Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
TRS director warns university supplemental rate must rise sharply to meet 2033 amortization
Loading...
Summary
Teachers Retirement System director told the committee that to amortize university-system liabilities by July 1, 2033, the MUSRP employer supplemental rate would need to rise from 4.72% to 14.21% or a $214 million lump sum would be required; the director said funding is not in the governor's budget.
Sean Graham, executive director of the Teachers Retirement System, briefed the House State Administration committee on TRS membership, cashflow and two bills on the board's agenda.
Graham said TRS currently serves about 20,000 active members and roughly 18,000 benefit recipients, with about $5 billion in assets. He told the committee the system's funded ratio rose to 74.2% as of July 1, 2024, and the system amortizes its liabilities over 21 years under current actuarial assumptions.
Graham described an outstanding unfunded liability associated with the Montana University System retirement plan (MUSRP), saying the statutory timetable requires the supplemental contribution rate in effect for MUSRP to fund that liability by 07/01/2033. "In order to actually pay that off by that deadline of 07/01/2033, that rate would have to increase from 4.72% of compensation to 14.21% of compensation," Graham said, adding that an alternative would be a one-time lump sum payment of about $214,000,000.
Committee members asked whether the increase could be phased in and whether the statute mandates legislative action by 2033. Graham answered that current statute requires that the payments be set to amortize by 07/01/2033 but does not create an automatic sunset; he also said the university system's fiscal capacity matters and that about half of any percentage-based increase would fall to the state general fund through university appropriations while the remainder would likely come from tuition and other university revenue.
Graham also noted the TRS board will carry two bills this session: House Bill 67 (a housekeeping bill to maintain IRS qualification and administrative efficiency) and House Bill 51 (the university system supplemental contribution bill, carried by a representative in the House). He told members the TRS board had not seen statutory funding for the MUSRP adjustment built into the governor's budget and that the board has brought rate-change bills in prior sessions without legislative action.
The committee did not vote on HB51 in the session recorded in the transcript; members sought more detail about fiscal effects and implementation before any decision.
