Difference between revisions of "Public pensions in Arkansas"

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}}{{tnr}}'''Arkansas public pensions''' are the state mechanism by which state and many local government employees in Arkansas receive retirement benefits. Arkansas operates seven distinct pension plans. The Arkansas Public Employees Retirement System administers the Public Employees Retirement Systems (PERS), the Judicial Retirement Plan (JRP), the Arizona State Police Retirement System (ASPRS) and a District Judges plan. The Teacher Retirement Plan (TRP), the Highway and Transportation Retirement Plan (HTRP) and the Local Police and Fire Retirement Plan (LPFRP) are additional state retirement systems not administered by APERS.<ref>[http://www.dfa.arkansas.gov/offices/accounting/Documents/cafr2012.pdf ''State of Arkansas'' "Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012," accessed October 30, 2013]</ref><ref>[http://www.lopfi-prb.com/LOPFI/Overview.aspx ''Local Police and Fire Retirement Plan'', "Overview," accessed October 30, 2013]</ref>
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}}{{tnr}}'''Arkansas public pensions''' are the state mechanism by which state and many local government employees in Arkansas receive retirement benefits. Arkansas operates seven distinct pension plans. The Arkansas Public Employees Retirement System administers the Public Employees Retirement Systems (PERS), the Judicial Retirement Plan (JRP), the Arizona State Police Retirement System (ASPRS) and a District Judges plan. The Teacher Retirement Plan (TRP), the Highway and Transportation Retirement Plan (HTRP) and the Local Police and Fire Retirement Plan (LPFRP) are additional state retirement systems not administered by APERS.<ref>[http://www.dfa.arkansas.gov/offices/accounting/Documents/cafr2012.pdf ''State of Arkansas'', "Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012," accessed October 30, 2013]</ref><ref>[http://www.lopfi-prb.com/LOPFI/Overview.aspx ''Local Police and Fire Retirement Plan'', "Overview," accessed October 30, 2013]</ref>
  
 
According to the U.S. Census Bureau, the state also has 30 locally-administered pension systems.<ref name=census>[http://www2.census.gov/govs/retire/2010summaryreport.pdf “Public Employee Retirement Systems State- and Locally-Administered Pensions Summary Report: 2010,” United States Census Bureau, April 30, 2012]</ref>
 
According to the U.S. Census Bureau, the state also has 30 locally-administered pension systems.<ref name=census>[http://www2.census.gov/govs/retire/2010summaryreport.pdf “Public Employee Retirement Systems State- and Locally-Administered Pensions Summary Report: 2010,” United States Census Bureau, April 30, 2012]</ref>
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The following data was collected from the systems' 2012 Actuarial Valuation Reports, which measured fund status as of June 30, 2012 (except the report for LPFRS, which measured fund status as of December 31, 2012). Valuation reports are annual reports produced by outside consultants, using unaudited data provided by the pension systems themselves, in order to determine what employers in the system should contribute in the coming year to maintain or improve the fiscal health of the pension funds.  
 
The following data was collected from the systems' 2012 Actuarial Valuation Reports, which measured fund status as of June 30, 2012 (except the report for LPFRS, which measured fund status as of December 31, 2012). Valuation reports are annual reports produced by outside consultants, using unaudited data provided by the pension systems themselves, in order to determine what employers in the system should contribute in the coming year to maintain or improve the fiscal health of the pension funds.  
  
