Tag Archives: Lillard

Lawmakers Approve Changes to State Retirement System

The House has approved and sent to the governor for his signature a bill that changes the pension system for state employees and teachers hired after July 1, 2014.
Drafted by state Treasurer David Lillard, SB1005 would create what is described as a “hybrid” between the present defined-benefits plan, which guarantees retirees a fixed pension based on years of service and earnings, and a defined-contribution plan, which has no guaranteed benefit level.
The bill passed the Senate 32-0 and won 71-16 approval in the House. All no votes came from Democrats.
Explaining his no vote, House Minority Leader Craig Fitzhugh praised the proposal as well designed, but said it is simply not needed in Tennessee because the state retirement system has adequate funding — unlike those in many other states.
But Lillard and sponsors of the bill — Sen. Randy McNally, R-Oak Ridge, and Steve McManus, R-Cordova — said long-range projections show the Tennessee Consolidated Retirement System could face problems and the legislation will head them off, without affecting current state workers and teachers.

Andrea Zelinski has details on the legislation:

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Lillard Outlines Plans to Change State Pension System

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. (AP) — Tennessee’s treasurer said Monday that he wants to overhaul the state’s public retirement system to cut costs and ensure it can pay out benefits for years to come.
David Lillard said he will propose legislation laying out the overhaul, even though Tennessee’s public pension system is faring better than those in most other states. Changes to the Tennessee Consolidated Retirement System will only apply to state employees, higher education officials and teachers hired after July 1, 2014, Lillard said at a news conference. The retirement benefits of those currently in the system won’t be affected.
The state is doing better than its peers with similar plans, but earnings of the Tennessee plan have fallen short of expectations over the past several years, he said. The changes are needed because it’s uncertain how much money the retirement system’s investments will yield in the future, Lillard said.
He said that in 2003, taxpayers spent about $264 million a year to support the system. As of last year, that number had grown to $731 million, he said.
“Based on projections we have seen, the cost could go up by one-third or more over the next 10 years if changes aren’t made, which would push the taxpayers’ total annual expense above $1 billion,” said Lillard, adding that at least 45 states have enacted some type of pension reform in the past few years.

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Treasurer Pushes Change in State Retirement System

Tennessee may be contributing much less to state employee retirement accounts in the future based on a state plan to convert to a defined contribution plan, reports the Commercial Appeal.
State Treasurer David Lillard will unveil details of his proposed revisions to the state pension plan Monday, and the state legislature will consider the changes with bills sponsored by Rep. Steve McManus, R-Memphis, and Sen. Randy McNally, R-Oak Ridge.
Lillard’s proposal will change — for future hires only — the pension plan from a defined-benefits plan to a hybrid plan that includes elements of defined-benefits and defined-contribution programs.
Defined-benefits plans guarantee retirees a fixed pension benefit based on their years of service and earnings, while defined-contribution plans do not have guaranteed payment levels but rather specified contribution levels by the employer. The benefit payments may rise and fall with their underlying investments.
The state’s pension plan is part of the Tennessee Consolidated Retirement System, established in 1972 and which today covers state government workers, employees of the state’s public higher education system, local public school teachers statewide and employees of about 485 towns, cities, counties, utility districts and other local entities that choose to participate in the state-run plan. All nonstate entities pay their own costs.

Comptroller, Secretary of State Treasurer Re-elected, Praised

Joint news release from House and Senate Republican Caucuses:
(NASHVILLE) – In a joint session of the Tennessee Senate and the Tennessee House of Representatives today members unanimously re-elected Secretary of State Tre Hargett, Treasurer David H. Lillard, Jr. and Comptroller Justin P. Wilson. Secretary Hargett will serve his second four-year term, while Treasurer Lillard and Comptroller Wilson will each serve two-year terms. All three were originally elected to their posts by the General Assembly in January, 2009. Treasurer Lillard and Comptroller Wilson were re-elected to their second two-year terms in January, 2011.
Senate and House leaders congratulated the Constitutional Officers today, and released the following statements:
“While many Tennesseans don’t know what they do, the constitutional officers are really the unsung heroes of state government. They work – often behind the scenes but sometimes in the harsh glare of the media spotlight – to make sure that our state’s investments are managed properly, that public employees have a financially sound retirement system, that taxpayer money isn’t wasted, stolen or misused at the local or state levels of government, that local governments get the assistance they need to be successful in various levels of their operations, that our elections run smoothly, that our public libraries have the support they need to provide excellent service to Tennesseans. Tennesseans are lucky to have leaders like Comptroller Wilson, Treasurer Lillard and Secretary of State Hargett overseeing these essential services of state government.” -Lieutenant Governor Ron Ramsey
“Tennessee is in excellent financial condition – and the work of our three constitutional officers has played no small part in that. As members of the State Funding Board, they set revenue estimates that are used by the governor, his staff and members of the General Assembly for budget planning purposes. They also appear regularly before the major rating agencies that determine how strong Tennessee’s credit ratings will be. They also provide helpful advice and information to help members of the General Assembly do their jobs better.” -House Speaker Beth Harwell
“I am very proud of the work Treasurer Lillard, Comptroller Wilson and Secretary of State Hargett have done over the last four years. They have made many major improvements to make Tennessee state government work more efficiently and effectively which benefits all Tennesseans. All three of these public servants are well deserving of another term in office.” -Senate Majority Leader Mark Norris
“Reforming government is something that’s easy to talk about, but difficult to do. These three constitutional officers have spent the last four years challenging traditional thinking about the way their offices should operate and, as a result, their offices are operating more efficiently and effectively than ever before. They have made the offices more accessible by making more services available over the Internet and have found ways to maximize the productivity of their employees.” -House Majority Leader Gerald McCormick.

