A closer look at the Teachers’ Retirement System

Sen. Ronnie Chance's picture

The Teachers’ Retirement System (TRS), which is not administered by Employees’ Retirement System (ERS) but as a separate state entity, is the largest of the state’s retirement systems.

TRS, whose members are largely employed by local school systems as teachers, has more than 222,000 active members and more than 87,000 retirees.

Like the Old and New Plans under ERS, TRS is a defined benefit system that allows a retiree to draw a monthly benefit upon retirement in an amount determined by his or her salary and years of service. Benefits are determined with a calculation similar to the one used by ERS.

In FY2010, TRS paid out $2.8 billion in benefits with an average benefit of $2,967 a month or $35,604 yearly. As of April 30, 2011, TRS’s assets totaled $55.2 billion.

TRS contributions differ from ERS plan

Some confusion exists when discussing retirement plans in Georgia. Teachers and members of TRS make a considerably higher contribution to their retirement plans and a COLA is supposedly built into the calculation.

This is an issue that was highlighted a couple of years ago when the TRS Board was encouraged to forego the annual COLA as ERS had done.

Under state law, teachers contribute up to 6 percent of salary and in the FY2012 budget are scheduled to pay 5.53 percent. The local system will contribute 10.28 percent in FY2012, which is part of the QBE formula.

Under TRS, COLAs are based on increases or decreases in the Consumer Price Index (CPI). On January and July 1, the average CPI will be determined. For those retiring during the six-month period, this will be their base index. Each January and July 1 after retirement, a new average CPI is determined and becomes the current index.

A TRS retiree will be granted a COLA of 1.5 percent if the ratio of the current index to base index is 1.000 or more. TRS members who retire under the age of 60 with less than 30 years of service will be eligible to receive their first COLA after reaching the age of 60 or when they would have reached 30 years of service, whichever occurs first.

The ERS plan that most state employees are under (changed in 2009) requires employees to pay in 2 percent of salary for retirement and the state portion was based on a contribution needed to maintain the funds solvency.

Under ERS, semi-annual COLAs are authorized by the Board of Trustees only if sufficient funds are available. If authorized, COLAs will be granted to retirees who are either 45 years old or older and have been receiving retirement benefits for at least seven months or retirees under the age of 60 with between 25 and 30 years of service.

The latter will begin receiving COLAs at the age of 60 or when they would have reached 30 years of service had they continued to work. ERS members who first or again became members on or after July 1, 2009 are not entitled to any COLA after retirement.

Georgia’s retirement plans well funded

Earlier this year, many states caused alarm when press reports appeared of low funding levels of their pension plans. The nationally accepted funding ratio for a healthy retirement system is generally seen to be 80 percent. A system is perceived to be better funded the higher this funding ratio is.

Based on Fiscal Year 2009 data from the PEW Center on the States, Georgia ranked in the top ten of all states for retirement system funding percentages.

During this same fiscal year, 62 percent, or 31 states, had funding ratios below 80 percent.

Only 22 states, including Georgia, paid their annual pension bill in full.

The most recent ERS data shows a funding level of 80.1 percent in FY2010, down from 85.7 percent in FY2009. In FY2009, TRS was at an 87.2 percent funding level. This number is expected to be updated in August 2011 to reflect FY2010 levels.

The lower levels are mainly a result of losses in the stock market and will require contributions in the FY2013 budget.

If you would like additional information here are some available informational websites:

PEW Center report on the growing gap in state pension funding — www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=858993...

National Conference of State Legislatures Article on State Reform Efforts

www.ncsl.org/?tabid=20716

Employees’ Retirement System

www.ers.ga.gov/plans/ers/ersmain.aspx

Public School Employees’ Retirement System

www.ers.ga.gov/plans/psers/psersmain.aspx

Teachers’ Retirement System

www.trsga.com/

Thank you for your interest. Please contact me if I may be of assistance at:

109 State Capitol

Atlanta, Georgia 30334

(404) 651-7738

(404) 651-5795 (fax)

ronnie.chance@senate.ga.gov

[Sen. Ronnie Chance (R-Tyrone) represents Senate District 16, which includes parts of Fayette, Monroe and Spalding counties and all of Lamar and Pike counties.]

roundabout
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Senator Chance

No one in their right mind or even wrong mind could decipher what you had your staff dig up!
Also, it would take a month just to pull up all those references you gave.

It sounds like a complaint to me by you about teacher's salaries and pensions! Although I can't be sure!

Just tell us what teacher's will draw upon retirement at what age and service, and who is paying for it!

A simple chart could do that.
You might need two charts, one for before and one for after!

You didn't impress me!

PTC Observer
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Georgia Govt. Pensions

Thanks Senator Chance....for illustrating the many pension plans that we will be paying for in future years. Collectively, I suppose that at some point they will bankrupt the state as the stock market tanks and Georgia politicans will be making up the shortfalls with taxpayer money.

Woe be it to any politician that doesn't support state worker pensions. If you want to see how things will eventually go in Georgia, look to California. We have a balanced budget provision in our Constitution, so they will either have to "reform" the tax code (tax increases) or cut spending to pay for these pensions. My guess is they will go for the reform option, under the cover of making taxes "fair".

roundabout
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Joined: 01/01/2011
PTC Observer

Have you added up "the many pension plans" the teachers have? How much is it in total?

I tried to add it up but wasn't smart enough. Senator Chance somehow meant to confound and confuse us about those bad old teachers everywhere in GA.

They mostly vote democratic you know? Wonder why? "Who loves you babe?" (Telly Savalas).

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