Voltlme
u,
No.
2
The Newsletter
of
the Teachers’ Retirement Sgstem
of
Ok[aboma
Mas
2002
Retirement Plans:
Defined Benefit
vs.
Defined Contribution
Two measures prefiled before the
2002
Legislative Session began would
have made substantial changes in the
retirement program for future members.
The proposed legislation would have
created defined contribution plans for
teachers and state employees hired after
the plans were authorized and
implemented. The bills as drafted would
not have changed the retirement plan for
current members.
Neither bill was heard by the
committees assigned to examine
retirement measures.
Legislative leaders and the Office of
State Finance have agreed to fund a study
to determine the impact the proposed
changes would have on current retirement
plans and whether the new program would
better serve
future
employees and the state.
(See
DW
vs
DC
plans,
p.5)
TRS
rule change to impact
post
-
retirement employment
TRS
retirees returning to work for an Oklahoma public school
are
subject to earnings limits if they want to continue receiving their
full retirement benefits while working.
Administrative rule
OAC
71310-17-6
is being changed to
include earnings from certain corporations
in
the post
-
retirement
earnings limits.
If
a member incorporates himself or herself or works
for a corporation that supplies
servics normally provided by a school
employee, the earnings for that employment would count toward the
earnings limit.
The
TRS
Board
of
Trustees has adopted the change. Approval
by the Govemor and the Legislature is pending.
To
continue receiving
a
full
retirement benefit, a member under
age 65 and retired fewer than 36 months who returns to work in an
Oklahoma public school can earn up to
$15,000 or half the average
salary used to compute the member’s retirement benefit, whichever
is less.
A member retired at least 36 months who returns to work as an
active classroom teacher, a counselor
or a librarian in
an
Oklahoma
public school can earn up to
$25,000 and continue receiving his or
her full monthly retirement benefits.
(See
Rule
change,
p.
5)
Enron collapse won’t affect benefits
The Enron bankruptcy will not affect the Teachers’ Retirement
System’s ability to pay retirement benefits or meet other obligations.
The total
TRS loss from the Enron bankruptcy is approximately $2.1
million. While this is a large amount of money, it is less than
5/100th of
1
%
of the TRS portfolio of almost $6 billion. For every $1
,0o0
of teachers’
money invested, TRS lost 41 cents due to its investment in Enron.
TRS will participate fully
in
class action lawsuits to reclaim
as
much
as possible from this loss.
Wik
Prom
$e
Annual Reprt-2,3
Positiwe Inwestments
-.....-
5
~unaing
Increase
SOU&
-
5
Briefb Speaking
6
Our
New Home
Our
New website
LOO^
2001
~rrmal~~
Aam*Me
2002
egisl la ti on
4
Page
2
Mag
2002
Trenbs
TEACHERS’ RETIREMENT SYSTEM
OF
OKLAHOMA
Statements of Plan Net Assets
June
30,2001
and
2000
Assets
2001
2000
Cash
Short
-
term investments
Accrued interest and dividends receivable
Contributions receivable
Receivable from state of Oklahoma
Due from brokers for securities sold
Security lending institutional daily assets fund
Long
-
term investments:
US
government securities
Corporate bonds
International bonds
Equity securities
Total long
-
term investments
Total assets
Capital assets, net
Liabilities
Benefits in process of payment
Due to brokers for securities purchased
Payable under security lending agreement
Accrued investment fees
Compensated absences
Total liabilities
Net Assets
Invested in capital assets
Net assets held in trust for pension benefits and annuity
benefits (note
6)
of electing members (a schedule of
funding progress is presented on page
45)
Total net assets
$
3,223,790
233,955,161
35,682,725
30,734,990
13,835,266
77,375,928
909,808,650
1,270,263,989
889,924,464
77,067,622
3.590.188.312
5,827,444,387
382.620
7,132,4433 17
30,777,532
338,743,201
33,153,290
24,699,745
12,83 1,212
134,537,732
73 1,866,253
1,121,322,730
607,998,748
3 12,023,596
3.915.168.380
5,956.5 13,454
400,195
7,263,522,6 14
15,976,756 42,137,486
15
1,95538
1
234,935,437
909,808,650 73 1,866,253
4,548,039
3,87 1,882
200,193 161,995
1,082,489,219 1,012,973,053
382,620
400,195
6.049.57 1,678 6,250,149,366
$
6,049,954,298 6,250,549,561
3
-
2002
TEACHERS’ RETIREMENT SYSTEM
OF
OKLAHOMA
Statements of Changes in Plan Net Assets
Years ended June 30,2001 and 2000
Additions:
Contributions:
Members
Members tax
-
shelter
Employer statutory requirement from local
school
districts
