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Pension Funding Council adopts lower contribution rates, projects $260 million general‑fund savings for 2027–29
Summary
The Pension Funding Council voted 5–0 (1 excused) on June 23 to adopt Office of State Actuary–calculated contribution rates for the 2027–29 biennium, citing improved funded ratios and deferred asset gains; OSA estimated $260 million in general‑fund savings and roughly $500 million in total employer savings.
The Pension Funding Council on June 23 adopted the Office of State Actuary’s calculated contribution rates for the 2027–29 biennium, approving the measure on a roll call vote of 5 ayes, 0 nays and 1 excused.
The council’s adoption follows a presentation of the Office of State Actuary’s 06/30/2025 actuarial valuation and a demographic experience study that showed most plans’ funded ratios rose to at least 94%, with many at or above 100%. Luke Maselink, senior actuary at the Office of State Actuary, said the combined effect of strong market returns since 2022 and the plan’s benefit formula produced improving accounting metrics and lower calculated rates.
"Following that trend, we see corresponding decreases in contribution rates for most plans," Maselink said during the meeting. He told the council the OSA estimates the change from current to calculated rates will yield about $260,000,000 in general‑fund savings for the 2027–29 biennium and nearly $500,000,000 in total employer savings.
Why it matters: the actuarial valuation reported unusually strong market returns for FY2025 (a market return of 9.6% versus an assumed 7.25%), and the systems still carry deferred actuarial gains that are scheduled to be recognized over coming years. OSA staff cautioned that those deferred gains provide a temporary buffer and that a market downturn could reverse some recent funding improvements.
The Office of State Actuary also emphasized that the accounting valuation presented to the council is designed for governmental accounting (GASB) and is not itself a funding valuation for setting contribution policy. OSA staff noted that a separate funding valuation would be appropriate for future rate‑setting decisions and that some systems are nearing statutory minimum employer contribution floors.
Council procedure and vote: after the presentation, a motion to adopt the calculated rates was made and seconded; the motion passed on a roll call that recorded votes from representatives and directors present. The council chair, noting the improved metrics, thanked the actuary’s office and the state investment board for contributing to the positive results.
Next steps: the adopted rates will be implemented for the 2027–29 biennium. OSA and the council will continue monitoring asset performance, deferred gain recognition, and whether statutory minimum rates will become binding in future biennia.
