2005 LEGISLATIVE RECOMMENDATIONS
General Goals:
Maintain the minimum funding schedule as provided in 70 O.S. § 17-108.1, and 68 O.S. §§ 1353, 1403, and 2352. (Contributions from local school districts and dedicated revenue from sales, use and income tax revenues).
Provide funding to local employers to fully implement the financial obligations of 70 O.S. § 17-108.1, which requires local school districts to contribute a percentage of employees’ pay.
Fund any benefit increase improvements over a period consistent with standard actuarial assumptions.
Provide additional funding to retire the System’s unfunded liabilities over a shorter period of time.
Title 70 O.S. § 17-108.1, sets annual contribution level local school districts must remit to the Teachers' Retirement System in the form of "employer" contributions. Since July 1,2003, schools have been required to remit 7.05% of employees’ total pay.
Since July 1,1999, the state’s contribution to fund the Teachers’ Retirement System (68 O. S. §§ 1353, 1403 and 2352) has been a portion of the state’s sales, use and income tax collections. Prior to 1999, TRS received 55% of the severance tax on natural gas. Even with the change in funding, TRS is still poorly funded. During FY-2004, TRS received $143 million from the State and $219 million from local schools. The combined annual contributions from the state and local employers was $173 million less than required to pay down the System’s unfunded liabilities over a 40-year period.
Specific Recommendations:
Properly fund the existing obligations of the Retirement System as provided by current statutes.
Provide a means of systematically increasing state contributions in order to amortize unfunded liabilities over as short a time period as possible by:
- Maintaining the state’s contribution to TRS to at least match the contribution level required from active members and local school districts.
- Re-establishing a percentage of the tax on natural gas as an additional source of funding for the Teachers’ Retirement System.
- Dedicating a percentage of available funds in the state’s Rainy Day Account to be appropriated to the Teachers’ Retirement System.
- Dedicating a portion of any windfall revenue received by the state to TRS.
- Earmarking a percentage of growth revenue available to the General Revenue Fund to the Teachers’ Retirement System to pay for benefit increases, i.e. COLAs insurance, etc.
An additional annual contribution of $10 million would result in a $1.13 billion accumulation in 30 years. Annual contributions of $25 million would result in a $2.8 billion increase in TRS assets.
Adopted January 26, 2005
