TRS rate expected to jump in 2013-14

On Board Online • November 19, 2012

By Paul Heiser
Senior Research Analyst

School district contributions to the state Teachers’ Retirement System (TRS) are expected to jump to at least 15.5 percent for the 2013-14 school year, according to an administrative bulletin issued by the pension plan. 

The 2013-14 rate is expected to be between 15.5 percent and 16.5 percent, up from 11.84 percent in 2012-13. This rate will apply to fiscal year 2013-14 TRS payroll and will be collected in the fall of 2014.

Four TRS representatives plan to meet with NYSSBA’s Board of Directors at its Dec. 1 meeting. They are: Thomas Lee, executive director; Wayne Schneider, general counsel; Richard Young, actuary; and Michael Kraus, board member.

The TRS board will not formally adopt a rate until next July, but provides advance notice to help school districts with planning and budgeting. TRS will issue another bulletin in February 2013 with a more precise estimate of the employer contribution rate.

TRS covers teachers, teaching assistants, guidance counselors and educational administrators in public school districts outside of New York City and BOCES.

The TRS rate is determined annually through an actuarial valuation of the assets and liabilities of the pension plan and depends upon future investment performance and member demographic experience. Poor returns in the global capital markets are the driving force behind recent rate increases. The one-year rate of return on TRS assets for the fiscal year ending June 30, 2012 was 2.8 percent.

“TRS rates are cyclical and have been since their very inception,” said David Little, NYSSBA’s director of governmental relations. “Rates rise in inverse proportion to the economy: When money is flowing in, the rates are lowest due to money made on the fund itself; when money is tight, it’s due to poor market performance and so they need to take more money from the employers and TRS members.”

Regent James Tallon, at the Board of Regents’ monthly meeting in November, said incorporating some kind of smoothing mechanism could help mitigate such wide fluctuations in the contribution rate and allow districts to make accurate long term decisions.

“We have to figure out how to give some predictability,” Tallon said.

Additional reporting by Senior Writer Cathy Woodruff.