The new state budget plowed an unprecedented amount of money into the Teachers’ Retirement System of Kentucky, but school board members shouldn’t cross off the funding issue as a “one and done.”
The biennial budget infused the teachers’ pension system with an additional $973 million over the two-year span. “This is 94 percent of the additional funding we requested, which is fantastic,” said Beau Barnes, TRS deputy executive secretary of operations and general counsel. “We’re very, very thankful to the governor and the General Assembly for this huge step that was taken with this budget for teachers’ pensions.”
However, the system is still a long way from erasing its unfunded liability, which, by traditional actuarial calculations, stood at 55.3 percent funded at the close of the 2014-15 fiscal year, which amounts to a $14 billion shortfall. That won’t be erased overnight, Barnes said.
“What we’re doing with the additional money is attempting to pay off the unfunded liability over a period of 30 years,” he explained. “We need to do it 14 more times.”
The chart at top shows the pattern of past and projected TRS asset selloffs prior
to the additional funding pumped into the system by the 2016 General Assembly.
The next chart shows the pattern adjusted for that influx of funding.