The three-judge appellate panel ruled that the state had broken its contractual responsibilities to the Golden State’s retired teachers when officials kept back the money during a cash crunch.
A CalSTRS news release said the funds would have gone to its Supplemental Benefit Maintenance Account that funds quarterly payments to approximately 63,000 retired educators and their survivors when inflation erodes their monthly benefit below 80% of its original consumer purchasing power.
CalSTRS said in the announcement that total interest from the state could exceed $200 million.
“ There is nothing ambiguous about today ‘ s ruling. The state ‘ s payments are a vested contractual right and necessary to fund this benefit for our members. CalSTRS current retirees receive only 55 percent of their replacement salary, no Social Security on their teaching earnings and frequently, no employer-provided healthcare benefits after retirement, “ said Jack Ehnes, CalSTRS Chief Executive Officer, in the news release. “ This ruling should permanently put to rest pension raids and allow us to refocus on strengthening retirement security for all. “
The Court of Appeal decision supports a ruling by the Sacramento County Superior Court in May 2005 that ordered the state to repay CalSTRS. The Department of Finance filed an appeal in September 2005.
With a $169 billion investment portfolio, CalSTRS is the second-largest public pension fund in the U.S. It administers retirement, disability and survivor benefits for California’s 795,000 public school educators and their families
The appellate court ruling is here .
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