PDF) on August 21, 2012. Retrieved September 13, 2013.
  35. ^ "New Headquarters Project". CalSTRS. Archived from the original on July 27, 2008. Retrieved September 13, 2013.
  36. ^ DC16 The Pride, "CalSTRS Goes for Gold By Building Green " Archived 2016-01-05 at the Wayback Machine, DC16 The Pride, page 10, Feb 2009
  37. ^ a b Ortiz, Jon (July 13, 2008). "CalSTRS' new building goes for 'green' gold". The Sacramento Bee. Retrieved June 12, 2009. [dead link‍]
  38. ^ "CalSTRS Headquarters Achieves Platinum Certification for Leadership in Energy and Environmental Design" (Press release). CalSTRS. Retrieved September 13, 2013.
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