This report covers the submitted LAR document and attempts to summarize the priorities and changes in the aforementioned Legislative Appropriations Request.
Background Spotlight
This LAR primarily concerns funding for two major programs: the TRS Pension Trust Fund and TRS-Care, the Retired Public School Employees Group Insurance Program.
This year, TRS will pay out more than $35 billion dollars in retiree benefit and health care payments to more than 430,000 recipients. Annuity payments generate more than $1.6 billion in tax revenue and guarantee 137,000 jobs in the state. As of July 2020, approximately 5% of TRS-Active Care and TRS-Care Standard enrollees have tested positive or identified as a suspected case for COVID-19.
Baseline requests include an increase to the state contribution rate for higher education and TRS employees from 7.5% in FY21 to 7.75% in FY22 and 8.0% in FY23, assuming 3% annual payroll growth. For TRS-Care and TRS-Active Care receive funding from public school teacher payroll tax, approximately 1.25% each year.
Given the economic uncertainty created because of the pandemic, the TRS decided to lapse 15% of the pension administrative operating budget in FY 2020 and plans to lapse 9% for FY 2021. Lapsed amounts will remain in the TRS Pension Trust fund. These lapses are attributed to a hiring freeze, limited payroll increases including limiting overtime compensation, and decreases in operating expenses including travel fees. Funding for FY 22-23 will be focused on mission-critical areas which includes continuing efforts to improve customer service and reduce investment fees, identify a solution for TRS’ long-term facility needs, and key support function initiatives like deploying new IT infrastructure as a part of the TEAM program.
TRS does not anticipate additional funding being needed to maintain TRS-Care benefits at current levels through FY 22-23 due to additional funds being appropriated in FY 20-21 and the re-procurement of major health administrator contracts, which will save an estimated $754 million over the next 3-5 years across both TRS-Care and TRS-Active Care.
Appropriations Spotlight
- General Revenue – Increase from $5,076,318,357 to $5,914,382,833
- GR Dedicated – Increase from $48,757,629 to $52,362,051
- Other Funds – Decrease from $805,434,755 to $297,491,135
- ALL FUNDS – Increase from $5,930,510,741 to $6,264,236,019