On September 30, Governor Schwarzenegger signed into law AB 1389 increasing member purchasing power from 80 percent up to 85 percent.

Increase to Begin Immediately

In mid-November 2008, benefit recipients who received a check for October 2008 based on 80 percent, will receive a second check for the 5 percent difference.

If a benefit recipient has not received a quarterly supplemental check in the past, the benefit recipient will receive their first supplemental check based on the 85 percent purchasing power.

Beginning January 2009, each quarterly supplemental check a benefit recipient receives will reflect the new 85 percent purchasing power.

Boosts the Future Value of CalSTRS for Retired Teachers

CalSTRS members, annually through the Supplemental Benefit Maintenance Account (SBMA), receive guaranteed purchase power protection payments.

The SBMA, since 2001, provided payments to members if their purchasing power was below 80 percent of their original retirement benefit; this benefit was guaranteed to the extent that sufficient funds are available to pay the benefit. The new law now guarantees payments, to the extent funds are available, when purchasing power drops below 85 percent.

Teachers' Retirement Board to Adopt Protection Regulations

To ensure the availability of funds the board may authorize adjustments to the payments at no more than 85 percent and no less than 80 percent.

In 2009 the board will take action to:

• Adopt rules to allow it to continue to make payments over a period of time
• Project the funds required to keep providing the benefit
• Establish how long the funds will be available
• Identify the maximum, sustainable level of benefits based on the projected funds