Montana Teachers' Retirement System
TRS Information for School Board Members
Message from Shawn Graham, TRS Executive Director
As a School Board Member, you are an important and valued stakeholder of the Montana Teachers’ Retirement System. Our mission at TRS is to provide long-term financial security for our members while maintaining the stability of the fund. We recognize that in order to accomplish this mission, we need the support of our participating employers and their governing boards.
Although public school districts in the State of Montana are required by law to participate in TRS, I think you should be proud of and promote the fact that, as an employer, you provide access to a defined benefit retirement system which, in turn, provides long-term financial security for your employees.
This webpage is designed to help you understand the importance of the role TRS plays in recruiting and retaining qualified teachers and administrators. I encourage you to review the information provided below and to contact us via the Ask TRS mailbox if you would like additional information. We welcome your questions and comments.
What is the Montana Teachers' Retirement System?
TRS is a defined benefit (DB) pension plan qualified under Internal Revenue Code (IRC) Section 401(a). State law established TRS in 1937 to serve public school teachers and other public employees who work in an instructional or educational services capacity in the state of Montana. Membership in TRS is mandatory for all K-12 public educators, except for persons teaching fewer than thirty days in each fiscal year.
TRS law is codified in Title 19, Chapter 20, Montana Code Annotated (MCA), part 44 of the Administrative Rules of Montana (ARM).
Since 1937, Montana TRS has grown from an initial enrollment of 3,367 members to approximately 20,000 active and inactive members and nearly 18,000 benefit recipients today. The vast majority of TRS retirees who receive monthly benefits live right here in Montana and the dollars they receive from TRS constitute an important part of the state and local economy. For the latest payment statistics and infographics, visit our Home page.
TRS administration
Administratively, TRS is attached to the State of Montana Department of Administration but has its own executive director and board. A deputy executive director and 20 staff members manage all day-to-day business of the retirement system.
The TRS Board of Directors is comprised of six members appointed by the Governor. Four of these members, including at least one active classroom teacher and at least one retired member, represent the teaching profession. Two public members from other professions fill the remaining seats. Each TRS board member serves on at least one committee; in addition, one member represents TRS on the State of Montana Board of Investments (BOI) board.
The TRS board meets five times per year in Helena. For a list of current members and the schedule of upcoming meetings, see the TRS Board page.
How do defined benefit (DB) and defined contribution (DC) plans differ?
In a defined benefit (DB) pension plan such as the Teachers’ Retirement System, both the employer and the worker are required to contribute a percentage of earnings to the retirement system. Vested members – those who have accrued at least five years of service – may apply for a monthly benefit upon reaching retirement age and terminating all employment in TRS-reportable positions.
The retiree’s benefit amount in a DB plan is not based on the account balance. Instead, an actuarial formula takes into account the individual’s total years of creditable service, average final compensation, age at retirement, and other factors to determine the monthly benefit amount, which is guaranteed for the retiree’s lifetime. In January of each year, a Guaranteed Annual Benefit Adjustment (GABA) provides a modest benefit increase to Montana TRS retirees who have received at least 36 benefit payments.
A Defined Contribution (DC) plan, on the other hand, makes no promise of income in retirement. When an employer offers a 401(k) or other DC plan, its workers are under no obligation to enroll in that plan, nor is the employer required to make contributions. This places the burden on workers to decide whether and how much to contribute, how to invest the funds among a limited number of options, and how to withdraw the funds after retiring. In addition, because DC retirement accounts are subject to market forces and do not guarantee income for life, retirees who outlive their savings may be more likely to rely on family support or public assistance programs for basic needs.
What about costs? A 2022 report by the National Institute on Retirement Security found that DB pension plans continue to be inherently more cost-efficient than DC plans. "In summary, when it comes to providing retirement income, DB pensions are substantially more economically efficient than individual retirement accounts because of risk pooling across a large number of individuals, a longer investment time horizon, and lower expenses and higher returns."
- We encourage all Montana school board members to view our 'TRS 101: Retirement System Basics' presentation, designed for educators and others who want to know more about TRS. You'll find links to this material on our Workshops page.
- We also encourage you to review results of our 2020 satisfaction survey to learn how important TRS is to active and retired members:
Active Member survey responses Retired Member survey responses
Challenges to TRS – and your role as a school board trustee
The section of TRS law entitled "Retirement System -- Policy" (19-20-102, MCA) may provide a helpful summary of TRS and its purpose.
One paragraph within that section is shown below:
These provisions seek to prevent unfair manipulation of retirement benefits that would harm the system and jeopardize the future retirement of all members. Without such restrictions, a member’s final salary could be inflated to achieve a larger monthly benefit. Or, a member could retire and then return to work at a high salary without paying the same contributions required of active members.
Periodically, legislation is brought forward that attempts to weaken these restrictions or limit employer contributions. Often, bill sponsors are sincere in the belief that changing the law will help school districts resolve short-term budget shortfalls, attract more candidates, or address other immediate concerns. However, a long-term effect of such legislation is that it increases the system's unfunded liability, making it less likely that TRS can fulfill obligations to thousands of current and future retirees.
To be sure, many of Montana's school districts face constant funding challenges. However, a strong pension plan should be viewed not as a costly burden but as a valuable tool to help recruit and retain qualified teachers and administrators.
If you have questions about TRS or if you would like more information about promoting its value in your district, please email us at Ask TRS. Together, we can achieve the TRS mission: To promote long-term financial security for our members while proactively maintaining the stability of the system.
Links and resources
National Conference on Public Employee Retirement Systems research:
Unintended Consequences – How Scaling Back Public Pensions Puts Government Revenues at Risk (pdf)
National Institute on Retirement Security research:
[1] 2022 Report: Economic Benefit of Public Pension Dollars in Rural America
and Montana Supplement with County-by-County Totals (pdf)
[2] Pensionomics 2023 – Montana Fact Sheet (pdf)
[3] 2019 Survey: State and Local Employee Views on Jobs, Pay and Benefits
[4] 2018 AARP-in-the States Snapshot: Montana TRS Economic Impact (pdf)
TRS laws, rules, and policies are the basis for the information provided in this section. Questions of interpretation will be resolved by application of those laws, rules, and policies.