Federal matching
Dedicated tax
Total contributions
Investment income:
Interest
Dividends
Net realized and unrealized
(losses)
gains
Less
investment expenses
(Loss)
income from investing activities
Income from securities lending activities:
Securities lending income
Securities lending expenses:
Borrower rebates
Management fees
Income from securities lending activities
Net investment (loss) income
Total additions
Deductions:
Retirement, death, survivor and health benefits
Refund of member contributions and annuity
Administrative expenses
payments
Total deductions
Net (decrease) increase
Net assets:
Beginning
of
year
End of year
!$
216,752,852
5,181,802
195,988,873
7,038,250
172,749,389 130,758,712
14,406,265 12,454,200
140,925,355 132,574,886
550,015,663
478,8 14,92 1
163,139,203 140,911,589
49,27 1,990 52,506,072
(342,603,97 1) 417,582,752
(16,590,368) (13,571,552)
(
146,783,146) 597,428,861
42,929,337
33,82 1,402
(39,306,499)
(30,723.626)
(907,494)
(8
17.240)
2,715,344 2,280,536
(144,067,802) 599,709,397
405,947~36
1
1,078,524,3 18
537,308,002
500,289,049
65,763,326 61,725,419
3,47 1,796 2,964,237
606,543,124 564,978,705
(200,595,263)
5
13,545,613
6,250,549,561 5,737,003,948
!$
6,049,954,298 6,250,54936
1
Mag
2002
2002
TRS
legislation
proposes
changes
The
2002
Legislature
is
considering
a
number
of
measures
affecting
TRS. Here
is
a
summary
House
HB 2124 Retiree Health Insurance Premium Offsets
Increases amount
TRS
pays toward retiree health insurance
premium.
Principal Authors:
Stites, J. T. (H); Morgan, Mike
(S)
HB 2344 Post
-
retirement earnings limits
Allows retirees age
62
or older to earn up to
$30,000
from
public schools and still receive full retirement benefits;
clarifies that corporations or members who work as
independent contractors are subject to same post
-
retirement
earnings limits as other retirees.
Principal Authors:
Staggs, Barbara (H); Crutchfield, Johnnie
c.
(S)
HB 2368 COLA
&
Health Insurance Supplement
Increase
Provides for COLA for
TRS
retirees who retired before July
1,
2001;
increases health insurance supplement paid by
TRS.
Principal Authors:
Turner, Dale
(H);
Shurden, Frank
(S)
HB 2383 Death Benefit Reference
TRS
$5,000
Death Benefit would be deemed life insurance
proceeds for purposes of federal income tax, if approved by
IRS
.
Principal Authors:
Roan, Paul D. (H); Shurden, Frank
(S)
HB 2429
Continues appropriation to TRS for Teacher Retirement
Credit.
Principal Authors:
BOMY, Jack
(H);
Mass, Mike (H); Haney,
Enoch Kelly
(S);
Hobson, Cal
(S)
Funding for Teacher Retirement Credit
m
Trends
Senate
SB 1001
Continues appropriation to TRS for Teachers’ Retirement
Credit.
Principal Authors:
Haney, Enoch Kelly
(S);
Hobson, Cal
(S);
Bonny, Jack
(H);
Mass, Mike
(H)
Funding for Teachers’ Retirement Credit
SB 1231 COLA
Provides for COLA for TRS members retired before July
1,
2001,
and would provide for automatic COLAS in future years.
Principal Authors:
Morgan, Mike
(S);
Stites, J. T.
(H)
SB 1244 TRS Retiree Health Insurance Premium
Supplement
Increases payment by
TRS
for a retiree’s health insurance plan
administered by the State and Education Employees Group
Insurance Program.
Principal Authors:
Morgan, Mike
(S);
Stites, J. T. (H)
SB 1376 Appropriations bill
Increases TRS apportionment from state income and sales taxes.
Principal Authors:
Morgan, Mike
(S);
Stites, J. T.
(H)
SB 1378 Alternate Retirement Plan for Eligible
Employees of Participating State Institutions
of
Higher Education Act
Authorizes higher education Boards of Regents to establish
retirement plans for their employees in which employees would
participate instead
of
participating in the Teachers’ Retirement
System of Oklahoma. Such employees would be ineligible to
participate in TRS.
Principal Authors:
Morgan, Mike
(S);
Ingmire, Terry
(H)
SB 1456 Continued TRS Membership
for
Certain State
Government Employees
Allows TRS members to remain in TRS when employed by
certain state government agencies
Principal Author:
Williams, Penny
(S)
Trenbs
5
-
2002
Investments post
positive returns
TRS investment returns for the
period ending
Dec. 31, 2001, were
8.1% for the 3-month period of
October, November and December.
TRS returns ranked in the top
17%,
compared to 155 other public pension
funds.
TRS returns (and rankings) were
a negative 1.9% (47
"
) for the 1-year
period ending 12/31/01, 4.6%
(28")
for three years, 10.4% (12
"
) for five
years, and 12.7% (17
"
) for the 7-year
period.
At the end of December, 63.4%
of
TRS's investments were in stocks,
35.7% in fixed income and 0.9% in
cash.
