Testifying before the Senate Finance Committee on Tuesday, GERS officials said the system has a $20 million deficit this year and had to liquidate a chunk of its assets to met retiree payments. According to GERS board chairwoman Corine King, retirement benefits are funded on a actuarial basis during an employees active employment, meaning the retirement has been funded in advance.
She said that in fiscal year 1998 some $76,868,055 was received in employer and employee contributions. However, $83,952,574 was paid out in benefits.
The $11,724,519 difference had to be paid by GERS liquidating a portion of its stocks and bonds, said GERS Administration Lawrence Bryant. He added that the number of retirees has doubled in the last five years.
"That has meant a decrease in money paid into the system," he said.
GERS officials told senators that government and member contribution rates are not sufficient to meet the cost of funding the system on an actuarial basis, as required by law.
"There were several critical issues which the board recognized needed attention. Such as the Y2K Certification Program (and) the conversion of our data processing system," King said.
One of the most critical problems facing GERS is the "uncontrollable growth of the unfunded liabilities," King said.
According to GERS officials, some 10,646 employees were making annual payroll contributions totaling $424,360,108 for fiscal year 1999. Currently, there are 5,301 retirees receiving annuities estimated at $83,499,266.