Teachers’ Retirement System of Louisiana (TRSL) Pension Solvency Analysis
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Policy Study

Teachers’ Retirement System of Louisiana (TRSL) Pension Solvency Analysis

Investment returns, failing to meet unrealistic expectations, have been the largest contributor to the unfunded liability growth, adding $4.2 billion to the unfunded liability since 2000.

The Teachers’ Retirement System of Louisiana (TRSL) was put in place to provide lifetime retirement benefits to those who 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, TRSL has over $10 billion in unfunded liabilities—pension debt, essentially—and only has 65 percent of the assets on hand today needed to fully fund the plan in the long-term. Things have worsened somewhat over the last two decades. In 1998, TRSL held $4 billion in unfunded liabilities and was only slightly better funded at 68 percent.

The system’s declining solvency stems from a perfect storm of conditions that, after 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 public priorities clamoring for public funding.

The Pension Integrity Project at Reason Foundation produced this analysis as the first part of an ongoing information series spotlighting the driving factors leading to the pension debt and education crowd-out caused by underlying structural problems within TRSL. The analysis analyzes the primary factors driving unfunded liabilities in TRSL over the past few decades and offers a stress testing analysis designed to highlight potentially latent financial risks. Bringing interested parties together around a central, non-partisan understanding of the challenges TRSL faces—complete with independent third-party actuarial analysis and expert technical assistance—our organization stands ready to guide Louisiana policymakers and stakeholders in addressing the shifting fiscal landscape.

Louisiana TRSL Pension Solvency Analysis (Preliminary Draft 6/18/19)

Leonard Gilroy is vice president of government reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets. He also serves as senior managing director of the Pension Integrity Project at Reason Foundation, which assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

Anil Niraula

Anil Niraula is a policy analyst at Reason Foundation.

Zachary Christensen is a policy analyst for Reason Foundation's Pension Integrity Project.

Steven Gassenberger is a policy analyst with Reason Foundation's Pension Integrity Project.