Staff Reports
CalSTRS announced this week that the California teachers’ pension fund topped $415 billion after earning a 13.9% net return for the 2025–26 fiscal year. The board is celebrating, and you can hear the confetti. But before anyone starts writing thank-you notes to the investment office, let’s unpack what this milestone really means — and what it does not.
CalSTRS hits $415.4 billion — headline numbers and what they mean
Yes, the math checks out. CalSTRS reported a 13.9% net return for the fiscal year and a total-fund valuation of $415.4 billion. Global equity and real estate helped drive the gains, and CalSTRS’ chief investment officer called the milestone evidence that the system is working to protect more than 1 million educators. Those are good numbers on paper. They make for a tidy headline that sounds reassuring to teachers and the public.
Don’t confuse a bull market with a miracle cure
Here’s the part officials aren’t shouting as loudly: a strong stock market helped push returns higher. As outside analysts pointed out, one very good year does not erase decades of underfunding. On an actuarial basis the system is still roughly 79% funded. Private-asset figures are also reported on a lag, so some gains are not even fully reflected in the numbers yet. In plain language: a big year helps, but it doesn’t fix long-term structural problems.
What this means for teachers, taxpayers and policy
Teachers should be pleased their fund gained ground. But taxpayers and lawmakers should stay skeptical of celebrations that treat market luck as a policy plan. CalSTRS still faces an unfunded obligation and risks from future market swings, lower payroll growth, and optimistic return assumptions. If the state wants real, durable security for retirees, it should insist on realistic return assumptions, steady contributions from all parties, and a closer look at costly private-equity bets that can be opaque and slow to report.
So celebrate the number if you must. Then get to work. A single bullish year is welcome, but not a substitute for sound fiscal choices. CalSTRS should keep chasing solid returns, but Sacramento should stop relying on market booms as its retirement plan. Teachers deserve stable pensions, not wishful thinking dressed up as success.
