FY 2007-2008 Budget Review Teams

PERS/TRS Facts

Mandatory contributions by ASD to PERS/TRS divert $73 million from educational services

District calls on Legislature to take immediate action

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In early projections for the 2007-08 budget, the Anchorage School District set aside $13 million for the PERS/TRS retirement systems, representing a 5 percent increase, the maximum allowed at the time. Then in October 2006, the Alaska Retirement Management Board surprised districts across the state by approving massive increases in employer contributions that were required to be paid to PERS/TRS. The board eliminated the 5 percent maximum increase limit and increased the mandatory employer rate to 40 percent for PERS and 54 percent for TRS.

The ARMB’s action added approximately $73 million in unanticipated retirement expenditures for the Anchorage School District for the 2007-08. The district is counting on the Legislature to appropriate funds to all districts to relieve this extreme and unexpected burden on expenditures.

“These increases are unacceptable and impact our ability to deliver the quality of education our community and our staff demands,” said Superintendent Carol Comeau. “We urge Gov. Palin and the Legislature to require the state to pay the mandated contributions directly into the retirement systems.”

PERS Contribution Rate			TRS Contribution Rate
Current (FY07)	24.25%		Current (FY07)	26%
ASD initial FY 08 estimate	29.25%		ASD initial FY 08 estimate	31%
Required (FY08)	40.89%		Required (FY08)	54.03%
PERS/TRS increase to FY 2007-2008 General Fund: $67 million Additional increases for employees reflected in other funds: $6 million

Comparison of ASD’s cost for a PERS employee’s salary/benefits:

FY 2003-2004			FY 2006-2007			FY 2007-2008
Salary	$50,000		Salary	$50,000		Salary	$50,000
Benefits*	$15,373		Benefits*	$26,122		Benefits*	$35,643
Total cost	$65,373		Total cost	$76,122		Total cost	$85,643
*figure includes ASD’s portion of Social Security; teachers do not pay into the Social Security system

Comparison of ASD’s costs for a TRS employee’s salary/benefits:

FY 2003-2004			FY 2006-2007**			FY 2007-2008 **
Salary	$50,000		Salary	$50,000		Salary	$50,000
Benefits	$14,245		Benefits	$24,512		Benefits	$39,727
Total cost	$64,245		Total cost	$74,512		Total cost	$89,727
**figure based on most recent tentative agreement between ASD and AEA