Arkansas's Actuarial Valuation Reports for 2012 were produced by Gabriel Roeder Smith and Company, a national actuarial and benefits consulting services firm that focuses on services for the public sector.<ref>[http://www.gabrielroeder.com/about-us/ ''Gabriel Roeder Smith & Company, Consultants & Actuaries'' "About Us," accessed October 29, 2013]</ref> The "percentage funded" is calculated by taking the current value of the fund and dividing by the estimated amount of total liabilities. The assumed rates of return used to calculate current fund value vary by system (see [[Arkansas public pensions#Rate of return|"Rate of return"]] below for more information). The Government Accountability Office (GAO) and Pew Research Centers cite a percent funded ratio of 80 percent as the minimum threshold for a healthy fund, though the American Academy of Actuaries suggests that all pension systems "have a strategy in place to attain or maintain a funded status of 100 percent or greater."<ref>[http://www.gao.gov/assets/270/267150.pdf ''United States Government Accountability Office Report to the Committee on Finance, U.S. Senate'', "State and Local Government Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future Costs," September 2007. Accessed October 23, 2013]</ref><ref>[http://www.actuary.org/files/80_Percent_Funding_IB_071912.pdf ''American Academy of Actuaries'' "Issue Brief: The 80% Pension Funding Standard Myth," July 2012. Accessed October 23, 2013]</ref> The column labeled "SBS figure" refers to a market liability calculation of the fund by the nonprofit organization State Budget Solutions. This analysis uses a rate of return of 3.225 percent, which is based upon the 15-year Treasury bond yield. The organization calls this a "risk-free" rate of return that would make it easier for states to achieve their pension funding requirements in the future. Since 2006, all private sector corporate pension plans have incorporated market costs into their funding schemes.<ref>[http://www.governing.com/blogs/view/gov-plot-against-pensions-report.html ''Governing Magazine'', " Is There a Plot Against Pensions?" October 14, 2013]</ref>
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Arkansas's Actuarial Valuation Reports for 2012 were produced by Gabriel Roeder Smith and Company, a national actuarial and benefits consulting services firm that focuses on services for the public sector.<ref>[http://www.gabrielroeder.com/about-us/ ''Gabriel Roeder Smith & Company, Consultants & Actuaries'', "About Us," accessed October 29, 2013]</ref> The "percentage funded" is calculated by taking the current value of the fund and dividing by the estimated amount of total liabilities. The assumed rates of return used to calculate current fund value vary by system (see [[Arkansas public pensions#Rate of return|"Rate of return"]] below for more information). The Government Accountability Office (GAO) and Pew Research Centers cite a percent funded ratio of 80 percent as the minimum threshold for a healthy fund, though the American Academy of Actuaries suggests that all pension systems "have a strategy in place to attain or maintain a funded status of 100 percent or greater."<ref>[http://www.gao.gov/assets/270/267150.pdf ''United States Government Accountability Office Report to the Committee on Finance, U.S. Senate'', "State and Local Government Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future Costs," September 2007. Accessed October 23, 2013]</ref><ref>[http://www.actuary.org/files/80_Percent_Funding_IB_071912.pdf ''American Academy of Actuaries'', "Issue Brief: The 80% Pension Funding Standard Myth," July 2012. Accessed October 23, 2013]</ref> The column labeled "SBS figure" refers to a market liability calculation of the fund by the nonprofit organization State Budget Solutions. This analysis uses a rate of return of 3.225 percent, which is based upon the 15-year Treasury bond yield. The organization calls this a "risk-free" rate of return that would make it easier for states to achieve their pension funding requirements in the future. Since 2006, all private sector corporate pension plans have incorporated market costs into their funding schemes.<ref>[http://www.governing.com/blogs/view/gov-plot-against-pensions-report.html ''Governing Magazine'', " Is There a Plot Against Pensions?" October 14, 2013]</ref>
  
 
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| align="right"|$11,484,000,000 || align="right"|71.2%  || align="right"|$4,655,000,000|| align="right"|75,627 active members  
 
| align="right"|$11,484,000,000 || align="right"|71.2%  || align="right"|$4,655,000,000|| align="right"|75,627 active members  
 
|-
 
|-
|Highway and Transportation Retirement Plan<ref name=ARKCAFR>[http://www.dfa.arkansas.gov/offices/accounting/Documents/cafr2012.pdf ''State of Arkansas'' "2012 Comprehensive Annual Financial Report," accessed October 30, 2013]</ref>
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|Highway and Transportation Retirement Plan<ref name=ARKCAFR>[http://www.dfa.arkansas.gov/offices/accounting/Documents/cafr2012.pdf ''State of Arkansas'', "2012 Comprehensive Annual Financial Report," accessed October 30, 2013]</ref>
 
| align="right"|$1,239,900,000 || align="right"|90.2%  || align="right"|$134,100,000|| align="right"|Data not available  
 
| align="right"|$1,239,900,000 || align="right"|90.2%  || align="right"|$134,100,000|| align="right"|Data not available  
 
