Districts May Not Have To Pay More To Retirement System

— The first question for George Hopkins, director of the Arkansas Teacher Retirement System, was whether school districts will have to pay for a proposed 1 percent increase in contributions to the system.

It’s still an unknown, Hopkins told Northwest Arkansas school superintendents meeting Thursday as the Northwest Arkansas Education Services Cooperative Board of Directors.

Before his presentation, Hopkins asked the 14 superintendents if they had specific questions. Springdale Superintendent Jim Rollins asked how the additional 1 percent would be paid.

Hopkins said preliminary thinking between himself, the Arkansas Department of Education commissioner and the governor’s office is a line item will be created in the Education Department’s budget so school districts aren’t billed for the increase.

The issue is expected to be addressed in the 2013 legislative session and could cost Springdale about $1 million.

The answer sparked another question from Rollins: Does the money come out of the education fund split among districts based on enrollment, or will it be a separate line item the state will pay?

“I’m glad to hear they are considering a department contribution,” Rollins said. “We need more clarity, more conversation. It’s early in the process.”

The state used to pay the contributions to the retirement system; since 1996, districts have paid the cost.

The 1 percent increase is intended to pay retirement benefits down the road as the number of teachers retiring from the classrooms begins to increase.

The system pays out $64 million a month to 36,042 retirees in the state.

“That number will increase,” Hopkins said, especially as baby boomers begin to retire.

There are several avenues to increase the money available for investment, such as increasing the years of service required to be eligible for retirement. The special line item in the Education Department’s budget seems to be the least disruptive to the districts.

The contribution was increased to 14 percent in 2005.

“Retirees expect a quality benefit for the 14 percent contribution,” Hopkins said. “We don’t want to burden the Arkansas economy.”

Hopkins said the retirement system’s board wants to maintain the dignity or quality of retirement benefits but noted, “ATRS will do what it has to do but not affect the benefit amount.”

By The Numbers

Arkansas Teacher Retirement System

Active Members: 76,478

Retirees: 36,042

Working retirees: 3,994

Oldest ATRS member: 107 years old

Number of retirees more than 100 years old: 21

Number of retirees between 90 and 99 years old: 728

Estimated value as of 9-30-12: $11.7 billion

Source: Arkansas Teacher Retirement System

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