The California Supreme Court has declined to review a lower court decision awarding the California State Teachers Retirement System $200 million in interest payments on $500 million withheld from CalSTRS in 2003-04.

The refusal to hear the case means the state will be required to pay CalSTRS $200 million in interest. The state paid CalSTRS the $500 million in September 2007 but appealed the Third District Court of Appeal’s decision on the interest payment.

The state withheld the $500 million payment in 2005-06 to the CalSTRS Supplemental Benefit Maintenance Account as a budget-balancing measure. The SBMA provides purchasing power protection to more than 63,000 retired educators.

“The long-delayed payment of interest owed to the Teachers Retirement Fund is necessary to ensure the retirement security of California educators,” said Jack Ehnes, CalSTRS chief executive officer. “The SBMA serves our members who are the longest retired and most dependent on CalSTRS benefits.”

A legislative appropriation will be required to pay the interest.