Pension Sustainability: Georgia
Pensions Policy
Analysis of Georgia's policies
As of June 30, 2015, the most recent date for which an actuarial valuation is available, Georgia's teacher pension system is 81.9 percent funded, a decrease of 0.4 percentage points since NCTQ's last report. Its current pension debt is about $8,000 per pupil throughout the state. Georgia also has a 30-year remaining amortization period. This is due to an accounting method, however, in which Georgia uses an open 30-year amortization period, meaning that the amortization period is reset to 30 years every year. Thus, the unfunded liability is never fully amortized. Under a closed amortization schedule, if the plan earns its assumed rate of return of 7.50 percent and makes its full actuarially determined contribution payments, it would take the state 30 years to pay off its unfunded liabilities. Both levels are better than regulatory recommendations, and Georgia's system is financially sustainable according to actuarial benchmarks.
Georgia, however, commits excessive resources toward its teachers' retirement system. The current employer contribution rate of 14.27 percent (which increased by 1.12 percentage points) remains too high, in light of the fact that some local districts must also contribute 6.2 percent to Social Security. While this rate allows the state to keep its system well funded and pay off liabilities, it does so at a high cost, precluding Georgia from spending those funds on other, more immediate means to retain talented teachers and crowding out other important educational expenses. The mandatory employee contribution rate of 6.00 percent is reasonable.
Recommendations for Georgia
Avoid committing excessive resources to the pension system.
While the state meets actuarially benchmarks for a financially sustainable system, it does so at great cost, precluding Georgia from spending those funds on other, more immediate means to retain talented teachers. The state should consider decreasing employer contributions to allow the state and local districts to spend those funds on other recruitment and retention strategies. However, it must be careful to maintain its funding level to allow for protection during financial downturns.
State response to our analysis
Georgia did not respond to repeated request to review this analysis.
-
Georgia
Select another topic
Delivering Well Prepared Teachers
- Admission into Teacher Preparation
- Elementary Teacher Preparation
- Elementary Teacher Preparation in Reading Instruction
- Elementary Teacher Preparation in Mathematics
- Early Childhood
- Middle School Teacher Preparation
- Secondary Teacher Preparation
- Secondary Teacher Preparation in Science and Social Studies
- Special Education Teacher Preparation
- Special Education Preparation in Reading
- Assessing Professional Knowledge
- Student Teaching
- Teacher Preparation Program Accountability
Expanding the Pool of Teachers
Identifying Effective Teachers
- State Data Systems
- Evaluation of Effectiveness
- Frequency of Evaluations
- Tenure
- Licensure Advancement
- Equitable Distribution
Retaining Effective Teachers
Exiting Ineffective Teachers
Pensions
Research rationale
Teacher salaries are just one part of the compensation package that teachers receive. Virtually all teachers are also entitled to a pension, which, upon vesting, provides compensation for the rest of their lives after retirement. In an era when retirement benefits have been shrinking across industries and professions, teachers' generous pensions remain fixed. In fact, nearly all states continue to provide teachers with a defined-benefit pension system, an expensive and inflexible model that neither reflects the realities of the modern workforce nor provides equitable benefits to all teachers.
Under defined benefit systems, states have made an obligation to fund fixed benefits for teachers at retirement. However, the financial health and sustainability of many states' systems are questionable at best. Some systems carry high levels of unfunded liabilities, with no strategy to pay these liabilities down in a reasonable period, as defined by standard accounting practices. Without reform, these systems are a house of cards, vulnerable to collapse as funding cannot keep up with promised benefits. And it is taxpayers who will have to pay if it all tumbles down.
Pension plans disadvantage teachers early in their careers by overcommitting employer resources to retirement benefits.
Pension Sustainability: Supporting Research
NCTQ's analysis of the financial sustainability of state pension system is based on actuarial benchmarks promulgated by government and private accounting standards boards. For more information see U.S. Government Accountability Office, 2007, 30 and Government Accounting Standards Board Statement No. 25.