The California State Teachers’ Retirement System nearly doubled its target rate of return on investments for the year ending June 30, placing itself on target for full financial recovery nearly two decades from now, CalSTRS announced Tuesday.
CalSTRS, the world’s largest pension system for educators, handles the retirement investments for the state’s teachers and administrators. Its 13.9% rate of return for 2025-26 is double the 7% rate of average return that CalSTRS set as its goal, and raises its 10-year rate of return to 9.4%. Its five-year average return was 7.0%, and its 30-year return was 7.8%.
Investment returns fund the retirement benefits for current and future CalSTRS members, along with contributions from current employees, school districts and the state.
Following the Great Recession, the value of CalSTRS’ assets plummeted, raising doubts about its financial viability. In 2014, Gov. Jerry Brown persuaded the Legislature to pass a reform strategy with the goal of fully restoring its health by 2046. The law raised the retirement age and years of teaching for a full pension for teachers, and also substantially raised the contribution levels.
Teachers now pay 10.25% of their salaries into CalSTRS, while the state pays 8.25% of salaries. Districts’ share more than doubled to 19.1% of payroll, where it will remain until 2044.
As of June 30, CalSTRS had reached 79.3% of full funding, up from 62.6% in 2017. It was on track for full funding in 2044, two years ahead of schedule.
Classified and other noncertificated school employees are part of the CalPERS pension system.
For background information, see the Getting Down to Facts study, “Pensions and California Public Schools, 2026,” by Cory Koedel and Sawyer Burgess of the University of Missouri.