December 9, 2005 (PLANSPONSOR.com) - The California
State Teachers' Retirement System (CalSTRS) Board voted to
oppose new legislation that would effectively close the
current defined benefit plan to new hires and switch to a
defined contribution or hybrid plan instead.
An announcement on CalSTRS Web site said Assembly
Constitutional Amendment 23 would give public educators
hired after July 1, 2007 the choice between a 401(k)
style plan or a combined 401(k)/defined benefit
According to the announcement, the opposition was
centered on the threat the bill would present to the
financial stability of the current fund.
Under the proposal, the current plan would be closed
to contributions to new members, affecting the long-term
funding of benefits.
The Sacramento Bee painted a picture of a divided
Board, saying six trustees voted against the bill, while
Four of those were appointees of Governor Arnold
Schwarzenegger, who said they were not prepared to consider
According to the Bee, i
f Representative Roger Kozberg, the governor's fifth
appointee, had been present, the outcome might have been
After a similar measure was rejected by the Board
earlier this year, Schwarzenegger removed four trustees
Administration officials said were not qualified to carry
out the governor's overhaul initiative.
As payback, the board rejected the governor's next
Political Infighting Leaves CalSTRS Board
with 7 Members).
CalSTRS, with $132 billion in assets, is the
third-largest public pension fund in the US.
It provides retirement, disability and survivor
benefits to California's public school teachers from
kindergarten through community college, serving more than
755,000 members and their families.