CalSTRS funded ratio rises to 79.3%; board keeps contribution rates, approves member credits and benefit increases

Chief Actuary David Lamoureux told the Teachers' Retirement Board that the June 30, 2025 actuarial valuation shows progress under the funding plan: CalSTRS now reports about 471,000 active teachers and a funded ratio of 79.3% (assets ≈ $314 billion; actuarial obligations ≈ $396 billion). Lamoureux and investment staff credited above‑assumption returns in recent years and ongoing contributions under the funding plan for the improvement. “We now have the highest number of teachers actively working we've ever had, 471,000 active teachers,” Lamoureux said.

Actuarial staff reported the state’s unfunded actuarial obligation has decreased substantially and under present assumptions the state supplemental contribution rate could drop to zero in the next valuation cycle, noting that a later poor investment return could reverse that result. Staff explained statutory mechanics that limit the pace of state supplemental rate increases to 0.5 percentage points per year if additional funding is later required.

On recommendation of staff, the board adopted the contribution-rate proposal that keeps employer and state contribution rates at current levels for fiscal year 2026–27 (motion moved and seconded and approved by voice/roll call as recorded in meeting minutes).

The board also approved actuarial recommendations affecting benefit accounts:
- Defined Benefit Supplement (DBS): The DBS funded status improved to nearly 130% and staff recommended an additional earnings credit (AEC) of 4.53%, yielding a total credited return of 9.14% for 2024–25. Trustees approved the staff recommendation.
- Cash Balance program: Funded status improved to about 119.1%; staff recommended an AEC step one of 2.81% to bring total crediting to 7.0% for 2024–25, and the board approved that action.

On the Supplemental Benefit Maintenance Account (SBMA), staff presented sensitivity analyses showing the program is currently well-resourced (assets ≈ $29 billion) but is sensitive to inflation. Using a suite of inflation scenarios, staff concluded there is about a 67% probability of sufficiency at the current 85% purchasing-power level and recommended maintaining the 85% level; trustees approved the recommendation.

Pursuant to Education Code requirements, staff will present statutory options for use of excess SBMA resources to the Legislature; trustees approved forwarding those options. Finally, under the board's funding‑linked policy for lump-sum death benefits, trustees approved a 2.75% increase in the lump‑sum death benefit effective July 1, 2026, reflecting the board's funding position and an inflation catch‑up reserve.

All of the actuarial actions were approved by the board at the meeting; staff will return with regular monitoring and an updated valuation in the next cycle.