TRS reports $113 billion in assets; lawmakers press on assumed returns, ADEC and COLA funding

At a joint meeting of the Georgia General Assembly’s House and Senate retirement committees, representatives for the Teachers Retirement System and the Employees’ Retirement System gave an overview of their funds’ finances and fielded questions about assumed investment returns and pension funding.

Buster Evans, representing the Teachers Retirement System (TRS), told lawmakers the system serves "over 500,000 active, retired, and inactive members" and that TRS managed about $106 billion in assets as of June 30 and about $113 billion "as of this morning." He said TRS’s fiscal-year returns had been strong recently — "last year's return on investments were 14 and a half percent" — and that the board reduced the assumed rate of return to 6.9% from 7.25% to adopt a more conservative outlook.

The assumed rate change drew sustained attention from committee members. Rep. Chuck Martin, chairman of the House retirement committee, warned that small changes in the assumed return can materially affect the actuarially determined employer contribution (ADEC). He noted, for example, that lowering the assumed rate from about 7.25% to 6.9% increased the funding need by billions of dollars and cited a figure discussed in the meeting that a few basis points can translate into roughly $4 billion on the plan’s liability.

Why it matters: The assumed return and the ADEC affect how much state and local employers must contribute and influence the system’s ability to pay or restore cost-of-living adjustments (COLAs) that retirees have sought. TRS officials described steps taken to improve sustainability; committee members pressed for long-term consistency in assumptions and clarity about how proposed state budget contributions would interact with actuarial changes.

Key facts presented

- Membership and benefits: TRS serves K–12 teachers, higher education faculty, extension agents and public library employees. TRS reported about 152,000 beneficiaries with an average monthly benefit of $3,637 and average service of roughly 25½ years.

- Assets and returns: TRS reported roughly $106 billion in assets at the end of June 2024 and about $113 billion at a later reporting date cited in the meeting; speakers described year-to-date gains and a multiyear track record of positive returns. TRS staff said they manage about 80% of assets in-house at low fees (about six basis points).

- Assumptions and ADEC: TRS’s board lowered the assumed investment return to 6.9% from 7.25%. Committee members said that change increases the ADEC and pointed to a governor’s proposed budget figure cited in the meeting of roughly $115 million for TRS in the coming budget cycle to address funding.

- Asset allocation: TRS reported an approximate allocation of 75% equities, about 25% fixed income and under 5% in alternative investments (private equity is roughly 2% of the fund). TRS staff said it is capped at 5% for alternatives and that equities drove recent outperformance.

ERS briefing and funding for state employees

Jim Poppin, executive director of the Employees’ Retirement System (ERS), gave a separate overview for ERS. He said ERS manages roughly $20.8 billion as of June and about $21.4 billion as of December across multiple retirement plans the agency oversees. Poppin said the ERS funded ratio was 72.0% as of the June 30, 2023 valuation and that an unreflected $500 million state contribution in the prior year should raise the next valuation by an estimated 3–4 percentage points (Poppin said he expected a funded ratio in the mid-70s on the next certified valuation).

Poppin noted that a second governor-proposed $500 million contribution for the current year was in the budget proposal under consideration and that raising the funded ratio is a step toward enabling larger COLAs for state retirees under ERS rules. He said ERS’s active population had grown (to about 57,000) and that investment returns had been favorable year to date.

Retiree group testimony

Chuck Clay, speaking for the Georgia State Retired Association (GSRA), urged continued and larger funding for retirees. He recounted that many retirees have experienced erosion of purchasing power and asked legislators to sustain and expand recent appropriations. Clay thanked staff for accessibility and noted a prior $150 million appropriation three years earlier and annual supplemental payments to retirees described during the meeting.

Votes at a glance

- House Retirement Committee rules for 2025–2026: Motion to adopt rules unchanged from 2023–2024; seconded by Rep. Brad Thomas; adopted by voice vote. The committee kept the quorum at eight members.

- Senate Retirement Committee rules for 2025–2026: Motion moved by Sen. McLaren; seconded by Sen. Goodman; adopted by voice vote. The Senate committee reported a quorum of four.

Discussion, concerns and next steps

Committee members repeatedly asked TRS and ERS staff to make the rationale for actuarial changes and ADEC calculations available and urged a stable, long-term approach to assumptions. Several members said they want to avoid creating a perception that changing assumed returns is used to alter perceived funding levels and then adjust benefits in response. TRS and ERS officials offered to provide detailed follow-up materials and to continue one-on-one discussions with committee members.

The joint committees did not take legislative action on benefit design or COLA policy during the meeting; members said budget proposals and forthcoming actuarial valuations will inform future deliberations.

Ending

Lawmakers and retirement-system officials agreed to continue technical briefings during the session. Officials from TRS and ERS invited committee members to follow-up meetings for deeper review of asset-allocation, smoothing methods and the actuarial basis for the ADEC. The committees adjourned after the overviews and public testimony from the retiree association.