TRS Contribution Rate Set to Soar
The global financial crisis has taken its toll on the assets of the New York State Teachers' Retirement System. As a result of the massive downturn, the TRS employer contribution rate that school districts are assessed on payroll is set to rise sharply in 2011/12.
This year's contribution rate rose to 8.62 percent from the 2009/10 rate of 6.19 percent. The rate is assessed on the salaries and stipends paid to administrators, teachers, advisors, coaches and any other employee whose position requires a certificate issued by the State Education Dept.
"Based on preliminary estimates, we anticipate the ECR for next year to be between 11 percent and 11.5 percent of member payroll," states a TRS administrative bulletin sent to school districts across the state. The final rate is expected to be announced in February 2011.
The increase in the contribution rate will force the Huntington School District to incur a staggering additional expense. The higher rate led the district to increase the TRS line in the 2010/11 budget by $850,000 to $4.35 million. As a result of the anticipated large increase in the 2011/12 rate, the budget line will again have to rise sharply. (The separate Employees Retirement System covers non-certificated employees such as clerical workers, buildings and grounds staff members, teacher aides, etc. The ERS contribution rate is also trending upward. The Huntington School District increased the ERS budget line by $500,000 for 2010/11 to $1.5 million.)
The TRS contribution rate is heavily dependent on the performance of the stock market. "The one year rate of return on System assets for the fiscal year ending June 30, 2010 was 12.1 percent," according to the administrative bulletin sent to districts. "Although the capital markets rebounded and the System achieved a positive, double-digit rate of return for the fiscal year, it did not make up for the significant loss incurred during the prior fiscal year due to the global financial crisis. This loss continues to exert upward pressure on the employer contribution rate."
The ECR reached a high of 23.49 percent during the 1980-83 period and then steadily declined to less than one-half of one percent for three consecutive school years from 2000-2003. It has risen in six of the past eight years.
History of the TRS Employer Contribution Rate (since 1978/79):
| 1978-79: 21.40% 1979-80: 22.49% 1980-81: 23.49% 1981-82: 23.49% 1982-83: 23.49% 1983-84: 22.90% 1984-85: 22.80% 1985-86: 21.40% 1986-87: 18.80% 1987-88: 16.83% 1988-89: 14.79% 1989-90: 6.87% 1990-91: 6.84% 1991-92: 6.64% 1992-93: 8.00% 1993-94: 8.41% 1994-95: 7.24% 1995-96: 6.37% 1996-97: 3.57% 1997-98: 1.25% 1998-99: 1.42% 1999-00: 1.43% 2000-01: 0.43% 2001-02: 0.36% 2002-03: 0.36% 2003-04: 2.52% 2004-05: 5.63% 2005-06: 7.97% 2006-07: 8.60% 2007-08: 8.73% 2008-09: 7.63% 2009-10: 6.19% 2010-11: 8.62% |