BILL NUMBER:  SB 1137
  VETOED	DATE: 09/15/2004




To the Members of the California State Senate:

I am returning Senate Bill 1137 without my signature.

This bill provides that the retired member, who is now appointed by
the Governor to the State Teachers Retirement System (STRS) Board,
instead be elected by retired members.

In 2002, the Legislature passed SB 1580 (Burton) which altered the
composition of the board by providing that three members be elected
by members of STRS.  Additional changes at this time would not be in
the best interest of promoting stable leadership of the STRS Board
who administer programs and provide investment oversight for its
members.

This bill diminishes the States presence on the STRS board at time
when the STRS fund is experiencing unfunded liabilities and the
General Fund is required to contribute over $1 billion to the fund
annually.  This bill weakens the Administrations ability to ensure
the continued viability of the STRS fund.  Reducing the
Administrations presence on the Board to less than half the
membership would be fiscally imprudent due to the current funding
arrangement for the system.

Unlike most defined benefit retirement systems, STRS has enjoyed
funding from the State General Fund to offset marginal fluctuations
in the need for contributions to ensure that the System is
actuarially sound.  Until funding for STRS is revised to eliminate
reliance on State General Fund contributions, it is important that
the Administration maintain a strong presence on the STRS board.

Sincerely,



Arnold Schwarzenegger