Recent market gains—a whopping 14.5% for the fiscal year ending June 30, 2024—for the Teachers Retirement System of Georgia (TRS) pension are a promising sign for closing the plan’s long-standing funding shortfalls, especially after a strong return in 2023.
Despite these recent successes in building the system’s assets, Georgia’s teacher pension is not out of the woods and still poses a major risk of unexpected runaway costs. The fund previously experienced returns substantially below plan expectations in 2016 (1.4%) and 2022 (-12.8%), and not only is there no guarantee major losses won’t happen again, but failure to prepare for that possibility places significant risks on tomorrow’s taxpayers.
TRS has gone through decades of growing pension debt—now up to $27.7 billion—and stagnant progress on reaching full funding. In addition, recent market plunges show that things can change quite quickly for Georgia’s teacher pension. Policymakers must grapple with these volatile swings while seeking to secure pension promises without passing major unnecessary costs on to future taxpayers. Ongoing challenges with pulling TRS back to full funding suggest that lawmakers still need to consider major reforms, particularly a more robust debt payment plan and a modernization of benefits, to improve the financial state of TRS.
The funded ratio of the plan is currently 78.2% as of June 30, 2023, according to the latest available valuation. A funded ratio of 100% means the pension plan has sufficient assets to cover all its liabilities. Being below this mark indicates that the pension system does not have enough assets to meet all its future obligations, posing a risk to the financial security of retirees.
Ever since the Great Recession, TRS has maintained funding below 80% (save a few brief periods barely above that level). According to the latest reporting, the system is on track to pay off existing pension debt within 22 years, but success will depend heavily on achieving lofty investment goals.
How can Georgia reform the state’s teacher pension program, to protect both teachers and taxpayers? We discuss that in this week’s commentary from Jen Sidorova with the Reason Foundation. We also have the latest stories from the past week, including:
- Atlanta area continues to have high inflation
- Georgia Power gets OK to build three new “dual-fuel” turbines
- New report: Georgia has more than 111,000 government regulations on the books
- Georgia Tech kicks off college football season this weekend…from Ireland
Have a great weekend,
– Kyle Wingfield
Friday’s Freshest
How do Georgia regulations hurt businesses and consumers?
The Mercatus Center at George Mason University recently published a review of state regulations. The strictest states were predictable: California, New York, New Jersey and Illinois – although No. 5 Texas comes as more of a surprise. California has a shocking 40% more regulations than even second-place New York, and more than the seven least-regulated states combined. Georgia’s reputation is much more business-friendly. Still, our state ranked only in the middle of the regulatory pack with the 26th-most restrictions.
How did the Tax Cuts and Jobs Act simplify the tax code?
If the individual provisions of the Tax Cuts and Jobs Act (TCJA) expire at the end of next year, tax filing will get more complicated for millions of Americans. The TCJA simplified tax filing through two main channels: encouraging taxpayers to take the standard deduction and raising the threshold for the alternative minimum tax.
We don’t do hard things anymore
Americans, and Georgians in particular, need to get back to building. Building what, you ask? Pretty much everything. For starters, we don’t build nearly as many homes as we used to. The peak in Georgia homebuilding – across all types – came in 2005 with more than 109,000 new housing units. Since the Great Recession, we haven’t come close to that number.
Previously unknown parts of Georgia’s eminent domain law surprise, displease landowners
Almost 20 years ago, an unpopular U.S. Supreme Court ruling forced property owners throughout Georgia to worry they could lose their property rights to eminent domain until a 2006 law put their minds at ease. But there were a few things in that Georgia law they didn’t know about. Consequently, they may have reason to brood yet again. As it turns out, Georgia law doesn’t shield landowners from eminent domain, at least not to the extent they thought it did.
Supreme Court returns checks and balances to governing
For four decades, the judiciary has ceded the important power of reviewing executive agencies’ rules and regulations to the agencies themselves. Reasserting the court’s preeminence in interpreting the law is a key step toward more constitutional balance with the executive branch, which is merely meant to carry out laws.
The Latest
Economy
Atlanta area continues to have high inflation
Inflation continues to plague Georgia businesses, and the Atlanta area continues to grapple with inflation, though it may be faring better than other cities in the country, a new analysis revealed. According to personal finance site WalletHub, the Atlanta-Sandy Springs-Roswell metropolitan statistical area ranks 11th out of 23 major MSAs for its change in inflation.
