Past - 1991:
Digging the Hole
> Following an actuarial valuation in 1989 which
indicated a dramatic increase in unfunded
liability from $3.9 million to $217.5 million, the
legislature in 1991 adopts the ‘Open Group
Aggregate’ actuarial method and sets the
assumed rate of return at 9.75%, both done for
the purpose of reducing employer contribution
rates
> Infringement of Board’s fiduciary duty to set
actuarially sound rates
>» Resulted in artificially depressed employer
contribution rates from 1991 to 2009
Past - 2007:
The Great Awakening
» Legislature replaces Open Group Aggregate
with ‘Entry Age Normal’ actuarial method and
creates 30-year amortization of liability to
begin in FY 2010
° Unfunded liability is determined to be $2.4 billion
> Funding for Special Account limited
» Legislature creates HB 876 Commission to
examine all aspects of the retirement system;
the first ‘Decennial Commission’
9/20/2021
