CalSTRS board on Wednesday will discuss creating a $150 million fund of funds that would invest in startup private equity funds. Staff of the $100 billion California State Teachers Retirement System, Sacramento, and consultant Pathway Capital Management offered two alternatives to the board, while recommending against creating a specific allocation to higher-risk private equity managers in the current market environment. CalSTRS either could remain opportunistic or could create a separate legal entity to invest in new and next-generation managers. If the latter option were approved, CalSTRS would become the controlling shareholder of the funds general partner, keeping half of the funds carried interest. The fund also would be marketed to endowments, foundations and other investors.