Teachers Retirement System of Kentucky Budget Review
The Teachers Retirement System of Kentucky receives funding requests in line with recent years, with the state paying nearly all recommended contributions. TRS members include various educational institutions, with different benefit structures. The actuarial status as of June 30, 2019, highlights assets, liabilities, and pension funding. Investment performance shows positive returns, outperforming average pension plans. Investment income plays a crucial role in the schedule of funds for retirement benefits. The 2020-22 budget aligns with previous requests to support retired teachers' pensions and the state's share of healthcare premiums.
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Presentation Transcript
Teachers Retirement System of the State of Kentucky Budget Review Subcommittee on Personnel, Public Retirement and Finance Gary L. Harbin, CPA Executive Secretary Feb. 27, 2020
2018-20 Additional Funding Summary TRS Requested $1.09 B Approved $1.09 B 100% State paid nearly all contributions recommended by the actuary for FY 2017 & 2018.
Who Are TRS Members? 172 school districts 17 Department of Education agencies KCTCS Five universities 95% of TRS members employed by non-university and benefit replaces Social Security 5% employed by university and benefit supplements Social Security
Actuarial Status As of June 30, 2019 Dollars in billions Assets Liabilities Unfunded Percent Pension $ 20.2 $ 34.7 $ 14.5 58.1%
Investment Performance Retirement Annuity Trust Returns as of Dec. 31, 2019 (unaudited) Quarter FYTD 6.92% 7.69% 21.92% 11.27% 8.25% 6.06% 7.11% 21.02% 10.76% 8.22% 5% N/A 17.1% TRS Aon Rank Top 2% N/A Net 6.84% 7.62% 21.57% 10.96% 7.98% 1-year 3-year 5-year 10-year 20-year 9.51% 9.3% 8.5% Gross 6.26% N/A N/A N/A 6.06% Benchmark 9.6% 7.2% Aon Index Top 4% Top 3% Top 5% Top 5% 9.27% 30-year compounded gross return 8.15%
Investment Performance Retirement Annuity Trust Since Great Recession TRS s investment performance above the average pension plan from 2008 to 2019 resulted in an additional $3.6 billion. 15 Billion $ 12 9 6 3 0 TRS Average Pension
Importance of Investment Income Schedule of Funds Available for Retirement Benefits In billions Beginning Balance as of July 1, 1985 Member & Other Contributions Employer Contributions Investment Income Benefit Payments & Refunds Administrative Expenses Ending Balance as of June 30, 2019 $ 1.8 7.6 14.6 27.5 (30.9) (0.2) $20.4
2020-22 Budget For both years of the next biennium, the additional funding request is in line with recent requests. Governor s recommendation fully funds retired teachers pensions and the state s share of the KEHP single premium cost for retirees. Agency request contained optional line items. A pension appropriation to show the cost of shortening amortization period, in response to a legislative request. Non-single subsidy cost State paid nearly all contributions recommended by the actuary for FY 2017 & 2018.
2020-22 Budget Summary Request for 2020-2021: $730 million Excludes SEEK Includes $551.1 million in additional pension funding Includes $61.7 million for state s share of KEHP single premium Request for 2021-2022: $769.7 million Excludes SEEK Includes $579.2 million in additional funding Includes $68.4 million for state s share of KEHP single premium
TRS Health Insurance Trust Funded Status 100% 90% 80% 70% 60% 50% 46.0% Shared Responsibility Becomes law 36.3% 40% 26.7% 30% 21.9% 18.1% 20% 15.9% 11.7% 9.4% 8.6% 7.5% 10% 3.5% 2.9% 2.4% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
TRS Health Insurance Funding Sources 1. Current costs for over-65 coverage Teachers contribute 3.75% School districts 3% State contributes 0.75% 2. Under-65 coverage costs Retired teachers pay about $195 a month State pays balance of about $515 a month
Our Members Come First! 800-618-1687 8 a.m. 5 p.m. ET Monday Friday info@trs.ky.gov https://trs.ky.gov Protecting & Preserving Teachers Retirement Benefits
