NO. TRS and CERS-NH plans are NOT in good shape.
While they are in better shape than other Kentucky plans, the funding level for both plans is below 60% -- 59.0% for CERS-NH and 54.6% for Teachers. And, those percentages are based on the old actuarial assumptions that were used in the FY 2016 calculations. Applying realistic assumptions, TRS' and CERS-NH's funding levels are actually much lower.
Using the same investment rates of return that corporate plans are required to use – the Corporate Bond Index rate – the TRS unfunded liability goes from $15 billion to $34 billion and the CERS unfunded liability goes from $5 billion to $9 billion.
And the TRS and CERS plans are not the only plans that are adversely affected. Using the Corporate Bond Index rate the aggregate underfunding for all eight of Kentucky's eight plans goes from $33 billion to $64 billion.
Furthermore, if Kentucky plans were subject to federal standards for single-employer private plans, TRS and CERS-NH would be designated as having severe funding shortfalls because their funded status is less than 60%. As such, the Internal Revenue Code would require that all benefits be frozen. This is true even using the results of the erroneous 2016 actuarial assumptions, not the more conservative and realistic discount rates and other assumptions required of private plans.
Unfortunately, under any set of assumptions, the TRS and CERS-NH plans are NOT in good shape. Implementing the appropriate changes will require a long-term commitment to reforms that are necessary to rebuild the foundation and that allows a path to fully sustainable fiscal health.