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Annual Required Contributions (ARC) are calculated annually and are a sum of two different costs. The first component is the "normal cost," or what the employer owes to the system in order to support the liabilities gained in the previous year of service. The second component is an additional payment in order to make up for previous liabilities that have not yet been paid for. According to a report by the Pew Center on the States, in 2010 Arkansas paid 106 percent of its annual required contribution.<ref name=arkansaspew/><ref name=GASB>[https://www.gasb45help.com/(S(yhfljjjuzjanja55rngvmrnr))/term.aspx?t=24 ''Government Accounting Standards Board'', "Annual Required Contribution (ARC)," accessed October 17, 2013]</ref>
 
Annual Required Contributions (ARC) are calculated annually and are a sum of two different costs. The first component is the "normal cost," or what the employer owes to the system in order to support the liabilities gained in the previous year of service. The second component is an additional payment in order to make up for previous liabilities that have not yet been paid for. According to a report by the Pew Center on the States, in 2010 Arkansas paid 106 percent of its annual required contribution.<ref name=arkansaspew/><ref name=GASB>[https://www.gasb45help.com/(S(yhfljjjuzjanja55rngvmrnr))/term.aspx?t=24 ''Government Accounting Standards Board'', "Annual Required Contribution (ARC)," accessed October 17, 2013]</ref>
  
On June 25, 2012, the Government Accounting Standards Board (GASB) approved a plan to reform the accounting rules for state and local pension funds. These revised standards were set to take effect in fiscal years 2013 and 2014.<ref>[http://www.reuters.com/article/2012/07/10/us-usa-accounting-government-idUSBRE86918P20120710 ''Reuters'' "Little-known U.S. board stokes hot pension debate," July 10, 2012]</ref> As a result, ARCs were removed as a reporting requirement. Instead, plan administrators and accountants will use  an actuarially determined contribution or a statutory contribution for reporting purposes.<ref>[http://www.statebudgetsolutions.org/publications/detail/gasbs-ineffective-public-pension-reporting-standards-set-to-take-effect ''State Budget Solutions'' "GASB's ineffective public pension reporting standards set to take effect," June 5, 2013]</ref>
+
On June 25, 2012, the Government Accounting Standards Board (GASB) approved a plan to reform the accounting rules for state and local pension funds. These revised standards were set to take effect in fiscal years 2013 and 2014.<ref>[http://www.reuters.com/article/2012/07/10/us-usa-accounting-government-idUSBRE86918P20120710 ''Reuters'', "Little-known U.S. board stokes hot pension debate," July 10, 2012]</ref> As a result, ARCs were removed as a reporting requirement. Instead, plan administrators and accountants will use  an actuarially determined contribution or a statutory contribution for reporting purposes.<ref>[http://www.statebudgetsolutions.org/publications/detail/gasbs-ineffective-public-pension-reporting-standards-set-to-take-effect ''State Budget Solutions'', "GASB's ineffective public pension reporting standards set to take effect," June 5, 2013]</ref>
  
 
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===Enacted reforms===
 
===Enacted reforms===
 
====2013====
 
====2013====
While several bills pertaining to the administration of the state's pension plans were passed during the 2013 session of the [[Arkansas General Assembly]], none constituted significant structural reforms to the existing system.<ref>[http://www.ncsl.org/research/fiscal-policy/pension-legislation-database.aspx ''National Conference of State Legislatures'' "Pensions and Retirement State Legislation Database - Arkansas 2013," accessed November 22, 2013]</ref>
+
While several bills pertaining to the administration of the state's pension plans were passed during the 2013 session of the [[Arkansas General Assembly]], none constituted significant structural reforms to the existing system.<ref>[http://www.ncsl.org/research/fiscal-policy/pension-legislation-database.aspx ''National Conference of State Legislatures'', "Pensions and Retirement State Legislation Database - Arkansas 2013," accessed November 22, 2013]</ref>
  
