Funding Changes Threaten Teacher Retirement System Stability in Fiscal Year 2024

The West Virginia Senate Banking and Insurance Committee convened on March 26, 2025, to discuss critical funding issues related to the state's teacher retirement system and municipal pension plans. A significant focus of the meeting was the current funding status of the Teacher Retirement System (TRS), which is presently only 83.4% funded, indicating a substantial unfunded accrued liability.

Committee members highlighted that approximately $3.5 million is currently allocated to the TRS. However, concerns were raised about the potential diversion of these funds to other areas, which would necessitate finding alternative funding sources to maintain the system's stability. Mark Muco, an expert consulted during the meeting, warned that any reduction in funding could exacerbate the existing actuarial shortfall, increasing the system's liability.

Erin Hunter, general counsel for the Office of the Insurance Commissioner, provided insights into recent tax revenues, noting that in fiscal year 2024, approximately $24.8 million was generated for pension plans, with $3.8 million specifically directed to the TRS for teachers. This information underscores the importance of maintaining adequate funding levels to support the retirement system.

Additionally, Executive Director Blair Taylor from the Municipal Pension Oversight Board presented data on 53 municipal funds, including those for fire and police services. The committee discussed the potential for these funds to qualify for an additional 10% funding increase under proposed legislation. Currently, funding levels for these municipal funds vary widely, with some as low as 11% and others exceeding 191%. Most, however, remain below optimal funding levels.

The discussions highlighted the urgent need for strategic financial planning to address the funding challenges facing both the TRS and municipal pension systems in West Virginia. As the committee continues to evaluate these issues, the implications for educators and public safety personnel remain significant, emphasizing the importance of sustainable funding solutions.