Long known as Carpet Capital, Dalton grows in solar output
Qcells broke ground on a second facility in Dalton in February 2023. Completed that August, the expansion added two football fields’ worth of manufacturing space with four new production lines — which produce 1.5 times more solar panels than the original three lines, thanks to technological advances. Now the whole complex employs 2,000 people full time.
FreshRealm, innovator in national fresh meals, moves operations to Montezuma
Gov. Kemp announced that FreshRealm, Inc., a national leader in fresh meal delivery, will expand its footprint in Montezuma, Georgia. This latest project will create more than 300 new jobs through an investment of $6.3 million in Macon County.
Education
Transparent K-12 open enrollment data matters to parents, policymakers and taxpayers
Strong open enrollment laws are distinguished by the fact that all school districts with available capacity must participate in the program. This ensures that students can fill every available seat. Accordingly, state policymakers should codify that state education agencies must publish annual reports that include detailed data on open enrollment.
Richmond County plans to get fleet of electric school buses for 2025
Richmond County was awarded nearly $9.9 million in federal funding to purchase 25 low-emission buses. Under the Clean School Bus Program’s multiple grant and rebate funding opportunities, the EPA has awarded nearly $3 billion to fund approximately 8,500 school bus replacements at more than 1,000 schools throughout the U.S.
Toyota provides up to $8.6 million to support Georgia schools
Toyota USA Foundation announced grants of up to $8.6 million to prepare Fulton County Schools students for future careers in science, technology, engineering, and math. The collaboration is part of the Driving Possibilities initiative and is a five-year phased rollout of programming in select schools.
Government accountability
State PSC signs off on Georgia Power turbines
State energy regulators gave final approval to Georgia Power’s plan to build three new “dual-fuel” turbines at Plant Yates near Newnan. The Georgia Public Service Commission (PSC) signed off on the proposal unanimously after officials with the Atlanta-based utility pitched the plan as necessary to meet the growing need for energy generating capacity prompted by an unanticipated demand for power.
Cobb County to accept judge’s ruling, switch to state map
Cobb County will accept the ruling that struck down its “home rule” map as unconstitutional, Chairwoman Lisa Cupid confirmed Wednesday. Cupid said that she plans to place an item on the commission’s agenda to “formalize the acceptance” of Cobb Superior Court Judge Kellie Hill’s ruling and “move forward” with the maps passed by the Georgia Legislature.
Transportation
Audit finds More MARTA Atlanta program due $70M, transit agency disagrees
Atlanta city officials say a review of the More MARTA Atlanta program for fiscal 2017 through fiscal 2022 concluded that it is due roughly $70 million. However, MARTA officials say that independent auditor Mauldin & Jenkins’ calculations are wrong, calling it a ” flawed methodology.”
Cities can improve microtransit by partnering with private contractors
Ridership on traditional fixed-route public transit services in the United States has been declining. And service quality on many of these transit systems has been lackluster. To combat these problems, many regions have developed a supplementary transit option called microtransit.
Bonus
In the lead-up to Saturday’s kickoff between Florida State and Georgia Tech, both schools spent 17 months making spreadsheets, filling out documents and triple-checking customs regulations to make sure they packed all the essentials for their transatlantic trip. Uniforms? Check. Cleats? Check. The Ramblin’ Wreck? Sadly, back in Atlanta.
Report: Safety-net programs discourage career advancement
While safety-net programs such as Medicaid and food stamps support those in need, they “discourage career advancement,” according to new research from the Georgia Center for Opportunity. The group’s “Workforce Engagement: A Missing Link in Understanding Income Inequality” examines the drivers behind perceived “income inequality.”
Walmart and Target are cutting prices to entice customers
The retail industry has issued plenty of deals in recent months to pull in consumers and stimulate sales. It’s working. Two of the biggest retailers, Target and Walmart, have recently reported a jump in traffic due to the reduction in prices in recent months.
Quotes of Note
“Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.” – Milton Friedman
“If you think taking guns is politically hard, just try it with gas-powered cars.” – Virginia Postrel
“Whether you think you can or think you can’t, you’re right.” – Henry Ford