Market gains mean huge comeback for Georgia teacher pension system

L.C. “Buster” Evans, the director of the Teachers Retirement System of Georgia.
L.C. “Buster” Evans, the director of the Teachers Retirement System of Georgia.

The $80 billion-plus system has recovered to pre-pandemic highs

While Georgia’s economy continues to struggle amid the COVID-19 recession, its massive teacher pension system has benefited mightily from the stock market’s rebound.

In late March, as stocks tanked, the state Teacher Retirement System’s assets dropped from $83 billion at the end of 2019 to $65 billion.

“There was a sick feeling in my stomach,” TRS Executive Director Buster Evans told his board Wednesday.

The value of the system’s assets is important to the state because a drop could force taxpayers to pay hundreds of millions of dollars extra in a year to shore up the pension’s finances.

But Evans told the TRS board that the system ended fiscal 2020 on June 30 at $81 billion and change, up about 3% from the same time a year ago. And by Wednesday, assets were at nearly $84 billion, close to the highs reached halfway through the fiscal year.

“We are in a much better position than we were in the depth of the markets,” Evans said. “We are back to the highs, we are back as of today to where we were in early December.”

Anyone who owns stock, or has a 401(k), can attest to the roller-coaster ride they went on over the past six months.

The market plummeted just as the pandemic was starting to make news, with the Dow Jones Industrial Average falling more than 23% in the first quarter of the year and by about 26% from its high in mid-February. It is up about 20% since the beginning of April.

The state’s teacher pension system is closely watched because so many educators and retirees depend on the benefits. And because state lawmakers have raised concerns about its long-term financial viability.

The pensions are funded through a combination of employee contributions, money from taxpayers and investments.

It provides monthly benefits to more than 130,000 retirees, with an average payment of just under $41,000 a year. The system annually sends out more than $5 billion to retirees.

Recent good years in the market had increased the financial stability of the system, making it far more solid than many teacher pensions across the country.

Only a few years earlier the state had hiked taxpayer payments into the system by about $600 million, eating up much of the new tax revenue that had come in during 2017 and 2018. That led to increasing efforts by some lawmakers to consider changing the system so that new teachers received 401(k)s — savings and investment funds that the state would contribute a share — rather than pensions.

An audit in 2019 said that, without any changes, the state and local school district contributions into the plan would rise to $2.4 billion by 2025 and $4.4 billion by 2045. That would make contributing into the teacher pension system one of the state’s biggest expenses.

But teachers see the chance for educators to retire after 30 years or so and receive a good pension as one of the state’s best recruiting tools to attract young people into the profession and keep them in schools. They have fought many of the changes legislators proposed for the TRS, including the 401(k) idea for new teachers. And they’ve beaten back those efforts, year after year.

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