Arkansas Teacher Retirement System Pension Solvency Analysis
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Policy Study

Arkansas Teacher Retirement System Pension Solvency Analysis

Investment returns failing to meet unrealistic expectations has been the single largest contributor to unfunded liability growth, adding $1.9 billion in debt to ATRS since 2000.

The Arkansas Teacher Retirement System (ATRS) was established to provide lifetime retirement benefits to public employees that dedicated their careers to teaching, but a Reason Foundation analysis finds that the long-term solvency of the plan is at risk.

Despite the longest bull market in American history, ATRS had amassed over $4.3 billion in unfunded liabilities prior to the onset of the COVID-19 pandemic. The system has only 80 percent of the assets on hand today needed to fully fund the plan in the long-term and debt has increased over the last three decades. In 1995, ATRS held $631 million in unfunded liabilities and was only slightly better funded at 85 percent.

The system’s declining solvency stems from a perfect storm of conditions. After two decades of underperforming investments, insufficient contributions, and flawed changes in actuarial assumptions and methods, benefit costs have been driven higher and crowded out other public priorities clamoring for funding.

This analysis, produced by the Pension Integrity Project at Reason Foundation, is the first part of an ongoing information series spotlighting structural problems within ATRS that are contributing to rising pension debt and education crowd-out. The analysis looks at the primary factors driving  ATRS’s unfunded liabilities over the past few decades and offers a stress testing analysis designed to highlight potentially latent financial risks.

To protect taxpayers and retirees stakeholders must gather together around a central, non-partisan understanding of the challenges ATRS faces. With independent third-party actuarial analysis and expert technical assistance, our organization stands ready to guide Arkansas policymakers and stakeholders as they address the shifting fiscal landscape.

Arkansas Teacher Retirement System (ATRS) Pension Solvency Analysis