Atlanta Public Schools is still in search of a long-term solution to paying for one of the worst-funded pension plans in Georgia.
Last week school board members agreed they would not seek voter approval this fall to fund more than $500 million of unfunded pension liability by borrowing money to bet on the stock market, board chairman Courtney English said.
The board had voted in June to authorize Superintendent Meria Carstarphen to prepare for the referendum, but decided against pursuing it after finding that rising borrowing rates would reduce potential savings by nearly $30 million, English said.
“Both then and now, we stressed that we would pursue such an option only if market conditions were favorable.” English said in a written statement. “But with the rising costs of maintaining our pension plans, we must continue to explore other options.”
The pension debt has been building for at least 35 years. When many Atlanta teachers transferred from the school pension plan to the Teachers Retirement System of Georgia in the late 1970s, they brought most of the school retirement plan’s assets with them. About 3,100 active and retired school system employees, many of them bus drivers and custodians, remain in the pension plan, which is overseen by a city of Atlanta pension board.
The pension plan has become a huge cash drain on the district. It is essentially paying out cash nearly as fast as it comes in.
Critics called the proposal to fund pension debt by betting on the stock market a risky strategy that could exaggerate losses if the stock market slumps. But district officials said selling bonds could save the district money by taking advantage of historically low interest rates and giving the school system breathing room to invest the proceeds for the long haul.
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