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CalSTRS auditors issue unmodified opinion for fiscal 2024; board accepts report
Summary
External auditors Crowe LLP issued an unmodified (clean) opinion on CalSTRS' FY2024 financial statements and other pension information, highlighted the $67.2 billion net pension liability and valuation complexity of alternative investments, and the committee voted to accept the auditors' report. No management letter was issued for the second consecutive year.
Crowe LLP presented the results of its audit of the California State Teachers Retirement System's basic financial statements and accompanying other pension information for the fiscal year ended June 30, 2024, and issued an unmodified opinion.
The auditors told the committee they had "issued an unmodified audit opinion," meaning the financial statements were "presented fairly in all material respects." Crowe also reported no significant deficiencies or material weaknesses in internal control and said it issued no management letter because it found no deficiencies meeting that threshold.
The firm called particular attention to two matters of emphasis. First, the auditors highlighted the employers' net pension liability, a large off-statement figure disclosed in footnotes that they said users of the financial statements should review closely. Second, they flagged valuation complexity for alternative investments, noting that "the portfolio includes a large balance of alternative investments" whose fair values are not always readily determinable and require significant management judgment and third-party inputs.
State Controller Miss Gallegos thanked staff and asked how to interpret the net pension liability, naming a figure cited by auditors: "67,200,000,000." Auditors responded that materiality involves qualitative and quantitative factors, that the net liability depends on actuarial assumptions and census data, and that the number appears in footnote disclosure rather than on CalSTRS' face financial statements.
CFO Julie Underwood reiterated the staff perspective: "Crow issued no management letter for the 2nd year in a row," and thanked staff for work on internal controls and financial reporting. After questions, the committee moved to accept the auditors' report and approved it by voice vote.
The committee's acceptance concludes the formal audit presentation for FY2024; the board will continue oversight of actuarial assumptions and investment valuation practices as part of its governance duties.
