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Worst Case: The budget director says, In the worst case, we cannot do anything about the cost of living adjustment, the stock market tanks, and
Worst Case: The budget director says, In the worst case, we cannot do anything about the cost of living adjustment, the stock market tanks, and we earn very littlesay 3 percent. Productivity goes to zero and other factors remain the same. That is the worst case. How bad would that be? Please explain logical reason.
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 25 25 25 25 25 25 25 25 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 25 0.01 0.04 0.01 0.01 0.04 0.04 0.01 0.04 0.05 82,820 $ $25,000,000 0.05 0.01 0.04 0.05 84,485 $ $25,502,500 0.05 82,000 $ 25 0.01 0.04 0.05 86,183 $ $26,015,100 0.01 0.04 0.05 85,330 $ $25,757,525 0.01 0.04 0.05 87,045 $ $26,275,251 0.01 0.04 0.05 87,915 $ $26,538,004 0.01 0.04 0.05 88,794 $ $26,803,384 $ 83,648 $ $25,250,000 0.05 89,682 $27,071,418 NA Value 0.03 INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.03) 0.001 0.095 $ - 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 23,685,305,718 62% 2016 2018 2019 2020 2022 2023 2025 $ 68,500 $ 133,000 NA 101,500 CALCULATIONS Average Teacher Salary Number of Active Teachers Number of New Retirees Number of Retirees Total Teacher Compensation Employee Contribution to Fund State Contribution to Fund Average Retiree Benefit Expected Benefits Payout 2017 69,185 $ 133,000 5320 101,745 9,201,605,000 $ 874,152,475 $ 2,185,381,188 $ 46,918 $ 4,773,624,090 $ 69,877 $ 133,000 5320 101,977 9,293,621,050 $ 882,894,000 $ 2,207,234,999 $ 47,387 $ 4,832,354,046 $ NA 2021 71,994 $ 133,000 5320 102,607 9,575,227,061 $ 909,646,571 $ 2,274,116,427 $ 48,823 $ 5,009,537,425 $ 70,576 $ 133,000 5320 102,198 9,386,557,261 $ 891,722,940 $ 2,229,307,349 $ 47,861 $ 4,891,254,773 $ 71,281 $ 133,000 5320 102,408 9,480,422,833 $ 900,640,169 $ 2,251,600,423 $ 48,339 $ 4,950,318,548 $ $ $ $ 2024 74,176 $ 133,000 5320 103,147 9,865,366,017 $ 937,209,772 $ 2,343,024,429 $ 50,302 $ 5,188,494,468 $ 72,714 $ 133,000 5320 102,796 9,670,979,332 $ 918,743,037 $ 2,296,857,591 $ 49,311 $ 5,068,952,540 $ 73,441 $ 133,000 5320 102,976 9,767,689,125 $ 927,930,467 $ 2,319,826,167 $ 49,804 $ 5,128,606,768 $ 74,917 133,000 5320 103,309 9,964,019,677 946,581,869 2,366,454,673 50,805 5,248,609,816 NA NA NA $ NA $ 2021 FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 2017 40,000,000,000 $ 874,152,475 $ 2,185,381,188 $ 1,200,000,000 $ 4,773,624,090 $ $25,000,000 39,460,909,573 $ 2018 39,460,909,573 $ 882,894,000 $ 2,207,234,999 $ 1,183,827,287 $ 4,832,354,046 $ $25,250,000 38,877,261,813 $ 2019 38,877,261,813 $ 891,722,940 $ 2,229,307,349 $ 1,166,317,854 $ 4,891,254,773 $ $25,502,500 38,247,852,683 $ 2020 38,247,852,683 $ 900,640,169 $ 2,251,600,423 $ 1,147,435,580 $ 4,950,318,548 $ $25,757,525 37,571,452,782 $ 37,571,452,782 $ 909,646,571 $ 2,274,116,427 $ 1,127,143,583 S 5,009,537,425 S $26,015, 100 36,846,806,838 $ 2022 36,846,806,838 $ 918,743,037 $ 2,296,857,591 $ 1,105,404,205 $ 5,068,952,540 S $26,275,251 36,072,583,879 $ 2023 36,072,583,879 $ 927,930,467 $ 2,319,826,167 $ 1,082,177,516 $ 5,128,606,768 S $26,538,004 35,247,373,258 $ 2024 35,247,373,258 $ 937,209,772 $ 2,343,024,429 $ 1,057,421,198 $ 5,188,494,468 $ $26,803,384 34,369, 730,805 $ 2025 34,369,730,805 946,581,869 2,366,454,673 1,031,091,924 5,248,609,816 $27,071,418 33,438,178,037 $ 2018 FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV 2016 NA NA $ 2017 4,773,624,090 $ $63,146,215,291 23,685,305,718$ 62% 4,832,354,046 $ $63,108,557,348 24,231,295,535 $ 62% 2019 4,891,254,773 $ $63,009,345,102 24,761,492,419 $ 61% 2020 4,950,318,548 $ $62,843,791,212 25,272,338,430 $ 60% 2021 5,009,537,425 $ $62,606,757,004 25,759,950,166 $ 59% 2022 5,068,952,540 $ $62,292,726,354 26,220,142,475$ 58% 2023 5,128,606,768 $ $61,895,728,290 26,648,355,032 $ 57% 2024 5,188,494,468 $ $61,409,301,144 27,039,570,339 $ 56% 2025 5,248,609,816 $60,826,504,262 27,388,326,225 55% $ NA NA 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 