Teachers Retirement System Critically Underfunded

As of June 30, 2009 the State’s Teachers’ Retirement System (TRS) funding ratio (assets set aside compared to pension liability) is less than 50%.  But the news gets worse, because that ratio is based on assets being valued using the average market value over the last five years.  If the ratio is calculated using the current market value, then the ratio drops to only 38%.

This critical fund ratios is due to two factors:  the recent downturn in the market values and the State’s routine underfunding of the System.  A history of the adequately funding amount calculated actuaries and the percentage actually contributed can be found by clicking here. For the last four years the State and other employers have been more serious about funding TRS, but as this schedule indicates there has been only one year in which the System was properly funded.  Before 2006 the System was willfully underfunded with contributions between 40% to 72% of what the actuaries said they should be.

Because of these two factors the unfunded liability of TRS is 250% of related payroll.

In the Institute for Truth in Accounting calculation of the State’s pension liability we are thinking about only including 66% of the TRS unfunded pension liability.  This is based on the State’s share of the employers contribution requirement.  A actuarial report of the State’s share of the Unfunded Actuarially Accrued Liability (UAAL) would be helpful in our analysis of the Financial State of the State.  Unfortunately, we have not be able to find one.  Can anyone out there help us?