By Elaine Owen, Editor
According to a just-released state audit, the University System of Georgia (USG) has shorted its employees pension fund over $600 million since it stopped making legally required payments to the fund over a decade ago.
When the 401(k) plan for USG employees (the Optional Retirement Program or ORP) was created in 1990, legislation required the USG to make two types of annual payments to the Teacher Retirement System (TRS) to make up for fewer employees paying into the pension fund. Current and former teachers, librarians, university faculty and staff are part of TRS and number approximately 400,000.
According to the audit, one of those required payments has not been made since 2008, equaling an estimated $600 to $660 million. The other payment has never been made, and state auditors don’t know the amount. The audit also found that Optional Retirement Program members were shorted $12.6 million by USG in fiscal year 2007.
The financial stability of TRS has been questioned in recent years, especially among state politicians who have had to pull from the state treasury to keep the system afloat. Recently, the General Assembly put nearly $600 million into the system.
Even though USG was not making payments into the Retirement System, state auditors said USG requested appropriations from the General Assembly to cover its TRS retirement costs, which included $250 million for the unfunded accrued liability payment.
According to the audit, the USG budget staff told auditors they “did not know or understand all of the underlying assumptions of their budget calculations.”
If USG wasn’t making payments to TRS, where did the roughly $600 million go? State auditors don’t know.
The Georgia Constitution gives USG broad authority to spend appropriations as it determines. Vice Chancellor for Communication Jen Talaber Ryan stated that USG is not receiving excess funds, and is still grappling with $1.2 billion in annual austerity reductions going back to 2007.
USG officials do not agree they owe TRS any payments. Ryan gave this statement, “The University System of Georgia has several significant concerns with the conclusions and recommendations of the Department of Audit and Accounts special review. USG does not believe it adequately presents critical information for use by policymakers. Further, it is not reflective of past sound decisions made by TRS and is inconsistent with advice received from the Attorney General.”
The audit also stated that the General Assembly “should review the current budget process to determine whether USG is receiving an appropriate amount to fund retirement benefits.” State auditors and USG agree that if the General Assembly wants to bail USG out of making payments to TRS, the 2010 law requiring USG to fund TRS must be repealed or revised.
The audit also found an administrative error that resulted in ORP members being shorted $12.8 million in fiscal year 2007. State auditors recommended USG make contributions to ORP member accounts to make up for that error.