TRS 2011 Comprehensive Annual Financial Report

TEACHER RETIREMENT SYSTEM OF TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT 2011
Notes to the Financial Statements
The results of the actuarial valuation reflect a long-term perspective, are dependent on the actuarial assumptions used, and are
subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actual
results can differ, as actual experience deviates from the assumptions. Even seemingly minor changes in the assumptions can materially
change the liabilities, calculated contribution rates and funding periods. The actuarial assumptions used are designed to reduce shortterm
volatility in the liabilities and assets.
The plan provisions used in the actuarial valuation are based on the expectations of cost sharing between the employer and plan
members. The calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of the valuation
and on the pattern of sharing of costs between the employer and plan members to that point. The projection of the benefits for
financial reporting does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost
sharing between the employer and plan members in the future.
C. FUNDED STATUS AND FUNDING PROGRESS – OPEB PLAN
See TRS-Care funded status below (dollar amounts in millions):
(7)
(3) (4) (5) UAAL as
(1) (2) Actuarial Unfunded Funded Ratio (6) a % of
Valuation Actuarial Accrued AAL Assets as a Annual Covered
as of Value Liability (UAAL) % of AAL Covered Payroll
August 31 of Assets (AAL) (3)-(2) (2)/(3) Payroll (4)/(6)
2011 $891 $29,785 $28,894 3.0% $30,515 95%
The Schedule of Funding Progress located immediately following the Notes to the Financial Statements in the Required Supplementary
Information (RSI) presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing
relative to the actuarial accrued liability for benefits paid. The required schedule reflects information beginning for the fiscal year ended
August 31, 2007 as it was the date of the first actuarial valuation for TRS-Care.
NOTE 11:
RISK MANAGEMENT
The 77th Texas Legislature enacted the Texas Active School Employees Uniform Group Benefits Act (H.B. 3343), establishing a new
statewide health coverage program for public school employees and their dependents. TRS began administering this program, known
as TRS-ActiveCare, September 1, 2002. The plan is available to all public school districts, charter schools, education service centers
and certain other employers. The risk associated with this program is retained by the plan’s participants, and no risk is transferred to
the plan’s administrators, to employers, or to the state.
NOTE 12:
PENSION DISCLOSURE
A. PLAN DESCRIPTION
TRS is the administrator of a multiple-employer public employee retirement system (PERS). It is a cost-sharing PERS with one
exception: risks and costs are generally not shared by the employing district but are the liability of the State of Texas. That is, unless
the employing district is a senior college, medical school, or state agency, in which case the employer is considered the State of Texas.
By statute, the State of Texas contributes to the retirement system an amount equal to the current authorized rate times the aggregate
annual compensation of all members of the pension trust fund during that fiscal year. However, for fiscal year 2011 the Pension Trust
Fund paid the employer’s share for its own employees.
For members of the system entitled to the minimum salary for certain school personnel under Section 21.402 Education Code, the
employing district shall pay the state’s contribution on the portion of the member’s salary that exceeds the statutory minimum.
60 FINANCIAL SECTION