The
TRS
portfolio continues to
be well-diversified, and the TRS
Board's asset allocation has produced
above-average returns.
Board Recommends Funding Increase
In
January. the
TRS
Board of Trustees adopted a recommendation
calling for an increase
in
state funding to be phased in over fike years.
Goal
777
asks the state to contribute the same amount statutes require
from employees and local school districts. TRS members contribute
7%
of
pay. Local school district contributions will increase
to
7.0S%
beginning
July
1.
The Board's proposal calls for the state to increase its contribution
from
3.54%
to
5.25%
of sales and income tax collections, or an equivalent
percentage of other state revenues. This increase would result in total state
contributions to be approximately
7%
of
employees' pay.
The Oklahoma Retired Educators Association and the OEA have agreed
to support the TRS plan.
TRS
needs
your
help
...
TRS is still poorly funded compared to other public pension plans.
TRS has only
5
1.4%
of assets needed to cover its future obligations.
Tell your elected representatives you want TRS to be funded
as
rapidly as possible!
Ask them to fund existing liabilities. help local schools fund their
payments to TRS, and provide extra money to cover new benefits
when granted.
Any extra money now will grow and greatly reduce future needs!
@?
G23
DB
V
S
.
DC
plans
...
promp.
1)
Current retirement programs operated by the Teachers' Retirement
System of Oklahoma and the Oklahoma Public Employees Retirement System
are
defined benefit
plans. A defined benefit plan calculates retirement benefits
based upon a formula, which is often a percentage of final average pay,
multiplied by years of service. The TRS formula is 2% times Final Average
Salary times years of service. Benefits are paid as an annuity for a member's
lifetime. The costs of a defined benefit plan are funded through a combination
of employee contributions, employer contributions and investment returns.
In a defined benefit plan, the employer assumes the investment risk, and
must make up any loss in investment earnings.
In a
defined contribution
plan, each member has an individual account
that accumulates employee contributions and/or employer contributions and
investment returns. At retirement, the retirement benefit is determined by
the account balance. Payment options often include lump sums, as well as
annuities, which are limited by the account balance at the time the annuity
is
purchased. In a defined contribution plan, the employee may self-direct all
or part of his or her investment account and assumes the risk of the investment.
Rule change ...
(from
p.
1)
A member age 65 or older
who has been retired fewer than
36
months or who returns to
Oklahoma public school
employment, but is not working
as an active classroom teacher,
a counselor or a librarian, can
earn up to half the average salary
used to compute his or her
retirement benefit.
TRS subtracts $1 from a
member's retirement benefit for
each $1
earned over the limit for
Oklahoma public school
employment.
Mag
2002
Page
6
Trends
Ma3
2002
Teachers'
Retirement Sgstem
Executive Secretarg
T0”g
C.
Beavers
Assistant Executive Secretarg
Sue
d&an
chief Investment Officer
Bif[P&ett
Secretarg
-
Treasurer
Joe
Ezzef[
Trenbs Bbitor
Jacqwehe Scott
Location:
2500
N
.
Lincofn
Bfvb.
okl&oma
citg,
okl&oma
Maifing
Abbress:
okl&m
citg
O
K
73152
http://
W
WtY.stat e.oIWL/.Okt eachers/
1
-
877
-
738
-
6365 [tokfree)
(405)
521
-
1387
P.O.
Box
53514
Trends
is
published
and issued by the Teachers’ Retirement
System
of
Oklahoma as authorized by Executive Secretary
Tommy C. Beavers. 150,ooO
copies
have been printed by the
Department
of
Central
Sewices Central Printing Division at a
cost
of
$14,255. Copies have been deposited with the
Publications Clearinghouse
of
the Oklahoma Department
of
Libraries.
Briefly Speaking.
..
We’ve
Mowed!
TRS
offices are back in the
Oliver
Hodge Education Building, at
the State Capitol Park, 2500
N.
Lincoln Blvd., Oklahoma City.
TRS
is on the
5”
floor.
Our
mailing address is still
TRS,
P.O.
Box
53524, Oklahoma City,
OK
73152.
Our
telephone numbers remain
405
-
521
-
2387 and 1-877
-
738
-
6365
(toll
-
free).
Website getting new
look
Anew look’s coming for the
TRS
website!
The website’s renovation, which
will be complete in June, will make
our site more compact and user-
friendly. Changes will include search
capabilities and a
retirement calculator.
Our website address
is:
www.okteachers.state.ok.us
We hope you’ll visit often for
updates on
TRS
activities.
2001
Annual
Report
available
The
2001
TRS
Annual Report
is now available.
The report contains the System’s financial, actuarial and investment
data
as of June 30,2001.
Copies have been mailed to every school, and single copies
are
available
to
members by written request. You can also read and copy the
Annual
Report
from the
TRS
website,
www.okteachers.state.ok.us.
