{"id":2031,"date":"2025-09-28T13:43:02","date_gmt":"2025-09-28T13:43:02","guid":{"rendered":"https:\/\/tcap.blog\/?p=2031"},"modified":"2025-09-28T13:43:04","modified_gmt":"2025-09-28T13:43:04","slug":"shareholder-spotlight-calstrs-a-pension-fund-swimming-in-scandal-and-suspicion","status":"publish","type":"post","link":"https:\/\/tcap.blog\/2025\/09\/28\/shareholder-spotlight-calstrs-a-pension-fund-swimming-in-scandal-and-suspicion\/","title":{"rendered":"Shareholder Spotlight : CalSTRS – A Pension Fund Swimming in Scandal and Suspicion"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

The California State Teachers’ Retirement System is supposed to safeguard the retirements of the people who teach us. Instead it’s become a bureaucratic colossus making decisions that leave pensioners exposed, paying fat bonuses to executives and holding stakes in companies that have just been nailed for massive wrongdoing. From data breaches to lawsuits, from dodgy investments to outsized pay, CalSTRS’ record reads like a catalogue of institutional failure. And yes – it still owns a chunk of Cummins, our engine-maker friends now shying from TCAP’s torchlight. Teachers deserve better.<\/p>\n\n\n\n

This isn’t some conspiracy rant from the fringes. This is the raw truth, dug from court records, audits, and public disclosures that paint a picture of an organisation that’s too big, too insulated, and too damn comfortable with controversy. Teachers deserve better than this shambles. Hell, all US citizens do, since it’s public money propping up the whole rotten edifice.<\/p>\n\n\n\n

\n\n\n\n

Legal Battles: When Pensions Become Punching Bags<\/strong><\/h1>\n\n\n\n

Start with the lawsuits – because bloody hell, there are plenty. CalSTRS has been dragged through the courts time and again, facing accusations from bungling benefit calculations to ignoring whistle-blowers who called out alleged abuse.<\/p>\n\n\n\n

Take the Blaser case from 2019. Retired teachers hauled CalSTRS before a judge, claiming the fund had slashed their monthly pensions without justification. These weren’t small adjustments; courts found reductions that materially reduced retirees’ income based on alleged errors in service credits. The court sided with the teachers, ordering CalSTRS to restore the benefits and stop the cuts, ruling that the fund was barred by a three-year statute of limitations from pursuing certain claims. Imagine that – years of loyalty to the classroom, only for some faceless administrator to decide your golden years aren’t worth the full payout. It’s infuriating, a betrayal that leaves you seething at the arrogance.<\/p>\n\n\n\n

Then there’s the whistleblower saga from 2012. A former analyst claimed he was booted out for exposing “pension spiking” – that insidious trick where salaries get artificially inflated to pump up retirement payouts. He sued for wrongful termination, shining a light on how CalSTRS allegedly turned a blind eye to systemic abuse and failed to adequately audit proposed benefits. What the fuck kind of oversight is that? If you’re guarding billions in teachers’ money, the least you can do is crack down on cheats, not fire the guy pointing them out. A state controller’s report later slammed CalSTRS for missing opportunities to curb spiking, adding fuel to the fire.<\/p>\n\n\n\n

It doesn’t stop there. In 2024, the Soto case saw CalSTRS go on the offensive, suing a disability recipient over medical malpractice settlements they claimed offset benefits. The court ruled CalSTRS could recover payments even after the teacher settled a malpractice suit without notifying them, raising questions about aggressive tactics that border on vindictive – as if the fund prefers litigation over fairness.<\/p>\n\n\n\n

Even charter schools aren’t immune. Green Dot Public Schools sued CalSTRS in 2023, alleging unfair garnishment of a retiree’s benefits that disrupted operations. These cases aren’t isolated blips; they’re a pattern of disputes that erode trust, leaving retirees to battle for what’s rightfully theirs.<\/p>\n\n\n\n

\n\n\n\n

Data Failings: Private Lives on the Line<\/h2>\n\n\n\n

If the legal woes weren’t enough to make your blood boil, consider how CalSTRS handles personal data – or rather, how it doesn’t. In 2023, a massive cyber-attack breached both CalSTRS and its sibling fund CalPERS, exposing sensitive information for hundreds of thousands of members. We’re talking Social Security numbers, birth dates, the works – all ripe for identity thieves, courtesy of a third-party vendor hack.<\/p>\n\n\n\n

This wasn’t some sophisticated heist; it was part of a larger global incident, yet it highlights a glaring vulnerability in a system that’s supposed to be rock-solid. Teachers entrust their futures here, only to have their privacy pawned off in a data dump. Outrageous doesn’t begin to cover it – it’s a fundamental failure that screams incompetence at the highest levels. CalSTRS offered free credit monitoring as a band-aid, but that’s cold comfort when your life’s details are floating in the dark web. And recent updates suggest some of that stolen data has surfaced, prompting fresh alerts to members.<\/p>\n\n\n\n

