In a Web announcement , Rell said final approval by the state Bond Commission is expected at the panel’s January 25 meeting. Rell contended that the teachers’ pension shortfall was largely caused by decisions under prior state chief executives to not fully fund the retirement program.
The fund currently contains $10.2 billion in assets, which represents 59.5% of its future obligations. According to Rell, the investment of $2 billion at the fund’s actuarial investment rate of 8.5% is expected to “significantly” reduce the funding shortfall.
A new law authorized the bond sale to reduce the liability. The legislation also requires the state to fund the Teachers’ Retirement Fund at 100% of the actuarially recommended contribution each year over the life of the bonds.
“We demand much from teachers – and rightfully so, since they are the ones we trust to educate our most precious resource,” Rell said in the announcement. “Teachers, in turn, trust state government to make good on its commitments to them, now and in the future. We must keep our promises, not only to current teachers but to those we hope to encourage to enter the profession in the future.”
The budget signed in 2006 by Governor Rell authorized $245.6 million to fully finance the Teachers’ Retirement Fund for fiscal years 2006 and 2007. The new state budget also provides for full payments in fiscal years 2008 and 2009.