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The Lansing Board of Education voted unanimously to establish and funded a Teacher Retirement System (TRS) reserve Monday.  School Business Administrator Kate Heath said that with increasing costs the reserve will be needed to stabilize expenses and prevent huge jumps in the district's TRS liability, which she said is currently over a million dollars.  The reserve is a sub-fund of the Employee Retirement System (ERS) reserve fund, and was only authorized by Albany in April of this year.

"Based on our audit we're making the recommendation to create and fund the reserve effective 6/30/2019," she said. "When I was speaking with our lead auditor he recommended doing that because it's the first year to make sure we establish it and have some money in there.  The concern is that those costs are going to be increasing and those percentages are going to be increasing.  So having this reserve gives us some padding to help stabilize those costs so we don't have huge jumps. Then we'll have some more flexibility on funding it every year."

In this year's state Article VII budget bills a provision allowed school districts to create the sub-fund to set aside monies for TRS contributions.  The annual contribution can be up to 2% of TRS (certified staff including teachers, administrators, counselors, and teaching assistants) salaries with a cap on the reserve fund of 10% of the prior year's TRS salaries.  The cap is a stricter condition than is placed on most reserve funds in New York.

Prior to the new law the ERS reserve could only be used to help pay ERS retirement costs.  Districts were not permitted to use their ERS reserves for TRS expenses.  Heath said that the new sub-fund extends flexibility to manage the money for TRS employees in the same way.  School districts may use TRS reserve fund money to make payments directly to TRS or to offset the amount of school aid deducted by the state to cover a district's TRS obligations.

"The bulk of our school payroll is under TRS, so it's been a huge accomplishment that the State finally passed this," Heath said. "The Teacher Retirement System is just the retirement contributions that the District has to make toward a teacher's retirement. Depending on how many employees have been here and what tier they fall in it could be 9% of their annual income, or as high as 20% of their annual income.  That does vary based on each employee, when they were vested and how long they have been working, and what their salary is."

The law provides that the fund must be established and funded by separate resolutions, and the Board of Education must pass another resolution each time they draw from the fund.  Heath recommended simply shifting money from the ERS reserve to the sub-fund in this first year so there would be no increase in planned for overall reserve amounts.

The Board of Education voted to establish the reserve, and approved a resolution to fund it for the first year by moving $195,612 into the fund.  In order to spend it the Board will have to approve another resolution.

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