25 25 25 25 25 25 25 25 CONSTANTS Retiree Years of Service Average Increase in Teacher Salary Retiree Rate Mortality Rate Expected Average Final Salary Expected Administrative Expense 25 0.01 0.04 0.01 0.01 0.04 0.04 0.01 0.04 0.05 82,820 $ $25,000,000 0.05 0.01 0.04 0.05 84,485 $ $25,502,500 0.05 82,000 $ 25 0.01 0.04 0.05 86,183 $ $26,015,100 0.01 0.04 0.05 85,330 $ $25,757,525 0.01 0.04 0.05 87,045 $ $26,275,251 0.01 0.04 0.05 87,915 $ $26,538,004 0.01 0.04 0.05 88,794 $ $26,803,384 $ 83,648 $ $25,250,000 0.05 89,682 $27,071,418 NA Value 0.03 INPUTS Cost of Living Adjustment Long Term Rate of Return Productivity Factor Employee Contribution Rate Final Salary Give Back State Contribution Factor 0.03) 0.001 0.095 $ - 2.5 SUMMARY OF KEY RESULTS NPV of Unfunded Liability Ratio of Assets to Liability NPV $ Value 23,685,305,718 62% 2016 2018 2019 2020 2022 2023 2025 $ 68,500 $ 133,000 NA 101,500 CALCULATIONS Average Teacher Salary Number of Active Teachers Number of New Retirees Number of Retirees Total Teacher Compensation Employee Contribution to Fund State Contribution to Fund Average Retiree Benefit Expected Benefits Payout 2017 69,185 $ 133,000 5320 101,745 9,201,605,000 $ 874,152,475 $ 2,185,381,188 $ 46,918 $ 4,773,624,090 $ 69,877 $ 133,000 5320 101,977 9,293,621,050 $ 882,894,000 $ 2,207,234,999 $ 47,387 $ 4,832,354,046 $ NA 2021 71,994 $ 133,000 5320 102,607 9,575,227,061 $ 909,646,571 $ 2,274,116,427 $ 48,823 $ 5,009,537,425 $ 70,576 $ 133,000 5320 102,198 9,386,557,261 $ 891,722,940 $ 2,229,307,349 $ 47,861 $ 4,891,254,773 $ 71,281 $ 133,000 5320 102,408 9,480,422,833 $ 900,640,169 $ 2,251,600,423 $ 48,339 $ 4,950,318,548 $ $ $ $ 2024 74,176 $ 133,000 5320 103,147 9,865,366,017 $ 937,209,772 $ 2,343,024,429 $ 50,302 $ 5,188,494,468 $ 72,714 $ 133,000 5320 102,796 9,670,979,332 $ 918,743,037 $ 2,296,857,591 $ 49,311 $ 5,068,952,540 $ 73,441 $ 133,000 5320 102,976 9,767,689,125 $ 927,930,467 $ 2,319,826,167 $ 49,804 $ 5,128,606,768 $ 74,917 133,000 5320 103,309 9,964,019,677 946,581,869 2,366,454,673 50,805 5,248,609,816 NA NA NA $ NA $ 2021 FUND BALANCE STATEMENT Beginning Balance Add: Employee Contribution Add: State Contribution Add: Income on Investments Less: Benefits Payout Less: Administrative Expenses Ending Balance 2016 NA $ NA $ NA $ NA $ NA $ NA 40,000,000,000 $ 2017 40,000,000,000 $ 874,152,475 $ 2,185,381,188 $ 1,200,000,000 $ 4,773,624,090 $ $25,000,000 39,460,909,573 $ 2018 39,460,909,573 $ 882,894,000 $ 2,207,234,999 $ 1,183,827,287 $ 4,832,354,046 $ $25,250,000 38,877,261,813 $ 2019 38,877,261,813 $ 891,722,940 $ 2,229,307,349 $ 1,166,317,854 $ 4,891,254,773 $ $25,502,500 38,247,852,683 $ 2020 38,247,852,683 $ 900,640,169 $ 2,251,600,423 $ 1,147,435,580 $ 4,950,318,548 $ $25,757,525 37,571,452,782 $ 37,571,452,782 $ 909,646,571 $ 2,274,116,427 $ 1,127,143,583 S 5,009,537,425 S $26,015, 100 36,846,806,838 $ 2022 36,846,806,838 $ 918,743,037 $ 2,296,857,591 $ 1,105,404,205 $ 5,068,952,540 S $26,275,251 36,072,583,879 $ 2023 36,072,583,879 $ 927,930,467 $ 2,319,826,167 $ 1,082,177,516 $ 5,128,606,768 S $26,538,004 35,247,373,258 $ 2024 35,247,373,258 $ 937,209,772 $ 2,343,024,429 $ 1,057,421,198 $ 5,188,494,468 $ $26,803,384 34,369, 730,805 $ 2025 34,369,730,805 946,581,869 2,366,454,673 1,031,091,924 5,248,609,816 $27,071,418 33,438,178,037 $ 2018 FUND LIABILITY Expected Benefits Payout Net Present Value of Payouts NPV of Unfunded Liability Ratio of Assets to Liability NPV 2016 NA NA $ 2017 4,773,624,090 $ $63,146,215,291 23,685,305,718$ 62% 4,832,354,046 $ $63,108,557,348 24,231,295,535 $ 62% 2019 4,891,254,773 $ $63,009,345,102 24,761,492,419 $ 61% 2020 4,950,318,548 $ $62,843,791,212 25,272,338,430 $ 60% 2021 5,009,537,425 $ $62,606,757,004 25,759,950,166 $ 59% 2022 5,068,952,540 $ $62,292,726,354 26,220,142,475$ 58% 2023 5,128,606,768 $ $61,895,728,290 26,648,355,032 $ 57% 2024 5,188,494,468 $ $61,409,301,144 27,039,570,339 $ 56% 2025 5,248,609,816 $60,826,504,262 27,388,326,225 55% $ NA NAStep by Step Solution
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