Calpers, Calstrs Award Big Bonuses Despite Losses in 403(b) Forum Posted April 27, 2009 · Report reply Update CalSTRS responds to my message: Dear Mr. Schullo: Your anger is understandable, with layoffs and budget cuts becoming a depressing norm these days. But please note that maximizing the value of the teachers’ retirement fund, and doing it in a transparent and ethical way, are top concerns of everyone at CalSTRS. Decisions on compensation are made in public meetings and are the purview of the Compensation Committee of the Teachers’ Retirement Board (TRB). The committee meets several times per year, most recently in April 2009 and before that in November 2008. You can see what they’ve done by visiting our TRB Public Meetings and Agenda’s page online at: http://www.calstrs.com/publicdocs/Page/Cal...blicBoardAgenda . On these pages you will find full disclosure of our incentive compensation recipients, discussion of the latest policy changes and of our look at how compensation has been calculated along with a study of how to best proceed. CalSTRS competes with the private sector and other public pension systems for qualified staff. CalSTRS salaries therefore reflect data compiled from both areas and are tied to performance. And because CalSTRS is a long-term investor, its compensation system looks at the investment performance over three years to avoid the pitfalls of short-term thinking. The latest incentives were given for performance from July 2005 through June 2008. During these the CalSTRS portfolio generated a 9.7 percent average annual return, beating its benchmark by 1.9 percent. This speaks to the value our staff has added to the portfolio over the past three years. Their decisions added $2 billion to the portfolio over the last three years, dwarfing the nearly $3 million paid out in incentive compensation. Even with incentive compensation packages, CalSTRS investment staff are far more cost effective than outside managers. As a rule, internal management costs one-tenth of external managers. For instance, in fiscal year 2007-08, our internal managers cost $14.3 million while external management cost $196.2 million. Thank you for your questions and the opportunity to provide a fuller picture of the CalSTRS incentive program than was provided in the recent article and editorial in the Sacramento Bee. Cassandra Lichnock Director, Human Resources CalSTRS (916) 229-3810 Can you get them to provide you with exactly what their benchmark is? I think that is probably the problems come from. They need broad, equity, bond, real estate and ect to truly diversify a portfolio like that and if they are benchmarking to the S&P 500 that would cause too much to be allocated to equities. On the previous post, just because you work on "the street" and work long hours do not equal a big paycheck. I would hate to compare the hours put in by my wife who teaches Spanish, is a coach for both Cross Country and Track. Too much entitlement is not a good thing.