 
==Local public pensions==
 
==Local public pensions==

Revision as of 07:43, 8 May 2014

Arkansas public pensions
Flag of Arkansas.png
Pension System
Number of pension systems 7
State pension systems: Public Employees Retirement Plan
Teacher Retirement Plan
Judicial Retirement Plan
Highway and Transportation Retirement Plan
District Judges Plan
State Police Retirement System
Local Police and Fire Retirement Plan
System type: Defined benefit plan
Pension Health (2012)[1]
Fund Value: $19,914,988,477
Estimated liabilities: $28,060,943,009
Unfunded liabilities : $8,145,954,532
Percent funded: 71.0%
Percent funded change: Green Arrow Up Darker.svg0.98%[2]
Percent funded rank: 22[3]
Pension Fund Members (2012)
Total Members: 241,597
Active Members: 135,461
Other Members: 106,136
Other State Pension Information
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Policypedia
Policypedia pension logo.jpg
Pension Policy
Public pensions
State public pension plans
Public pension health by state
Arkansas public pensions are the state mechanism by which state and many local government employees in Arkansas receive retirement benefits. Arkansas operates seven distinct pension plans. The Arkansas Public Employees Retirement System administers the Public Employees Retirement Systems (PERS), the Judicial Retirement Plan (JRP), the Arizona State Police Retirement System (ASPRS) and a District Judges plan. The Teacher Retirement Plan (TRP), the Highway and Transportation Retirement Plan (HTRP) and the Local Police and Fire Retirement Plan (LPFRP) are additional state retirement systems not administered by APERS.[4][5]

According to the U.S. Census Bureau, the state also has 30 locally-administered pension systems.[6]

A 2012 report from the Pew Center on the States noted that Arkansas's pension system was funded at 75 percent at the close of fiscal year 2010, below the 80 percent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[7]

Taken together, the funding ratio for the state's pension systems decreased from 74.20 percent in fiscal year 2010 to 71 percent in fiscal year 2012, a 3.2 percent drop. Likewise, unfunded liabilities increased from approximately $6.5 billion in fiscal year 2010 to more than $8 billion in fiscal year 2012.

Features

Pension plans

In fiscal year 2012, according to the systems' Actuarial Valuation Reports, Arkansas had a total of at least 135,461 active members in its retirement plans (information regarding the number of active members in the Highway and Transportation Retirement System could not be located as of October 2013). Our membership figures divide plan participants into two broad categories: active and other. Active members are current employees contributing to the pension system. Other members include retirees, beneficiaries and other inactive plan participants (usually terminated employees entitled to benefits but not yet receiving them).[8]

The following data was collected from the systems' 2012 Actuarial Valuation Reports, which measured fund status as of June 30, 2012 (except the report for LPFRS, which measured fund status as of December 31, 2012). Valuation reports are annual reports produced by outside consultants, using unaudited data provided by the pension systems themselves, in order to determine what employers in the system should contribute in the coming year to maintain or improve the fiscal health of the pension funds.

Arkansas's Actuarial Valuation Reports for 2012 were produced by Gabriel Roeder Smith and Company, a national actuarial and benefits consulting services firm that focuses on services for the public sector.[9] The "percentage funded" is calculated by taking the current value of the fund and dividing by the estimated amount of total liabilities. The assumed rates of return used to calculate current fund value vary by system (see "Rate of return" below for more information). The Government Accountability Office (GAO) and Pew Research Centers cite a percent funded ratio of 80 percent as the minimum threshold for a healthy fund, though the American Academy of Actuaries suggests that all pension systems "have a strategy in place to attain or maintain a funded status of 100 percent or greater."[10][11] The column labeled "SBS figure" refers to a market liability calculation of the fund by the nonprofit organization State Budget Solutions. This analysis uses a rate of return of 3.225 percent, which is based upon the 15-year Treasury bond yield. The organization calls this a "risk-free" rate of return that would make it easier for states to achieve their pension funding requirements in the future. Since 2006, all private sector corporate pension plans have incorporated market costs into their funding schemes.[12]

Basic Pension Plan Information -- Arkansas
Plans Current value Percentage funded Unfunded liabilities Membership
State figure SBS figure[13] State figure SBS figure[13]
Arkansas Public Employees Retirement System[14] $5,625,000,000 68.9% N/A[15] $2,538,000,000 N/A[15] 45,937 active members
Judicial Retirement System[16] $167,796,000 85.8% $27,658,000 140 active members
State Police Retirement System[17] $215,010,000 60.5% $140,290,000 534 active members
District Judges[14] $13,925,350 49.1% $14,418,018 55 active members
Teacher Retirement System[18] $11,484,000,000 71.2% $4,655,000,000 75,627 active members
Highway and Transportation Retirement Plan[19] $1,239,900,000 90.2% $134,100,000 Data not available
Local Police and Fire Retirement System[20] $1,169,357,127 65% $636,458,514 13,168 active members
TOTALS $19,914,988,477 71.0% 36% $8,145,954,532 $35,101,319,000 135,461 active members

