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The Senate Finance Committee met Monday, September 25, 2006, to briefly review the budgets of several state entities, including the Teacher Retirement System. Without directly addressing the issue of the TRS budget request that includes a state contribution rate of under 6%, the senators discussed the costs of increasing the state contribution to a level that might eventually allow for an increase in retiree annuities. Moving the state’s contribution from the current 6% to 7.19% would bring the system’s unfunded liability period down to 31 years, a statutory benchmark, and additional funds would be necessary to fund any benefit increases.
When asked about what the necessary rate for the 31-year benchmark would be if the state and employees had the same contribution rate, TRS responded that the employee rate would have to rise from the current 6.4% to about 6.7%.
Senators discussed TRS-Care, the retiree health insurance administered by TRS. Though the program is currently in relatively good shape, with TRS not expected to require additional funding from the state for the upcoming biennium, the long-term outlook still predicts problems in keeping up with the rising costs of health care and prescription medications. Among the solutions to this problem is pre-funding; the insurance program is currently funded on a pay-as-you-go basis, and some senators expressed interest in finding a way to set aside money in upcoming years to offset those anticipated cost increases. This would likely be quite expensive, but would be preferable to reducing health insurance benefits for retirees.
Updated: 09/25/06
