calpers

calstrs

By Dale Kasler
dkasler@sacbee.com
Published: Tuesday, Jul. 15, 2014 – 12:00 am
Last Modified: Tuesday, Jul. 15, 2014 – 12:13 am

Continuing to claw their way back from the 2008 market crash, California’s two giant public pension funds said Monday they each earned more than 18 percent on their investments in the just-ended fiscal year.

The strong results by CalPERS and CalSTRS, however, don’t erase the two funds’ ongoing financial troubles. Both are “underfunded,” which means they don’t have enough money to cover their long-term obligations, and both are implementing rate hikes that will cost taxpayers billions of dollars in higher pension contributions.

“There’s much, much work to be done,” said Ted Eliopoulos, CalPERS’ interim chief investment officer, in a conference call with reporters. “We’re ever vigilant; we try not to get too excited in good years or bad years about one-year results.”

The California Public Employees’ Retirement System said it earned 18.4 percent in the fiscal year that ended June 30. It was the fourth double-digit return in the past five years for CalPERS.

The California State Teachers’ Retirement System’s profits totaled just under 18.7 percent. “These numbers are extraordinary and very encouraging,” said Sharon Hendricks, chair of the teachers’ pension fund’s investment committee, in a news release.

The gains were substantially higher than each fund’s official investment forecasts of 7.5 percent.

On the surface, CalPERS and CalSTRS have recovered from the crippling multibillion-dollar losses they suffered when the housing bubble burst and the stock market crashed in 2008. CalSTRS’ portfolio, for example, has risen to $189.1 billion in market value, well above the pre-crash watermark of roughly $160 billion. Similarly, the CalPERS portfolio has soared 83 percent since bottoming out at $164 billion in 2009, putting it at $299 billion.

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