Annual Required Contribution

Annual Required Contributions (ARC) are calculated annually and are a sum of two different costs. The first component is the "normal cost," or what the employer owes to the system in order to support the liabilities gained in the previous year of service. The second component is an additional payment in order to make up for previous liabilities that have not yet been paid for. According to a report by the Pew Center on the States, in 2010 Arkansas paid 106 percent of its annual required contribution.[7][21]

On June 25, 2012, the Government Accounting Standards Board (GASB) approved a plan to reform the accounting rules for state and local pension funds. These revised standards were set to take effect in fiscal years 2013 and 2014.[22] As a result, ARCs were removed as a reporting requirement. Instead, plan administrators and accountants will use an actuarially determined contribution or a statutory contribution for reporting purposes.[23]

ARC Historical Data
Fiscal year Arkansas Public Employees Retirement System[14] Judicial Retirement System[16] State Police Retirement System[17] District Judges[14]
Annual Required Contribution (ARC) Percentage contributed Annual Required Contribution (ARC) Percentage contributed Annual Required Contribution (ARC) Percentage contributed Annual Required Contribution (ARC) Percentage contributed
2012 $229,631,149 100% $5,465,079 100% $14,052,962 139.94% $1,805,741 102%
2011 $195,628,572 100% $5,220,623 100% $12,580,828 112.30% $1,950,782 95%
2010 $169,604,041 100% $4,667,612 100% $12,748,302 161.18% $1,906,776 93%
2009 $159,232,361 100% $4,466,571 100% $10,535,605 115.25% $1,581,100 102%
2008 $173,462,377 100% $5,144,958 100% $9,996,439 116.56% $1,525,167 110%
ARC Historical Data
Fiscal year Teachers Retirement System[18] Highway and Transportation Retirement System[16] Local Police and Fire Retirement System[20]
Annual Required Contribution (ARC) Percentage contributed Annual Required Contribution (ARC) Percentage contributed Annual Required Contribution (ARC) Percentage contributed
2012 $443,650,000 89.9% $17,936,000 100% $66,648,849 100%
2011 $417,320,000 95.9% $17,661,000 100% $61,818,119 100%
2010 $362,850,000 107.3% $17,999,000 100% $58,654,842 100%
2009 $344,030,000 104.4% N/A N/A $53,051,887 100%
2008 $343,990,000 101.8% N/A N/A $49,518,628 100%

Historical funding levels

Historical pension plan data - all systems
Year Value of assets Accrued liability Unfunded liability Funded ratio
2010 $18,822,981,513 $25,368,815,104 $6,545,833,591 74.20%
2011 $19,297,763,648 $26,809,225,935 $7,511,462,287 71.98%
Change from 2010-2011 $474,782,135 $1,440,410,831 $965,628,696 -2.22%

Rate of return

Arkansas presumes an 8.00 percent return rate on most of its pension investments. The JRS assumes a 7.25 percent rate of return on its investments.

Analysis

Percent Funded Status of Pension Plans
in the 50 States as of November 2013
Public pensions in NevadaPublic pensions in MassachusettsPublic pensions in ColoradoPublic pensions in New MexicoPublic pensions in WyomingPublic pensions in ArizonaPublic pensions in MontanaPublic pensions in CaliforniaPublic pensions in OregonPublic pensions in WashingtonPublic pensions in IdahoPublic pensions in TexasPublic pensions in OklahomaPublic pensions in KansasPublic pensions in NebraskaPublic pensions in South DakotaPublic pensions in North DakotaPublic pensions in MinnesotaPublic pensions in IowaPublic pensions in MissouriPublic pensions in ArkansasPublic pensions in LouisianaPublic pensions in MississippiPublic pensions in AlabamaPublic pensions in GeorgiaPublic pensions in FloridaPublic pensions in South CarolinaPublic pensions in IllinoisPublic pensions in WisconsinPublic pensions in TennesseePublic pensions in North CarolinaPublic pensions in IndianaPublic pensions in OhioPublic pensions in KentuckyPublic pensions in PennsylvaniaPublic pensions in New JerseyPublic pensions in New YorkPublic pensions in VermontPublic pensions in VermontPublic pensions in New HampshirePublic pensions in MainePublic pensions in West VirginiaPublic pensions in VirginiaPublic pensions in MarylandPublic pensions in MarylandPublic pensions in ConnecticutPublic pensions in ConnecticutPublic pensions in DelawarePublic pensions in DelawarePublic pensions in Rhode IslandPublic pensions in Rhode IslandPublic pensions in MassachusettsPublic pensions in New HampshirePublic pensions in MichiganPublic pensions in MichiganPublic pensions in AlaskaPolicypediaPension Health 2013.png
Note: The data in this map was compiled from state CAFR reports and Actuarial Valuation documents. Figures reflect a combination of all of the state pension plans.
Funded Ratio of State Public Pension Plans as compiled by State Budget Solutions

