Trustees approve Pension Stabilization Reserve Trust audited financial report for fiscal year 2023–24

The Pension Stabilization Reserve Trust Board of Trustees voted to adopt the trust's audited financial report for the fiscal year ended June 30, 2024, after a presentation from a Department of Treasury representative.

Brian Derek, Department of Treasury, told trustees the stabilization reserve was created as a cost-control mechanism for hybrid defined‑benefit plans and became effective July 1, 2018. He said state law requires a 4% contribution of covered payroll to those defined‑benefit plans and that the actuary annually determines the actuarially determined contribution (ADC). When the ADC is less than 4%, the excess is deposited into stabilization reserves; when the ADC exceeds 4%, reserve balances would be available to offset the statutory contribution.

Derek said there have been no withdrawals from the stabilization reserves since their inception and that, for the first four years, excess contributions were held inside the Tennessee Consolidated Retirement System pension trust before a separate stabilization reserve trust was established in 2018. He reported balances held inside the pension trust of $158,000,000 and balances inside the separate stabilization reserve trust totaling $398,600,000, which he broke down in the presentation by participant group. He also said the trusts’ assets are invested alongside other TCRS assets in the Tennessee Retiree Group Trust.

Derek noted the packet included the comptroller's audit opinion letter and described the opinion as “unmodified,” commonly called a clean opinion from the Comptroller of the Treasury. He directed trustees to the statement of net position and the notes to the financial statements for further detail and said the statement of changes showed additions from contributions and investment earnings and zero deductions.

Trustees were told that, after June 30, 2024, the trust received additional contributions and earnings through Dec. 31, 2024, totaling $49 million, bringing combined balances in the pension trust and stabilization reserve trust to “a little over $605 million,” according to Derek. He also said separate stabilization reserve trusts exist for the state legacy plan and the teacher legacy plan but that, to date, no contributions have been made to those legacy trusts.

After the presentation the chair called for a motion; a motion and second were made and trustees adopted the report by voice vote with no opposition indicated. The board also approved minutes from the previous meeting as a separate procedural vote during the session.

No further business was raised and the meeting was adjourned.