The size and scale of California’s education system boggles the mind. Some 5.8 million students – a population rivaling the entire citizenry of Denmark, Costa Rica or New Zealand – attend more than 10,000 schools. Teaching those schoolchildren are close to 319,000 teachers.
To support that army of teachers as they retire and transition to a long and vibrant post-career life is CalSTRS, the California State Teachers’ Retirement System, and its CEO, Cassandra Lichnock.
Lichnock helms a financial juggernaut: CalSTRS is the largest teacher-focused pension fund in the world and the second largest pension fund in the United States, with a market value of approximately US$311.1 billion as of April. For the 2021–2022 financial year, CalSTRS paid about US$17.4 billion in benefits to retirees living in California.
It has approximately 449,000 active members, a number that also includes public school administrators and California community college professors.
We’re so many different businesses all in one huge enterprise. But everything we do is for the purpose of serving the membership.
Most of CalSTRS’ members worked in the classroom for more than 25 years, and the fund is a financial lifeline for their retirement life. Unlike most United States workers, CalSTRS members do not pay into social security, so they do not received social security benefits for their CalSTRS-covered positions. More than 400 of the fund’s members are more than 100 years old.
Lichnock, who was appointed CEO in 2021, is keenly aware of the critical role CalSTRS plays in the lives of its members.
"We’re an investment company, we’re a customer service company, we’re a technology organization," she tells The CEO Magazine. "We’re so many different businesses all in one huge enterprise. But everything we do is for the purpose of serving the membership. I wake up every day with that mission-driven purpose in mind when I go to work."
Planning for the future
Lichnock is the century-old organization’s first female CEO. She took the fund’s reins after serving as COO for eight years. Before that, she led the organization’s human resources function. In all of her roles, she has spearheaded efforts to increase learning and development opportunities for CalSTRS employees, among other accomplishments.
One of Lichnock’s first priorities as CEO was overhauling the fund’s strategic plan.
"We’re setting a vision for 10 years," she says. "We do three-year strategic planning cycles, which might seem short, but we do that purposefully because environments change so quickly."
A native Californian, Lichnock says she strives to be an "authentic and genuine leader", and she actively engages the CalSTRS’ workforce of about 1,200 employees. As one example, she meets a group of new employees for more than an hour every month.
Overall, Lichnock sees the CEO role as an opportunity to build on her prior successes. "As well as elevate some of my values and things that I think need to be elevated coming into the role as the first woman CEO of CalSTRS, as well as recognizing the importance of advancing women in leadership."
Forging new directions
Lichnock’s background in operations and talent are critical to her ambitious plans for CalSTRS, which will require the organization to pivot in ways the fund has not seen over its long history.
To reduce costs, increase returns and keep a closer eye on portfolio risk, Lichnock is overseeing the ongoing transformation of the CalSTRS’ investment model to manage more of its portfolio in-house. Lichnock says the program has already saved more than US$750 million, and she expects additional impact from the change in the months ahead.
CalSTRS’ net zero and sustainability commitments are also a top priority for Lichnock. The fund has committed to a net zero portfolio by 2050 or sooner. To accelerate progress, Lichnock is leveraging the fund’s size to influence sustainability efforts at other organizations, extracting new commitments from ExxonMobil, Nippon Steel and Dominion Energy, among others.
Underpinning these significant moves is a digital transformation at CalSTRS, bringing automation to back-end processes and member tools. Nevertheless, Lichnock’s operations background shines through when she says that innovation must stem from rigorous and ongoing performance management.
Innovation is not just about technology. It’s how you look at a business function and what opportunities you can leverage or learn from to improve or advance.
"Innovation is not just about technology," she says. "It’s how you look at a business function and what opportunities you can leverage or learn from to improve or advance."
Through it all, Lichnock says these transformations will help CalSTRS support its members for decades to come.
"We love our membership," Lichnock proclaims. "We want them to have their pension when they are ready to retire and be financially secure."