Nov. 21, 2019
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Public School Employees' Retirement System
PSERS releases its 2018-19 Comprehensive Annual Financial Report
The Pennsylvania Public School Employees' Retirement System has released its 2018-19 Comprehensive Annual Financial Report, which commemorates PSERS' centennial anniversary of operations.
The 136-page CAFR, posted to PSERS website Tuesday, contains financial, accounting, investment, actuarial, and statistical information in accordance with Pennsylvania law and the Government Finance Officers Association standards. This year's edition also uses more photographs, narratives and graphs to explain the 100-year history of PSERS' employees and its membership, as well as the three financial elements that make up a pension fund: employers' and employees' contributions, and the investments of those contribution streams.
"PSERS has paid out retirement benefits uninterrupted for 100 years through two World Wars, the Great Depression, and the Great Recession," PSERS Executive Director Glen Grell said in the CAFR's official letter to the Board of Trustees and Commonwealth policymakers. "Through good times and bad, PSERS staff's dedication and commitment to our members has never wavered since our System began."
One of the CAFR's narrative explains how Gov. Tom Wolf and the Legislature have helped PSERS improve its funded ratio on a market-value basis from 54.0% at June 30, 2018 to $55.7 at June 30, 2019 by budgeting the full actuarially required employer contribution rate for a third consecutive year. That trend is continuing in the 2019-20 budget, too.
Another narrative describes the worldwide economic and political issues that played a role in PSERS' 6.68% investment rate of return for the fiscal year that ended June 30, 2019. Many of those same geopolitical issues will continue to play a role in PSERS' long-term investment strategy. That investment strategy, created after the Great Recession, is centered on diversifying the asset portfolio to maximize returns while simultaneously minimizing risk to better protect the retirement benefits of more than 500,000 active and retired public school employees.
2018-19 CAFR highlights include:
- About $6.7 billion in pension benefits were distributed to PSERS retirees, helping to provide a stable source of revenue for local Pennsylvania economies.
- Nearly 73% of PSERS' retirees received an annual pension benefit of less than $39,999.
- PSERS net assets increased by more than 4% or $2.4 billion to $59.1 billion.
- PSERS Investment expenses fell for a fifth straight year. The year-to-year decline was 3.8% or about $17.9 million to $449.8 million. The 5-year decline (FY13-FY19) was 19 percent.
- PSERS unfunded liability fell on a market value basis by 5.6% to $46.8 billion. The market value basis is a measurement of the debt compared to net asset value at the fiscal year close.
- PSERS unfunded liability on an actuarial basis rose by less than 1 percent to $44.8 billion. The actuarial basis is calculated by spreading out investment annual gains and losses over 10 years. This actuarial smoothing method of annually recognizing 1/10 of the investment gains and losses helps control for large fluctuations to employer contributions in the Commonwealth's and school districts' budgets.
About the Pennsylvania Public School Employees' Retirement System
PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS’ role expanded in 2019 to include oversight of a new defined contribution plan. PSERS membership covers about 256,000 active and 233,000 retired school employees.