Financial Health of Arkansas Teacher Retirement System Continues to Improve
LITTLE ROCK – The financial health of the state Teacher Retirement System has been steadily improving over the past decade.
For example, using very conservative criteria, retirement systems are generally considered healthy if their “funded ratio” is above 80 percent. Ten years ago it was below 80 percent but at the end of last fiscal year it was 84.6 percent. This measure the system’s capacity to pay for all future benefits of both retired and active members.
Improvement is also indicated if you measure the system’s financial health by its amortization period. Actuaries estimate that within 20 years the system will be 100 percent funded. That compares favorably to the amortization period of ten years ago, when it was an estimated 33 years. It is a marked improvement over last year’s estimated 26 year estimate.
The ratio is 100 percent when taking into account only retired members. The system has enough funds to fully pay for all future benefits of every retired beneficiary, for the rest of their lives.
According to the system’s director, who sends regular updates to members, the retirement system hire consultants to recommend how to best make investments. The investments are diversified, to protect from excessive loss in a particular category and withstand market volatility.
About 56 percent of the system’s investments are in publicly-traded stocks, while 13.4 percent are in bonds and other fixed income categories. Alternative investments, such as hedge funds, make up 5.1 percent of total investments. Real estate accounts for 6.7 percent, private equity 13.4 percent and agriculture, timber and infrastructure 4.9 percent.
Assets are evaluated after adjusting for losses and gains over a four-year period, and at the end of last fiscal year the system’s investments earned 9.75 percent.
A snapshot of the system’s finances demonstrates how its financial health has improved over the past few years. At the end of Fiscal Year 2024 its assets were $22.4 billion. A decade ago its assets were $15 billion.
The system has 142,000 members. About 68,000 are active and 56,000 are retired. Almost 3,000 are in the T-DROP program and almost 15,000 are inactive.
The Teacher Retirement System is the largest public retirement fund in Arkansas. Its Board of Trustees makes decisions after considering their long-term effect. To quote from the system’s web page: “The ATRS Board makes decisions in terms of decades, not days, weeks, or months.”
Junk Food Restrictions
The governor announced that Arkansas would seek permission from federal agencies to prohibit the use of food stamps for sugary soft drinks and junk food snacks. The food stamp program is now called SNAP, for the Supplemental Nutrition Assistance Program.
In a letter to federal officials, the governor said that SNAP “is undermining the health of millions of Americans, on the taxpayer’s dime, by encouraging families to eat highly processed, unhealthy junk food…. our federal food assistance policies are fueling obesity, diabetes, heart disease, hypertension, and a wide range of chronic health conditions across America.”