By Pat Geyer, CalRTA Liaison
The Search Committee met briefly in open session. Then the Committee met in closed session to review the recruitment strategy for the Chief Executive Officer.
Teachers’ Retirement Board
The Committee heard the Legislative Proposal for the Recovery of Overpayments. The proposal would: (1) When benefits are reduced as a result of employer error, require members to repay the three most recent years of overpaid benefits and employers to repay the balance. (2) Extend the window to commence recovery for benefit adjustments resulting from fraud or misrepresentation by or on behalf of a member from three years to 10 years. (3) Clearly establish CalSTRS’ rights to recover benefit overpayments and make related benefit corrections. (4) Require employers to remit remaining overpaid amounts within 30 days. (5) Make additional technical and conforming changes.
CalSTRS has been engaging with stakeholder groups on this topic for several months, in general, employer groups have expressed concern about benefits changing after retirement and collecting from members when the overpayment was through no fault of the member. Employer groups are also concerned about taking on the additional liability of paying back funds beyond the three years. Employers are asking CalSTRS for consistent guidance, a comprehensive written resource and training on the front end on reporting to avoid overpayment and collections. This was reiterated by many groups during public comment.
Board members discussed this topic and the possibility of providing written guidance, pre-retirement audits and other resources to employers. The Board decided to move this item to a later date, November 2021, and staff have additional items to research in the interim.
COVID-19 has impacted the Pension Solution Project (computer). Training and User Acceptance Testing are the two most critical activities. Some of the key training activities have been successfully conducted in a virtual environment. Data Conversion remains on schedule. Being able to complete the Pension Solution Project is one of the major risks that the team is monitoring.
The CalSTRS funding levels and risks were presented to the Board. Covid 19 presents a challenge; however, positive news of a vaccine is reassuring. As of June 30, 2019, CalSTRS was 66% funded. Key risks to the funding plan are (1) Investment risk – potential for lower returns
And increased market volatility, (2) Longevity risk – members living longer in retirement, (3) Membership and payroll growth risk – affects incoming contributions if active membership baseline declines. The Board suggested a periodic review of risk factors
The Board heard the Enterprise Risk Management Report. For this reporting period all but four categories have low or very low risk. The four categories with higher risk scores are: Pension Administration (medium risk) due to this current remote working environment; Information Security (high risk) due to the remote working environment; Transformational Change (medium risk) due to delay in contractor acceptance testing and staff shifting to remote work; Third Parties (medium risk) due to staff being dependent on third parties to perform services. All risks are being adequately managed.
The next CalSTRS Regular meeting will be virtual in January.