According to a 2012 analysis by the Pew Center for the States, most state pension plans assume an 8 percent rate of return on investments.[24] Critics assert that this assumption is unrealistic, citing changing market conditions and significantly lower investment returns across the board over the past several years.[25] When states lower the rate of return in an effort to accurately predict investment earnings, it increases the current plan liabilities, thereby lowering the percent funded ratio and causing the ARC to increase. This is because future plan liabilities are discounted based on the rate of return, so smaller expected investment returns result in larger actuarially accrued liabilities.[26] For example, on September 21, 2012, the Illinois Teachers Retirement System voted to lower its rate of return from 8.5 percent to 8.0 percent. This change increased the state's fiscal year 2014 ARC from $3.07 billion to $3.36 billion.[27] Similarly, when California's CalPERS reduced its projected annual rate of return from 7.75 percent to 7.5 percent in March 2012, it cost the state an additional $303 million for fiscal year 2013.[28]

The 2008 financial crisis had a devastating effect on pension plans nationwide and has resulted in slower economic growth and increased market volatility. In light of this, some market strategists find the 8 percent assumption to be overly ambitious. Stanford University Finance Professor Joshua Rauh stated that using past investment performance in this economic climate was "dangerously optimistic."[29] Advocates for a lower assumed rate of return argue that the standard assumptions could cause pension fund managers to engage in more risky investments and imprudent stewardship of public funds. Further, if pension plans were using more conservative assumptions, such as the 3 or 4 percent assumed rate of return used in the private sector, and the plans grew more quickly than expected, the fund would have a surplus and smaller future ARCs, which would be preferable to using optimistic assumptions and potentially being caught with larger-than-expected deficits.[30][31][32][33][34]

On the other hand, traditional public pension plan advocates argue that the dip observed in recent years is not sufficient proof of a long-term, downward trend in investment returns. According to Chris Hoene, executive director at the California Budget Project, "The problem with [the market rate] argument is there isn’t significant evidence other than the short term blip during the economic crisis that there’s been that shift. It’s a speculative argument coming out of a very deep recession."[29]

The National Association of State Retirement Administrators compiled data on the median annualized rate of return for public pensions for the 1-, 3-, 5-, 10-, 20-, and 25-year periods ending in 2013. While the median annualized rate of return failed to meet the 8 percent assumption that most public pensions assume over the 5- and 10-year periods, it was just shy (7.9 percent) over the 20-year period, and it exceeded 8 percent for the 1-, 3-, and 25-year periods. It is important to note that the NASRA data is reporting the median returns, indicating that even though median annualized returns exceeded 8 percent in the 25-year period, the investment portfolios for half of the examined public pension funds failed to meet an 8 percent assumed rate of return.[35]

In September 2013, the nonprofit organization State Budget Solutions published an analysis of state pension funding levels. In its calculations, State Budget Solutions used a 3.2 percent rate of return, the 15-year Treasury bond yield as of August 21, 2013, to discount plan liabilities.

