The California State Teachers' Retirement System, Sacramento, won a legal battle Wednesday after a judge ordered the state to repay a $500 million contribution it withheld nearly two years ago. In the ruling, Sacramento County Superior Court Judge Judy Holzer Hersher said she agreed with CalSTRS' argument that the law obligating the state to make the contribution is "clear and unambiguous."
The state withheld the payments because of a California Senate bill introduced in 2003 that amended the law to reduce the state's 2003 to 2004 contribution by $500 million. However, the law would have hurt the $125 billion fund's ability to make future benefit payments, said CalSTRS spokeswoman Sherry Reser. Quarterly payments are made when inflation eats into recipients' monthly benefit below 80% of its "original consumer purchasing power," according to a CalSTRS news release.
"We're certainly very relieved to have (the lawsuit) over and can put this behind us," Ms. Reser said.