The Georgia House approved legislation Thursday to kill an obscure law that raised questions last year about whether the University System of Georgia had shorted the state’s teacher pension program.
House Bill 292 would essentially make it clear that the University System doesn't owe the money that a state audit last year said it did. It now heads to the Senate for its consideration.
Auditors in February 2019 released a report saying colleges stopped making legally required payments to the teacher pension system more than a decade ago, shortchanging the retirement program $600 million.
The Teacher Retirement System board later voted to begin billing the college system about $180 million extra a year.
The University System has strongly opposed the move, saying it never owed the money, and key lawmakers have concurred.
Any extra payments this year would be hard for the colleges, and lawmakers, to swallow. Gov. Brian Kemp's is proposing 4% cuts this fiscal year and 6% next year in state spending.
So nobody at the Capitol has hundreds of millions to spend on an issue lawmakers hadn’t heard about until the audit came out.
At issue are payments auditors said the University System was supposed to make after it created something called an Optional Retirement Plan in 1990.
Essentially, the plan allowed University System staffers to choose a 401(k) over a pension. In a 401(k), the employer and employee put money into a retirement investment fund, which the employee can take when leaving. In a pension, the employee who works for a certain number of years receives a regular payment from the TRS when he or she retires.
When the optional plan was created, state law required the University System to make payments into the TRS to fund the long-term liability of retirees.
The payments were to prevent the long-term pension costs of retirees from being borne by the state or school districts by balancing the ratio of active employees paying into the TRS and retirees drawing money out of the TRS, auditors said.
The University System made the payments through 2001, when the pension system had the money to meet its future responsibility to retirees, and the TRS -- based on a report by its actuary -- determined that the payments were no longer required.
House Appropriations Chairman Terry England, R-Auburn, said the General Assembly should have fixed the law then.
But auditors said the law requiring the payments was never repealed, and they should have resumed in 2008, when the Great Recession started hammering investments in the retirement system, helping create another pension liability. TRS never began rebilling the University System.
University System officials dispute the auditors' conclusion and say the system pays more than its fair share. They said last year that forcing the system to immediately make new payments could have serious consequences, including major spending cuts at colleges and higher tuition or fees for students.
Rep. Chuck Martin, R-Alpharetta, a member of the House Retirement Committee, said any extra payments would have ultimately come from state taxpayers.
“The University System of Georgia didn’t ask us for money to pay for this because they didn’t know they owed it,” Martin said. “If they thought they owed it, they would have asked us to budget (money) for it.
“This shouldn’t be something that pits TRS against the University System of Georgia.”
The $83 billion retirement system is a big deal to hundreds of thousands of teachers, university staffers and retirees in Georgia and a hot political topic at the General Assembly.
More than 130,000 retired teachers, professors and other university staff receive benefits, averaging about $37,000 a year. Last year the state and local school systems put about $2.6 billion into the TRS and its companion, the Employees Retirement System, which provides benefits to retired state employees.
More than 200,000 current employees pay part of their checks into the TRS, with the rest of the fund's money coming from taxpayers and investments.
Most private businesses long ago moved away from providing pensions, and rising costs have had lawmakers pushing legislation to change benefits for future teachers and university staffers.
But politically active teacher groups say the pensions help school districts attract and retain teachers. They have consistently beaten back attempts to change benefits.
An email campaign helped stall an effort earlier this session.
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