The Pennsylvania School Employees’ Retirement System (PSERS) has released its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015. The report is intended to provide financial, investment, actuarial, and statistical information regarding PSERS.  The CAFR states that the past fiscal year was a mixed year to be invested in higher risk assets, with modestly positive returns to equities while commodity and commodity-related securities struggled. PSERS’ Board and investment staff made significant changes to the fund’s investment asset allocation, further refining investment strategy and increasing the diversification of the fund’s assets. For the second year in a row, PSERS’ investment manager fees have declined.
 
The report also notes that, for many years, the commonwealth and school employers paid below the annual required contribution (ARC) that was necessary to pay down the unfunded liability of the system. The ARC percentage received fell to a low of 27% before significant pension reform was enacted in 2010. Act 120 of 2010 has made dramatic progress toward addressing the funding issue at PSERS. Since 2010, Act 120 has slowly resulted in increased employer contributions to the system and has raised the ARC to a level closer to other states. In FY 2015, PSERS received 69% of the ARC and is projected to receive 80% of the ARC in FY 2016. After FY 2017, PSERS’ Employer Contribution Rates are projected to plateau.
 
According to the report, employer contributions increased from $2.1 billion in fiscal year (FY) 2014 to $2.7 billion in FY 2015 due to the increase in the total employer contribution rate from 16.93% in FY 2014 to 21.40% in FY 2015.  The rate will continue to climb over the next several years, projecting to peak at 32.23% in 2020 and remain at almost 32% through 2029. 
 
Click here to see the entire CAFR report.
 
Click here to see the actuarial section.