The Teacher’s Retirement Association (TRA) is seeking legislative action this session to close a $1.5 billion funding gap created by increased member longevity according to recent pension system experience studies. As of today, a comprehensive fix is proving elusive, and a bill moving forward in the House would essentially punt on a long-term solution.
The current proposal of reducing cost of living adjustments (COLAs) for current retirees to 1 percent for one year closes the TRA gap by a meager 4 percent, leaving a $1.4 billion problem.
MREA and others are seeking a more comprehensive solution that reflects a more balanced approach among retirees, active employees, employers, and the state.
TRA is seeking an increase in employer contributions of 1 percent, and MREA thinks the legislature should appropriate the funds necessary to cover the cost of this increase. This would cost roughly $43 per pupil in average, but each district’s impact various based on their overall salary schedule.
There are also some legislators who believe the employee share should be increased as well. These are complex and sensitive issues and there’s little time left on this legislative session’s clock to sort them out.