TRS 2011 Comprehensive Annual Financial Report

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TEACHER RETIREMENT SYSTEM OF TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT 2011 Notes to the Financial Statements Contribution Rate Amount Member 6.400% $ 2,243,954,725 State 6.644 1,595,771,774 Reporting Entities 6.644 411,889,817 Federal or Private Funding Sources 6.644 324,764,720 Total $ 4,576,381,036 Effective September 1, 2007, H.B. 2358, 80th Legislature, amended Section 825.406(b) of the Government Code and Section 1575.252 of the Insurance Code, requiring that contributions received by an employer from federal or private funding sources be deposited in the state contribution account and in the retired school employees group insurance fund (relates to OPEB see Note 10) of TRS, respectively, instead of the general revenue fund of the state treasury. C. LEGAL RESERVE ACCOUNT BALANCES The balances in the five legally required reserve accounts are sufficient to meet statutory requirements. As of August 31, 2011 the reserve accounts had the following balances: Member Savings Account $ 29,150,974,343 State Contribution Account 15,672,128,723 Retired Reserve Account 62,479,240,823 Deferred Retirement Option Account 83,931,941 Expense Account 34,511,063 Total (Exhibit I) $107,420,786,893 D. FUNDED STATUS AND FUNDING PROGRESS – PENSION PLAN The funded status of the Pension Trust Fund as of August 31, 2011, the most recent actuarial valuation date, is as follows (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 $115,253 $139,315 $24,062 82.7% $36,797 65.4% 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 over time. These indicators and trends may be useful in assessing progress made in accumulating sufficient assets to pay benefits when due for the Pension Trust Fund. 62 FINANCIAL SECTION
TEACHER RETIREMENT SYSTEM OF TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT 2011 Notes to the Financial Statements Additional actuarial valuation information follows: NOTE 13: Valuation Date...............................................................................August 31, 2011 Actuarial Cost Method................................................................ Entry Age Normal Amortization Method...............................................................Level Percent, Open Remaining Amortization Period * ............................................................. 30 Years Asset Valuation Method...................................................5-Year Smoothed Market Actuarial Assumptions: Investment Rate of Return **...................................................................8.00% Projected Salary Increases **....................................................4.25% to 7.25% Weighted-Average Projected Salary Increases **....................................5.62% Cost-of-Living Adjustments....................................................................... None * .The state’s contribution rate would need to increase from 6.00% to 8.13% beginning in fiscal year 2012 in order to amortize the unfunded actuarial accrued liability (UAAL) over the 30-year maximum acceptable amortization period permitted by Governmental Accounting Standards Board Statement No. 25. ** Includes Inflation at 3.00% SUBSEQUENT EVENTS Under the Patient Protection and Affordable Care Act of 2010 TRS-Care has been approved for participation in the Early Retiree Reinsurance Program. (See Note 6 for amounts received during fiscal year 2011.) While funds remain available, reimbursements under the program will be provided for 80 percent of qualified costs between $15,000 and $90,000. TRS estimates that its additional claim for fiscal year ended August 31, 2011 will be approximately $98.7 million. However, because of the uncertainty surrounding the availability of funds, TRS cannot reasonably estimate the amount, if any, it will actually receive. As of November 10, 2011, TRS has not received any additional funds attributable to this program. FINANCIAL SECTION 63
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TRS 2011 Comprehensive Annual Financial Report

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