What was six months ago an $8 billion shortfall now stands at $11 billion for the Teacher Retirement System of Texas, according to the Austin American Statesman.
In years in which the state Legislature sits, the pension fund releases its actuarial figures in the middle of the fiscal year, which was February 28. It was projected that the original $8 billion shortfall would take 31 years to make up, according to the American Statesman, assuming current funding levels and an 8% investment return. Because of this shortfall, state lawmakers cannot increase benefits levels; the last time such levels were increased was 2001.
Of concern is that the increase in unfunded liabilities occurred during a time of solid investment returns, according to the paper. Returns in fiscal year 2004 were 11.9% according to the system’s executive director Ronnie Jung. The ten-year running average is 10%.
According to the paper, the shortfall is mainly due to a lack of state funding. In 1995, the state cut its contributions to the fund from 7.31% to 6%. According to the paper, this reduction, coupled with s change in policy to encourage early retirement, is largely the cause of the increase in unfunded liabilities.
The $91.4 billion pension fund is the 12 th -largest in the world, and pays benefits to 1.2 million retired and active teachers.