The state should ensure that excessive resources are not committed to funding teachers' pension systems.
As of October 1, 2015, the most recent date for which an actuarial valuation is available, the District of Columbia's teacher pension system is 88.7 percent funded, a decline of 1.4 percentage points since NCTQ's last report. Its current pension debt exceeds $2,800 per pupil throughout the district. It also has an amortization period of 17 years. This means that if the plan earns its assumed rate of return of 6.50 percent and makes its full actuarially determined contribution payments, it would take the state more than 17 years to pay off its unfunded liabilities. Both levels are better than regulatory recommendations, and the District's system is financially sustainable according to actuarial benchmarks.
The District does not commit excessive resources toward its teachers' retirement system. The mandatory employee contribution rate to the defined benefit plan is 8 percent for teachers hired on or after October 1, 1996, and the current employer contribution rate is 12.17 percent. For now these rates are reasonable, considering that teachers and the district are not also contributing to Social Security. The employer rate, however, increased by 1.77 percentage points since NCTQ's last report. If this trend continues, then resources will increasingly be diverted from classrooms.
District of Columbia Retirement Board Teachers' Retirement Plan, Actuarial Valuation Report as of October 1, 2015.
Contribute meaningfully to teachers' pension plans.
The District is commended for providing a financially sustainable system without committing excessive resources. However, the District should share part of the burden of funding the system by contributing along with teachers.
The District of Columbia was helpful in providing information that enhanced this analysis.