Teachers' Retirement System of Oklahoma

PROJECT PURPOSE

The purpose of this ARPA funding request is to restore revenue that was diverted from TRS in the 2020 legislative session to fill a budget shortfall in education funding due to the Covid-19 pandemic. While TRS is a non-appropriated agency, it does receive dedicated revenue to pay down its unfunded actuarial accrued liability (UAAL). This funding has helped increase the System?s funded ratio thereby positively impacting the State?s overall credit rating. Historically, TRS received 5% of lottery, personal and corporate income tax, tobacco, and sales and use tax. In 2020, HB 2741 reduced TRS?s percentage to 3.5% for FY21 ? a reduction of over $117 million. During that period, TRS earned a 33.3% return on its assets. This ARPA funding request does not factor in loss opportunity cost from investment returns. In 2021, HB 2894 restored TRS to 5% for FY22 and increased dedicated revenue to 5.25% for FY23 through FY27. If the ARPA funding request is granted thereby restoring TRS? loss in revenue, this 0.25% increase can be eliminated for FY23 through FY27 (restoring the typical 5%), saving the State of Oklahoma over $125 million for that period.

EVIDENCE

None

POPULATION DESCRIPTION

Of the 184,000 members of TRS, more than 67,000 are retirees - a vulnerable population that has been disproportionally impacted by the COVID-19 pandemic.

PERFORMANCE MEASURING

The performance will be measured annually by TRS' annual independent actuarial report.

ONGOING INVESTMENT AMOUNT

$

ONGOING INVESTMENT DESCRIPTION

None

ONGOING INVESTMENT REQUIRED

One-time project will not need continued funding