Bob Lyons on TRS finances.

TRS FY 2018 Cash Flow Summary Beginning Balance (July 1, 2017) in billions        $49.400

    State appropriation for FY 2018   4.164 

    Teacher/Employer contribution     1.036Total Contributions to TRS $5.200    

Total annuity benefits             ($6.555)            

Cost of running TRS                 .023

                                                                 TRS Total outflow                         ($6.578)

The part of our profit that makes up the difference                                                 1.378

The part of our profit that is left to be invested                                                   1.905

Ending balance (June 30, 2018) in billions                                                      $51.300

The state appropriation for FY 2019 is     $4.466                                            

Note that TRS needs to make in its investments almost $1.4 billion just to break even for the year.  And even with making more than 8% for the year, our unfunded liability grew in FY 2018.For 2018 the TRS fund made 8.45% net of fees, but because the cost of benefits exceeds our contributions by $1.383 billion our fund only grew by $1.9 billion or 4.2%.For FY 2018 the thirty-year net of fees return was 8.4% and the forty-year return was 9.2%.

Due to state underfunding last year, the TRS unfunded liability grew by 2.8% from $71.4 billion to $73.4 billion. TRS funded status is by my calculation 41.14%. It was 40.2% in FT 2017. 

Bob Lyons

4 thoughts on “Bob Lyons on TRS finances.

    1. Are retiree health costs included in this picture? How about growth in pension obligations to those who have not yet started their pensions? What this seems to show is that most money going in for current and future pensions is being spent on this year’s pensions only. If that’s sustainable for the long-term, no need to worry. But if I’m a Tier One active member, I wonder whether my own pension is safe (not to mention medical) looking down the road 10 years.

  1. Tier 1 is pretty safe, medical insurance cost is split with portions put in by the state, the retiree, and the school districts. Medical coverage that is only available to state (TRS,SURS,SERS,JRS,GAPS) retirees has been deemed by a court ruling to be a pension benefit. A benefit which is not supposed to be diminished or cut. However, I have noticed on next years coverage it looks like a few things like out of pocket limits and emergency medical treatments have gone up a little. The problem is that if they change things like that, it sets a precedent for more cuts later. Another thing that is disturbing is that some other public pensions, City of Chicago in particular seems to have slashed medical coverage to retirees leaving some of them with insurance coverage that exceeds their pensions.

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