Actuarial Valuation Shows Funded Ratio at 76.7%; Board Keeps Contribution Rates Unchanged

CalSTRS staff and Milliman actuaries presented the June 30, 2024 actuarial valuation at the May board meeting. Nick and Scott of Milliman reported a funded ratio of 76.7 percent, up from 75.9 percent the prior year, driven in part by investment returns near the plan’s 7 percent assumption and contribution inflows.

The valuation showed an increase in the system’s actuarial obligation largely tied to higher-than-expected teacher salary growth during the fiscal year. Milliman and CalSTRS staff explained that, under the current funding plan, investment volatility primarily affects the state’s share of the unfunded actuarial obligation; employer and member rates are buffered by the plan design.

Staff recommended, and the board approved, maintaining the current supplemental contribution rates for the state and employers based on the valuation results. David (CalSTRS staff) and Milliman emphasized CalSTRS’ ability to absorb downside scenarios, including projected outcomes under hypothetical negative-return scenarios (0%, -5%, -10%) and historic recession simulations, while noting that substantial negative returns would likely require adjustments to the state rate over multiple years under the funding plan rules.

The board approved the recommendation to adopt supplemental rates as presented; no immediate rate increases were required.