US - The California Supreme Court has declined to review a lower court decision awarding California State Teachers' Retirement System's (CalSTRS) US$200m in interest payments on a $500m payment withheld by the state in 2003-2004.
Global Pensions reported in August that the Third District Court of Appeal in Sacramento had unanimously decided the state violated its contractual obligation to the $176bn pension fund when it withheld its contribution to CalSTRS’ inflation-protection programme, the Supplemental Benefit Maintenance Account (SBMA).
The ruling required the State of California to pay CalSTRS the $500m withheld payment plus interest.
The state paid CalSTRS the $500m in September 2007 but appealed the Third District Court of Appeals’ decision on the $200m interest payment.
The California Supreme Court upheld the lower court this week. A legislative appropriation will be required to pay the interest.
The case originates from 2003, when governor Gray Davis signed Senate Bill 20, which withheld a $500m payment to the SMBA that year.
The SBMA currently funds quarterly payments to approximately 63,000 retired educators and their survivors when inflation erodes their monthly benefit to below 80% of its original consumer purchasing power.
Jack Ehnes, chief executive officer at CalSTRS, said: “The long-delayed payment of interest owed to the Teachers’ Retirement Fund is necessary to ensure the retirement security of California educators. The SBMA serves our members who are the longest retired and most dependent on CalSTRS benefits.”
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