State Sells Bonds at 2.05% — Lowest Rate Ever

News release from state comptroller’s office:
The State of Tennessee sold more than $170 million worth of general obligation bonds this week at the lowest overall interest rates in more than 40 years. The debt offering was sold in two parts, consisting of $140,000,000 in tax-exempt bonds and $30,525,000 of federally taxable bonds. The combined true interest cost of the bonds was 2.05 percent.
The tax-exempt bond proceeds will be used to fund new capital projects while the proceeds from the taxable issue will be used to refinance currently outstanding bonds.
The refinanced bonds will result in present value savings to the state of $2,607,000 over an eight-year period.
“We chose to refinance some of our bonds at this time because interest rates were so low,” said Comptroller Justin P. Wilson, who serves as secretary of the State Funding Board. “The low interest rates we were able to get demonstrate, once again, that the state is in excellent financial health.”
“Over the last 15 months, we have saved the state more than $63.6 million through refinancing, said State Treasurer David H. Lillard Jr., who is also a State Funding Board member. “We believe that’s part of our mission to be good stewards of public money.”
“Tennessee has continued to maintain strong credit ratings, which makes low interest rates possible,” said Secretary of State Tre Hargett. “We are able to maintain those credit ratings because of the excellent work done by the General Assembly, the governor and his administrative staff in managing our state’s finances.”

State Offers ‘TNStars’ College Savings Plan

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — A new college savings plan in Tennessee aims to help more students afford a higher education, state officials announced Tuesday.

Gov. Bill Haslam, joined by the state treasurer and both legislative speakers, announced the “TNStars College Savings 529 Program.”

The governor called the plan a “great opportunity for Tennesseans who want to attend college.”

“There are a lot of issues around why Tennessee is behind the national average in college attendance and college graduation, but affordability and access is at the heart of those issues,” he said.

The plan takes its name from section 529 of the Internal Revenue Service code, which authorized the creation of tax-advantaged plans in 1996.

To encourage enrollment in the program, Tennesseans who open accounts with at least $50 will receive a one-time $50 match from the state. Those who roll over their account balances from other 529 college savings plans, including the state’s prepaid plan, will get $100.

The program also offers federal tax-free earnings if the money is used for higher education expenses, and low fees that compete with some of the top-rated plans in the nation.

The state is spending more than $3.3 million to market the program, including payment to a private marketing firm and television ads.

“In this highly-competitive and changing economy, it is important that we keep our children focused on achieving a higher education and post-secondary education that qualifies them for the 21st century specialized workforce,” said state Treasurer David Lillard.

About four years ago, the state partnered with Georgia to start a college savings plan that allowed families to put away money for their children’s higher education expenses.

The new one is specific to Tennessee and allows participants to control how they manage their investments. The plan has an age-based option in which investments are more aggressive when children are young and become more conservative as they approach college age.

Rich Rhoda, executive director of the Tennessee Higher Education Commission, told The Associated Press earlier this week that the new program is more viable.

“There has been one (college savings program) in place in Tennessee over the years, and this is basically breathing new life into it,” he said. “This is where families can start saving for their children’s, grandchildren’s college education way ahead of time. It’s a safe investment.”

Mark Schneider is vice president of the American Institute for Research and the author of a recent study that examined how much graduates from Tennessee’s colleges and universities earn their first year in the workforce. He said Tennessee’s new plan is a good idea.

