State Retirement Agency budget funds operations; funded ratio falls to 72.9%

Jacob Cash, the DLS analyst, presented the fiscal 2026 allowance for the State Retirement Agency (SRA): $64.1 million, an increase of $4.6 million from fiscal 2025. Cash said the agency’s administrative budget is funded by charges on employers; the investment division itself is non‑budgeted and accounts for about 40% of the allowance.

Cash reported the retirement system ended fiscal 2024 with $68.2 billion in assets and a funded ratio of 72.9%, a year‑over‑year decline; DLS said the system is now expected to reach full funding by 2039, nine years later than projected in the prior forecast. Total fund performance for fiscal 2024 was 6.93%, outperforming benchmarks by 59 basis points, DLS noted.

The analyst described proposed changes: the fiscal 2026 budget includes a conversion of several contractual positions to regular status, adds four positions including a director for diversity, equity and governance (required by chapter 495 of 2024), and reflects an administrative fee holiday in FY26 tied to consensus legislation (HB 107) that would move SRA administrative fees into the pension contribution process and pay SRA from the trust fund. Cash said BRFAA of 2025 proposes to permanently lower the state subsidy for local teacher retirement employer contributions by $97.7 million in fiscal 2026.

Board and agency leaders thanked DLS for the analysis. The agency emphasized efforts to reduce call center wait times and to fill vacancies; the board announced a planned search for the chief investment officer, who said he will retire effective June 30 and is working on a transition plan.