Teachers’ Retirement System of Louisiana Pension Solvency Analysis

Teacher Retirement System of Louisiana (TRSL) Pension Solvency Analysis 

The Teachers’ Retirement System of Louisiana (TRSL), the public pension plan serving educators in the state, is descending into insolvency and putting the retirement benefits of teachers at risk. In the year 2000, TRSL had just over $3 billion in public pension debt, and, in the two decades since, this number has risen dramatically. The latest, official numbers reveal that the Teachers’ Retirement System of Louisiana now has over $10 billion in unfunded pension liabilities.

Reason Foundation’s latest analysis, updated this month (October 2020), shows that the past two decades of underperforming investments, insufficient contributions, and a flawed process of issuing cost-of-living adjustments, has driven benefit costs higher while crowding out other programs and priorities that clamoring for public funding in Louisiana. In fact, investment returns failing to meet unrealistic expectations has been the largest contributor to the public pension plan’s unfunded liability growth, adding $4.2 billion since 2000.

The chart below, from the full solvency analysis, shows the dramatic increase in the Teachers’ Retirement System of Louisiana’s debt:

Today, TRSL has only 67 percent of the assets needed to fully fund the pension system in the long-term. This underfunding not only puts taxpayers on the hook for growing debt but also jeopardizes the retirement security of Louisiana’s educators. The pension debt also continues to pull funding away from Louisiana classrooms and teachers’ salaries.

Left unaddressed, TRSL’s structural problems will lead to more education funding crowd out, more debt for future generations, and less retirement security for the state’s educators.

The solvency analysis looks at the primary factors driving unfunded liabilities in TRSL over the past few decades and offers stress-testing designed to highlight potentially latent financial risks the pension system is facing. Reason Foundation also provides a number of policy suggestions that, if implemented, would address the declining solvency of the public pension plan. A new, updated analysis will be added to this page regularly to track TRSL’s performance and solvency.

Bringing stakeholders together around a central, non-partisan understanding of the challenges TRSL faces—complete with independent third-party actuarial analysis and expert technical assistance—Reason Foundation’s Pension Integrity Project stands ready to help guide Louisiana policymakers and stakeholders in addressing the shifting fiscal landscape.

Teacher Retirement System of Louisiana (TRSL) Pension Solvency Analysis 

Reason Foundation’s previous solvency analysis of the Teachers’ Retirement System of Louisiana (TRSL) is available here:

• 2019 Teacher Retirement System of Louisiana Solvency Analysis