“It’s all about college affordability and debt,” he said. “So, as colleges become more and more expensive, parents and students are looking for more and more ways to finance college. And the 529 plan is one way of trying to accumulate … the money that you need to send your kid to school.”

Note: News release below.

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With Cities Pulling Out of State Pension Plan, New Options Offered

The Tennessee Consolidated Retirement System bills itself as “one of the best-funded pension plans in the nation,” but some local governments have been pulling their new hires out of the plan, reports Hank Hayes.
The city of Kingsport did. So did Johnson City and Tri-Cities Regional Airport. The reason: These cash-strapped political entities have found their contributions into TCRS to be too costly.
“Fifty-four (governmental entities) were at or above 15 percent of payroll (with TCRS employer contributions). … Speaking as a former county commissioner, that tells me they are under a bit of funding pressure,” said Tennessee Treasurer David Lillard Jr., who oversees TCRS.
For instance, TCRA’s TCRS contribution expense is almost 18 percent of payroll. The airport decided to go with a different defined contribution plan that would have a maximum 9 percent of payroll cost.
Kingsport’s and Johnson City’s TCRS pullout, in particular, got Lillard’s attention.
“These are all issues of concern to us because these are significant-size local governments, and they are entities participating in the system for many, many years — some going back to 1948,” he noted.
So Lillard hit the road last fall and did listening sessions with more than 200 local government officials about their future with the state’s pension plan.
Proposals from those meetings resulted in legislation passed this year to create three less costly investment options.
TCRS says the bill, scheduled to go into effect on July 1, would not apply to current local government hires, state employees, K-12 teachers or higher education workers. No local governments are required to make any changes. The provisions are only effective if adopted by local governments, according to TCRS.

Pension Bills Delayed in Committee

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. — Proposals to change the retirement system for public employees in Tennessee stalled Monday in the Legislature when a joint panel of lawmakers decided they need more study of the issue.
One measure before the Joint Council on Pensions and Insurance expands the statute denying retirement benefits to state employees and officials who are convicted of a felony while in office. Under the proposal, benefits would end if there’s a guilty plea.
The state treasurer’s office had some concerns with the legislation. It said the measure could be unconstitutional on the grounds that there’s no language in the proposal to address restoration of benefits if a court later finds a person is innocent.
Senate sponsor Randy McNally, an Oak Ridge Republican and chairman of the joint committee, delayed the proposal for two weeks to address the concerns.

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History of Past State Treasurers to Be Chronicled

News release from state treasurer’s office:
What: State Treasurer David H. Lillard, Jr. is hosting a reception to honor past State Treasurers by introducing a project chronicling their history. Special honor will be given to the four living former State Treasurers who will be in attendance including: The Honorable Thomas Wiseman, The Honorable Harlan Mathews, The Honorable Steve Adams and The Honorable Dale Sims.
When: Wednesday, April 6 at 3 p.m. Central Time
Where: The Old Supreme Court Chamber on the first floor of the Tennessee State Capitol
Who: In addition to Treasurer Lillard, the four living former treasurers, descendants of other former treasurers, historians and state officials including Governor Bill Haslam, Lieutenant Governor Ron Ramsey, House Speaker Beth Harwell and other members of the Tennessee General Assembly are expected to attend.

Lillard: TN Pension Plan in Far Better Shape Than Some Claim

While state Treasurer David Lillard says the $32 billion Tennessee Consolidated Retirement System ranks among the best pension plans in the nation, there’s also some bad news.
From Richard Locker:
The plan has been fully funded since its creation in 1972, but two years of bear-market losses in its investment portfolio — minus-1.2 percent in 2008 and minus-15.3 percent in 2009 — left it with a $2.7 billion unfunded liability on paper that the state will amortize over 20 years.
That number could be reduced if investment earnings average better than the projected 7.5 percent. (Earnings rebounded to 10 percent in fiscal 2010 and 13 percent the first half of fiscal 2011.)
The $2.7 billion is far less than a $30.5 billion shortfall attributed to the Tennessee plan by the conservative American Enterprise Institute and $23.2 billion claimed by a pair of Northwestern University economists whose analysis Lillard said was flawed. Both claims have been used by a coalition of “free market” groups campaigning to end pensions for public workers.
Lillard, a Republican and former Memphis tax attorney, said the TCRS has a “conservative benefit structure that does not produce pension abuse found in several other states. We don’t have, as California does, any fire chiefs who have retired with $200,000-plus in pension benefits.”
…TCRS will pay out just over $1.5 billion to 112,133 retirees this year, an overall average of about $13,720 a year. Most covered retirees worked for the state for at least five years (the minimum to qualify) but less than 30, or retired years ago at lower benefit levels.