CalSTRS' board on Friday will consider whether to reduce the system's assumed rate of return to 7.5% from 8%, according to the board's meeting agenda.
The $138.6 billion California State Teachers' Retirement System, West Sacramento, will decide whether to accept its investment committee's recommendation to lower the assumed rate, which would force the state Legislature to decide how to fund the increased shortfall that would result from the rate reduction.
CalSTRS, with a 78% funding ratio, is currently scheduled to run out of money to pay benefits in 2045. A 7.5% assumption rate would reduce the funding ratio to 74.2%, according to the agenda materials.
School districts in California now pay 8.25% toward CalSTRS for their teacher's retirement benefits while teachers pay 8%.
The system would need as much as 16.8% increase combined from school district and teachers to fully close the shortfall under the recommended lower rate.
The $218.5 billion California Public Employees' Retirement System, Sacramento, will discuss whether to lower its 7.75% rate of return in February.