The research found that, all states combined, state public employee pension plans have only 39 percent of the assets they need to cover their promised payments—a $4.1 trillion gap. According to the report, Arkansas's public pension plans were 36% funded, making it the 25th most funded state.[36]

Moody's report on adjusted pension liabilities

On June 27, 2013, Moody's Investor Service released its report on adjusted pension liabilities in the states. The Moody's report ranked states "based on ratios measuring the size of their adjusted net pension liabilities (ANPL) relative to several measures of economic capacity." In its calculations of net pension liabilities, Moody's employed market-determined discount rates (5.67 percent for Arkansas) instead of the state-reported assumed rates of return (8 percent for Arkansas's largest pension plan).[37]

The report's authors found that adjusted net pension liabilities varied dramatically from state to state, from 6.8 percent (Nebraska) to 241 percent (Illinois) of governmental revenues in fiscal year 2011.[37]

The adjusted net pension liability for the two Arkansas pension systems included in the report (APERS and HTRP) in fiscal year 2011 was ranked the 36th highest in the nation.[37] The following table presents key state-specific findings from the Moody's report, as well as the state's national rank with respect to each indicator.

Adjusted net pension liabilities (ANPL) relative to key economic indicators - Arkansas
Governmental revenue* Personal income State GDP Per capita
State findings 33.6% 5.0% 4.7% $1,681
National ranking 33rd 27th 26th 28th
*Moody's uses governmental revenues as reported in each state's consolidated annual financial reports; this includes not only state-generated revenue, but federal funds, as well.[37]

Reforms

Enacted reforms

2013

While several bills pertaining to the administration of the state's pension plans were passed during the 2013 session of the Arkansas General Assembly, none constituted significant structural reforms to the existing system.[38]

Local public pensions

See also: Local government public pensions

According to the United States Census Bureau, the state has 30 locally-administered pension plans.[6]

Transparency

See also: Public pension disclosure and Governmental Accounting Standards Board
  • The names of recipients and amounts disbursed to recipients are available upon request, provided that the request does not constitute a violation of privacy.[39]
  • Pension fund investment performance data is available on the APERS site.[14]
  • External oversight of the pension fund and financial reports are available.[40]
  • Pay to play (the practice of investment managers contributing to officials with influence over public pension fund decisions) information is unavailable, as is pension lobbying information.

Recent news

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Arkansas Public Pensions News Feed

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See also

External links

References

  1. Figures below are compiled by adding up all state pension plans
  2. This figure is derived by calculating the percent difference between the current year's funding level and the system's percent funded from the prior year.
  3. Rank is relative to the 50 state pension programs. "1" refers to the healthiest pension plan while "50" would be the least well-funded plan.
  4. State of Arkansas, "Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012," accessed October 30, 2013
  5. Local Police and Fire Retirement Plan, "Overview," accessed October 30, 2013
  6. 6.0 6.1 “Public Employee Retirement Systems State- and Locally-Administered Pensions Summary Report: 2010,” United States Census Bureau, April 30, 2012
  7. 7.0 7.1 "Widening Gap Update: Arkansas," June 18, 2012
  8. Organisation for Economic Co-operation and Development, "Pensions Glossary," accessed November 27, 2013
  9. Gabriel Roeder Smith & Company, Consultants & Actuaries, "About Us," accessed October 29, 2013
  10. United States Government Accountability Office Report to the Committee on Finance, U.S. Senate, "State and Local Government Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future Costs," September 2007. Accessed October 23, 2013
  11. American Academy of Actuaries, "Issue Brief: The 80% Pension Funding Standard Myth," July 2012. Accessed October 23, 2013
  12. Governing Magazine, " Is There a Plot Against Pensions?" October 14, 2013
  13. 13.0 13.1 State Budget Solutions, "Promises Made, Promises Broken - The Betrayal of Pensioners and Taxpayers," accessed September 20, 2013
  14. 14.0 14.1 14.2 14.3 14.4 14.5 14.6 Arkansas Public Employees Retirement System, "Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  15. 15.0 15.1 Analysis only available for system totals and not individual funds.
  16. 16.0 16.1 16.2 16.3 Judicial Retirement System, ""Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  17. 17.0 17.1 17.2 State Police Retirement System, "Actuarial Valuation and Experience Gain/(Loss) Analysis," June 30, 2012
  18. 18.0 18.1 18.2 Teacher Retirement System, "2012 Comprehensive Annual Financial Report," accessed October 30, 2013
  19. 19.0 19.1 State of Arkansas, "2012 Comprehensive Annual Financial Report," accessed October 30, 2013
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