TRS executive announces upcoming retirement

TRS Executive Director Ronnie Jung announced at this week’s Board meeting that he will be stepping down after the end of the 2011 legislative session. With the agency for 14 years, seven of those as executive director, Jung has steered TRS through some hazardous waters, and will be missed. See the official TRS news release here.

At $98 billion, pension fund continues rebound

About this time last year, the market value of the TRS pension fund was $67 billion (down from a high of $118 billion a couple of years earlier), but has now gained back more than $30 billion as a result of improvements in the US and global  economies. As the system approaches $100 billion, TRS members can take some comfort in the recovery – but not too much. The next actuarial valuation, which will be based on August 31, 2010, figures, will take into account a portion of the billions of dollars lost in recent years that have not yet been included in the actuarial calculations.  The gains of this fiscal year will be offset by those past losses, and it is unlikely that the resulting figures will allow the fund to pay for increases in retirement benefits for retirees.

Budget cuts in store for current biennium

State leaders have asked agencies to identify budget cuts that will trim at least 5% from the current biennial budget. State contributions to the pension fund were excluded from the requirement, leaving TRS administrative costs and TRS-Care as the budget areas subject to the reduction. The total amount by which the budget must be reduced is approximately $26.5 million.

At TRS, only staff salaries are funded by general revenue; the remaining administrative costs come out of the TRS pension fund and are not subject to the reduction. (In the past, all administrative costs were paid for by the pension fund.)

In an effort to minimize the impact on TRS-Care, the agency hopes to return all of the staff salary appropriation and use funds from the pension system (around $7 million) to pay for salaries. The remainder of the required reduction would have to come from TRS-Care, and would slightly reduce the current assets of the retiree health insurance fund. A letter from TRS officials to the Legislative Budget Board notes: “The retiree insurance fund is currently anticipated to be depleted early in the 2014-2015 biennium. The proposed reduction in the state contribution would accelerate that date by an estimated two weeks.”

TRS has not yet received a response from state leaders to this proposed strategy.

Other budget news

TRS is working on its budget request for the upcoming legislative session. At this time, the plan is to request continuation of the current 6.644% state contribution, and add an additional request for a .5% increase in each of the two budget years, eventually resulting in a state contribution rate of around 7.7%.

Given the anticipated severe budget shortfall that the legislature will be grappling with next session, it will be very difficult for TRS to be successful in achieving this goal. Agencies have not yet received “instructions” from the state leadership regarding the budget preparation process, but in difficult economic times, they are often required to submit a budget that does not include increases, and may even reflect a lower contribution level.