The Georgia Teacher Retirement System was the focus of conversation Wednesday among members of the House Appropriations Education Sub-committee. Many Georgia leaders have expressed concerns over the sustainability of the program which is the 25th largest retirement fund in the nation with over 240,000 active contributing members and 133,000 retired members.
During the 2017 session, Georgia lawmakers had to put in an extra $223 million to ensure the financial security of the system. And in the 2018 session, they added an extra $361 million.
Wednesday, L.C. “Buster” Evans, who heads up the TRS, told lawmakers that the fund currently has over $84 billion in assets — up from $65 billion a little more than three years — reflecting a growth of over $19 billion. He said the membership numbers have been growing, adding “that’s a good thing. We went through the recession where we actually lost memberships, and that meant we had fewer people contributing into the system. But school systems and colleges have been able to return to hiring new people to come into the profession, and we’ve seen those membership numbers increase.”
TRS has also paid out about $14 billion in assets over that same period of time. Evans said the average teacher pension is about $37,000 a year today.
According to Evans, the TRS has three main revenue streams. One is the employee contribution rate, which is set by Georgia law between five and six percent and is currently at 6 percent. Another, the employer contribution rate, reached 21.1 percent in FY20 and will go down to 19 percent for FY 21. Evans added that while that number may not stay at that rate, there is “less volatility” in that number than there has been seen in the last few years.
The third and largest revenue stream comes from investment earnings, he said.
“We have been very fortunate for the last four years to experience asset growth as a result of the returns we have gotten — with FY 17 being over 12.5 percent and 2018 at 8.9 percent. We had a little dip in FY 19 down to 6.7 percent. But year-to-date, as of today, we are over 9.5 percent.
“I know it would be less than optimistic to say it would be nice to close the books right now for the year, but if we can at least hold on to that for the balance of the year, we think as these numbers are built into our actuarial valuations, we again will see sustainability being a more realistic goal for us and less of a burden on the state,” Evans said.
Evans said there are once again several pieces of legislation that could have an impact on TRS. Among them are HB 109 and HB 336 — a return to work bill that would allow retired educators to return to work full time while drawing their pension if they sit out a year. Currently a retired educator in Georgia can return to work and continue to draw their pension as long as they work 49 percent or less — after a 30-day period from the date of their retirement.
HB 109 has undergone major changes since its introduction and would limit cost of living adjustments to once a year for all current and future TRS members. Now, employees get a 1.5 percent increase twice a year; giving the COLA once-a-year represents a $17 million savings.