\n\n\n\n

Risky Bets: When Pension Money Chases Yield, Not Safety<\/strong><\/h2>\n\n\n\n

Now, dive into the investments, where CalSTRS’ choices raise eyebrows and hackles. This fund isn’t just parking money in safe bonds; it’s wading into murky waters with holdings that smack of ethical compromise.<\/p>\n\n\n\n

In 2025, CalSTRS yanked $1 billion from Western Asset Management Company after federal fraud charges against its execs for misleading investors. Good move, but why the hell were they in bed with them in the first place? Due diligence seems optional when billions are at play, and this redemption joins a string of pension funds bailing out amid the scandal.<\/p>\n\n\n\n

Then there’s the 1.3% loss in fiscal year 2022 – the first since 2009 – amid market chaos, with both US stocks and bonds posting double-digit losses. Teachers’ nest eggs took a hit, while the fund’s unfunded actuarial obligation sits at $88.7 billion. And don’t get me started on holdings like RCI Hospitality, tied to strip clubs and exec indictments for bribery and tax fraud in 2025. Activists begged CalSTRS to divest, citing ethical rot, and recent filings show they’ve reduced or exited the position – but the fact they held it at all speaks volumes.<\/p>\n\n\n\n

Even construction projects stink of trouble. In 2024, CalSTRS sued DPR Construction over its headquarters expansion in West Sacramento, alleging contracting fraud and breach in a $300 million project. The suit prompted a state investigation into licensing lapses, with tentative rulings trimming some claims but keeping the core fight alive. These aren’t savvy plays; they’re gambles that flirt with disaster, all on teachers’ backs.<\/p>\n\n\n\n

\n\n\n\n

Executive Pay and Public Pain<\/strong><\/h2>\n\n\n\n

While retirees scrap for benefits, CalSTRS brass live large. In 2024, CEO Cassandra Lichnock pocketed over $1 million total, including a $645,000 bonus on top of her $430,000 salary. Retiring CIO Christopher Ailman scored $1.1 million in extras. With an unfunded actuarial obligation topping $88.7 billion, this is galling – public servants awarding themselves fortunes while the fund gasps for air. It’s not just numbers; it’s a slap in the face to every teacher scraping by. How do you justify such payouts when lawsuits pile up and investments falter? Critics argue it’s excessive for a public fund facing massive shortfalls.<\/p>\n\n\n\n

\n\n\n\n

The Cummins Link: Why This Matters to Teachers<\/strong><\/h2>\n\n\n\n

Here’s where it gets particularly grubby. CalSTRS holds a significant stake in Cummins Inc – 210,392 shares worth $65.9 million as of the latest filing. That’s no pocket change; it’s a deliberate bet on a company that’s just coughed up a record $1.675 billion penalty for emissions cheating.<\/p>\n\n\n\n

Cummins has it’s grubby fingers in countless scandalous pies, as we’ve shown over previous months, but none bigger than when they installed software defeat devices on over 600,000 Ram trucks from 2013 to 2019, dodging clean air rules and spewing illegal pollutants. The 2024 settlement with the EPA and California authorities included a $1.642 billion civil penalty, plus $325 million to remedy the violations – the largest ever under the Clean Air Act. They agreed to recall vehicles and mitigate environmental harm, but the damage is done: years of extra NOx emissions poisoning the air we breathe.<\/p>\n\n\n\n

So why does CalSTRS, a fund preaching sustainability and ethical investing, cling to this? They’ve backed shareholder proposals on ESG issues elsewhere, yet here they are, profiting from a firm that systematically cheated emissions tests. Is this another thread in an ecosystem where ethics bend to returns? From prison divestments only after public outcry to lingering in fraud-tainted managers, CalSTRS’ portfolio choices suggest a pattern: talk big on responsibility, but when the cheques roll in, look the other way. Is money earmarked for teachers being invested in companies with major environmental or governance scandals? It’s a gut-punch, a hypocrisy that demands answers.<\/p>\n\n\n\n

\n\n\n\n

What Members Should Demand Now<\/h2>\n\n\n\n

In the end, CalSTRS isn’t some villainous cabal – it’s a public institution that’s lost its way, bloated by size and shielded by bureaucracy. But the scandals stack up: endless court fights, data leaks, dodgy investments, fat-cat pay. Retirees fight for scraps while the fund bets on cheaters like Cummins. It’s time for a reckoning – audits, transparency, real accountability. Because if this is how we treat educators, what hope is there for the rest of us?<\/p>\n\n\n\n

If you’re a CalSTRS member: Check your benefits through MyCalSTRS, file a complaint if discrepancies arise, contact your board representative or the state auditor for oversight, and push for ethical investment reviews. Turn outrage into action – demand better.<\/p>\n\n\n\n

Lee Thompson – Founder, The Cummins Accountability Project<\/em><\/strong><\/p>\n\n\n\n

\n\n\n\n

Sources<\/h2>\n\n\n\n