The House State Administration Committee heard details about House Bill 51 and the university-system supplemental contribution during a presentation by Sean Graham, executive director of the Montana Teachers Retirement System (TRS). Graham said the rate currently paid by the university system for the Montana University System Retirement Plan (MUSRP) is 4.72% of covered payroll and that the TRS board's valuation shows the contribution would need to increase to 14.21% to amortize the associated unfunded liability by the statutory deadline of July 1, 2033.

"In order to actually pay that off by that deadline of July 1, 2033, that rate would have to increase from 4.72% of compensation to 14.21% of compensation," Graham told the committee. He added a one-time alternative: "Alternatively, they could pay a lump sum of 214,000,000 and then continue to pay the 4.72%."

Why this matters: TRS and the committee framed the MUSRP supplemental contribution as a legacy liability created when university hires after 1993 were directed into a defined-contribution plan, leaving the defined-benefit system with an unfunded obligation for employees and retirees on TRS rolls at the time of the change. The TRS board is required by statute to recommend a funding schedule; Graham said he has brought proposals to increase the rate in multiple prior sessions but that the legislature has not adopted a full adjustment in his tenure.

Fiscal impacts discussed: Graham said the university system paid about $16 million to TRS last fiscal year at the 4.72% rate. To reach the 14.21% rate by payroll adjustments would add roughly $30 million per year in contributions based on current payroll levels; he said about half of that additional annual cost would likely be covered by the state general fund through university appropriations and the remainder would come from tuition and other university revenue sources. Graham also told lawmakers the $214 million lump-sum option is unlikely to be available to the university system absent a state one-time appropriation.

Questions from lawmakers: Representative Braxton asked whether the 14.21% rate could be phased in; Graham said current statute requires funding sufficient to amortize by July 1, 2033, but that the statute does not automatically end the obligation on that date and the legislature could consider alternative schedules or extending the deadline. Representative Perry asked who would pay the increased cost; Graham described the likely split between state general funds and tuition/other university revenue and said the governor's budget did not include funding to meet the TRS board's recommended rate.

History and next steps: Graham said university employees were closed off from TRS membership in the early 1990s when the MUSRP defined-contribution plan was adopted, and that supplemental contributions to TRS have been adjusted infrequently (the last statutory adjustment he cited was 2007). He said TRS will continue recommending adjustments and that House Bill 51 is the board's vehicle to present those recommendations to the Legislature this session; the bill was carried by Representative Matthews and was heard in House Education the previous day. No committee vote on HB51 occurred in the House State Administration meeting.

Proposed action recorded: TRS requested legislative action (via HB51) to increase the supplemental employer contribution or provide a lump-sum appropriation; committee members requested additional fiscal detail and staff follow-up before any final action.