The investment team that achieved a nearly 13 percent return for the pension system benefiting Texas teachers will share $9.7 million in performance bonuses.
The $104 billion Teacher Retirement System of Texas turned in the best one-year performance among the nation's largest public pension funds as of Sept. 30, the Austin American-Statesman reported for its Friday editions.
The fund had a 12.6 percent one-year return, according to figures released Thursday by the pension system.
Chief Investment Officer Britt Harris will receive a $444,553 bonus on top of his $480,000 base salary. Harris also will get another $343,515 based on the fund's 2009 performance. Payment of that bonus was deferred until the fund turned in a positive annual return.
The bonuses are part of performance incentive program established in 2006.
Between 2008 and 2010, the investment team generated $2.3 billion more than benchmarks for the incentives.
The bonuses are "going to sting" for retired teachers who have not received an increase in their monthly checks in the past 10 years, said Tim Lee, executive director of the Texas Retired Teachers Association.
Texas law says no additional benefits can be given to retirees unless the trust fund is fully funded, and it still has only 83 cents for every dollar needed to meet long-term obligations made to the system's 1.3 million active and retired public school employees.
Lee said he would like the 2011 Legislature to find a way to get retirees a benefit increase, but that would require the state to increase its contribution by more than $500 million in the next two-year budget.
Texas lawmakers are trying to cut spending to deal with a projected budget shortfall topping $20 billion. On Tuesday, leaders asked state agencies to plan for additional cuts of 2.5 percent. The cuts will be on top of about $1.2 billion in reductions already made this year.
TRS board chairman David Kelly praised the work of the investment team.
"All of us on the board could not be more pleased with this outstanding performance," said Kelly.
The bonuses are paid from the trust fund, which is fed by contributions from the state and active members as well as investment returns. The total award amounted to three years' worth of bonuses for most of the 108 investment staff members and is based on the fund performance in relation to other peer pension funds and the markets.
Harris opted last year not to take the $168,000 that he had earned based on the fund's 2008 performance amid a legislative backlash about bonuses at the state investment funds.