Report on CalSTRS Meetings, July 13, 2006
         By Pat Geyer, CRTA Liaison

Executive Summary
Asset Class           Current Target            New Long-term Target
U.S. Equity            41%                                40%
Non-U.S. Equity          20%                                20%
Alternative Investments  6%                        9%
Real Estate             6%                                  11%
Fixed Income          26%                                20%
Cash                      1%                                  0%
1.     For the last three years STRS fund has earned a return of 13.8%
and outperformed the benchmark of 8% return.  As of July the STRS fund is
$142 billion
2.     STRS will move to its new building in West Sacramento in 2009.
3.    STRS Board voted to support if amended AB 2941 (Koretz).  This bill
would provide indemnification for STRS Board members and staff for
actions taken to divest in companies doing business in Sudan.  STRS wants
the indemnification to be the same as the UC
4.    Next STRS Board meeting will be Sept 7-8, where STRS will discuss
the unfunded liability

Investment Committee
Chris Ailman, Chief Investment Offices, presented the new asset
allocation targets based on the Asset Liability Study.  There are six
asset classes. U.S. Equity (40% of the STRS portfolio) and Non-U.S.
Equity (20% of the STRS portfolio) will stay the same.  Alternative
Investments will increase from 6% to 9%.  Real Estate investments will
increase from 6% to 11%.  Fixed Income will decrease from 26% to 20%.
Finally, Cash will decrease from 1% to 0.  Several Board members and Pat
Geyer, CRTA questioned the wisdom of increasing alternative investments
and real estate at this time when there are few good investment
opportunities.  Board Chair, Gary Lynes, requested that staff return with
a year-by-year plan for moving toward the new asset allocation.

Next each of the asset classes gave reports.  U.S. Equity will move
toward 30% active and 70% passive management.  The active management will
be enhanced index investing, environmental investing, corporate
governance activist fund, and, later, a developing manager fund.   STRS
will increase external management in Equities, Currency Hedging, and
Alternative Investments as a way of increasing fund income.  Real Estate
will look for non-U.S. investment opportunities, especially in Asia and
India.  Corporate Governance will continue to track executive
compensation and environmental issues.  STRS will present their Reverse
Mortgage program at the September meeting.
For the last three years STRS fund has earned a return of 13.8% and
outperformed the benchmark of 8% return.  As of July the STRS fund is
$142 billion.
Teachers' Retirement Board
STRS Board reviewed the 2006-07 work plans of the Committees: Benefits
and Services, Board Governance, Audits and Risk Management, Compensation,
and Investment.  Next the Board reviewed the 2006-07 business plans for
Administration, Benefits and Services, Plan Design, Enterprise
Initiatives and Technology, General Counsel, and Investments.
Some highlights of the plans were an agreement for STRS to pay 30% of the
school contract for board members who are STRS committee chairs.  This
would include the teacher, administrator and community college
representatives (Dana Dillon, Carolyn Widener, and Gary Lynes)  Gary
Lynes asked to be compensated for his substitute only.  STRS is going
ahead with plans and development of the new STRS headquarters in West
Sacramento.  Occupancy will be in 2009.
STRS Board voted to support if amended AB 2941 (Koretz).  This bill would
provide indemnification for STRS Board members and staff for actions
taken to divest in companies doing business in Sudan.  STRS wants the
indemnification to be the same as the UC indemnification.  Much
discussion followed.  Beth Rogers felt that teachers' retirement money
should not be used to support third world cases.  Finance (Anne Sheehan)
opposed the bill because it would be a "slippery slope" to increased
divestment legislation.  Motion passed 6 to 5 with Jerilyn Harris, Roger
Kozberg, Gary Lynes, Beth Rogers and Anne Sheehan opposed.
STRS continues to oppose, unless amended, AB 2970 (Pavley) which
eliminates the post-retirement earnings limit for retired DB members who
are at or over age 60.  STRS wants to employers to pay retirement
contributions on all retired DB members' earnings.