The state should ensure that excessive resources are not committed to funding teachers' pension systems.
As of January 1, 2015, the most recent date for which an actuarial valuation is available, Wyoming's pension system for teachers is 78.2 percent funded, a decrease of 9.3 percentage points since NCTQ's last report. It has an amortization period of 45 years. This means that if the plan earns its assumed rate of return and makes its full actuarially determined contribution payments, it would take the state 45 years to pay off its unfunded liabilities. While its funding ratio meets the recommended minimum standard, the state's system is not financially sustainable according to actuarial benchmarks.
Wyoming commits excessive resources toward its teachers' retirement system. The mandatory employee contribution rate to the defined benefit plan is 8.25 percent, and the current employer contribution rate is 8.37 percent. These rates are set by statute. Both of these rates are excessive considering that teachers and local districts are also contributing to Social Security.
State of Wyoming Retirement System Actuarial Valuation Report for the Year Beginning January 1, 2015.
Ensure that the pension system is financially sustainable.
The state would be better off if its system had an amortization period of 30 years or less to allow more protection during financial downturns. Wyoming should consider ways to improve its funding level without raising the contributions of local districts and teachers. Committing excessive resources to pension benefits can negatively affect teacher recruitment and retention and crowd out funding for other areas in education. Improving funding levels necessitates, in part, systemic changes in the state's pension system. The goals on pension flexibility and pension neutrality provide suggestions for pension system structures that are both sustainable and fair.
Wyoming was helpful in providing information that enhanced this analysis.