The Joint Public Retirement Committee (JRC) met on Monday, February 4th. The committee heard an "Actuary 101" presentation by legislative actuary Jody Carreiro. The ATRS Board of Trustees had the privilege to attend the JRC meeting this week since they were in town for a regular board meeting. A few technical and minor corrections bills were heard and passed through committee (SB209, SB210, and SB220). These bills will have no adverse affects on ATRS members or the ATRS system. The ATRS Appropriation bill (SB95) has been signed by Governor Hutchinson and is now Act 81.
Each week the JRC meeting will be video streamed over the Internet. Just visit the Arkansas Legislative Meetings and Events web page on Monday at 10:00 a.m. Look for the item "PUBLIC RETIREMENT & SOCIAL SECURITY PROGRAMS-JOINT" and click on the "video camera" icon.
ATRS has a package of seven (7) minor correction and cleanup bills this session. ATRS is grateful and appreciative for the members of the General Assembly that agreed to sponsor ATRS package bills. A special thank you goes out to our sponsors: Senator Eddie Cheatham, Representative Michelle Gray, Representative John Maddox, and Representative Stu Smith. ATRS would also like to thank Senator Bill Sample and Representative Les Warren for their leadership and hard-work in service as the Co-Chairs for the Joint Public Retirement & Social Security Committee.
This week HB1206 was amended to contain substantive language that will be a legislated reduction of retirees' cost of living adjustment (COLA). HB1206 now sets the maximum adjustment to 3% or the percentage change in the Consumer Price Index (CPI) for the year, whichever is lower. Since the COLA is capped at 3% regardless of how high inflation runs, a reduction of the retirees' purchasing power will occur. With the maximum COLA being limited to that year's CPI percentage, there is no opportunity for retirees' purchasing power to be restored in time of lower inflation. The current ATRS fixed 3% simple COLA protects both the ATRS system and the retirees' purchasing power. In times of high inflation, the 3% COLA limits the liability accrued by ATRS. In times of lower inflation, any reduction to the retirees' purchasing power due to the 3% maximum is restored.
Back in 2016, ATRS was faced with some harsh actuarial facts: that our retirees were living longer, and that our assumed rate of return on investments needed to be lowered. As a result, ATRS had to make some hard decisions on how to make responsible cuts to bring the projected unfunded liabilities back to a responsible level. Those member benefit adjustments were made and we have started to see improvements to our actuarial status. From June 2017 to June 2018, ATRS has gone from 79% funded to 80% funded, the amortization period of the unfunded projected liability decreased from 29 years to 28 years, and the actuarial value of assets increased from $16.1 billion to $16.7 billion. These numbers indicate that ATRS is in good shape. The 2017 member adjustments are working and should be allowed to continue to work. It is ATRS' position that no legislation related to the adjustment of the ATRS COLA is needed at this time. Any adjustments to retirees' COLA should be the responsibility of the member-elected board of trustees, under advice from the system actuaries, as they carry out their fiduciary responsibilities.
ATRS is also getting a lot of questions about HB1173 which requires the Arkansas pension systems to perform stress testing. First of all, stress testing is a valuable tool that provides pension administrators with information that is helpful in making difficult system management decisions. In fact, ATRS just had a stress test performed by our investment consulting firm (Aon Hewitt). Our actuary, GRS Retirement Consulting, will be performing an increased level of stress testing next year, as required by Actuarial Standard of Practice 51 (ASOP 51). All of the results from these stress tests are available to the Arkansas Legislature to assist them in their pension system oversight role. It is the position of ATRS that we already perform a prudent level of stress testing and there is no need to require it through legislation.
It is a busy time for ATRS and its staff. ATRS will try to keep its members informed about the bills that impact ATRS, its members and employers.
For more information regarding the ATRS Bill Package and bills that may impact ATRS visit the Legislation page on our website.
Stay in Touch with ATRS and View YOUR Account Information
The ATRS website allows members to have direct access to specific member account information. Now, approximately 16,500 members have direct account access to individualized account information. Here is the link to the instructions to sign up: www.artrs.gov/registration.
You can also sign up to obtain these executive director updates through your private email address. Updates are made throughout the year such as at retirement season and other times when information needs to be shared. Now, over 19,600 people have signed up to receive this executive director update by direct email delivery. It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public. The ATRS Board is committed to providing a system that is member friendly and transparent.
You can also get helpful ATRS information on the ATRS Facebook page under the name of Arkansas Teacher Retirement System. Over 4,900 Facebook users get updates via the ATRS Facebook page. Go to the Facebook page and "like" ATRS to get daily updates. I try to go to the Facebook page every day to post information and answer member questions about ATRS. In addition, if you use Twitter, you can join over 940 others by following events at ATRS and issues of interest on the ATRS Twitter page. Remember that ATRS is here to serve you! If you have questions, email me or call.
Best regards,
Clint Rhoden
(501) 291-1623 Mobile
(501) 588-4367 Office
clintr@artrs.gov