Due to TRTA’s strong advocacy efforts during the 88th Legislative Session, the Texas Legislature appropriated revenue designated for a TRS retiree cost-of-living adjustment (COLA). Texas voters will need to vote FOR a constitutional amendment authorizing this much-needed COLA!
Cost-of-Living Adjustments (COLAs) Eligibility
*(contingent upon the passage of the constitutional amendment; if approved by voters in November 2023, COLAs would start in January 2024)
Note: Annuitant is a person receiving a monthly annuity from TRS such as a retiree, surviving spouse or beneficiary.
The reason has to do with the state’s constitutional spending limit and the fact that funds for this particular COLA are coming entirely from state general revenue.
The pool of money from which the Legislature can design the state budget is limited by the cap placed on it by the Texas Constitution. If items of importance exceed that limit, they can either be eliminated entirely, or be approved by exceeding the spending limit with the approval of Texas voters.
The constitutional spending limit has been in place for more than 45 years. It was approved by voters in November of 1978. Article VIII, Section 22 of the Texas Constitution limits the rate of growth in appropriations from one biennium to the next. In no biennium shall the rate of growth of appropriations from state tax revenues not dedicated by the constitution exceed the estimated rate of growth of the state’s economy.
For 2024-2025, state budget officials serving on the Legislative Budget Board set the growth rate at 12.3%. The figure is based on personal income growth of Texans, population growth, and inflation adjustment. Once set, the rate cannot be changed for the biennium. Even though the state had a historic surplus of more than $32 billion, the Legislature was not allowed to spend more than $134 billion of an available $188 billion due to the growth rate.
To go beyond the specified budget cap, legislators had two options: get the approval of voters in a constitutional election to exempt the extra funds from the spending limit, or conduct a vote in both the Senate and the House to bust the spending cap. That cap needs a three-fifths vote in both chambers to break, though usually this type of vote applies only to funds needed for an emergency.
Ultimately, legislators decided that the COLA was an important facet of financial relief for TRS retirees, but that the pool of money available to fund it did not fall within the budget. Voter approval at the polls was the best path to the state fully funding the COLA and not having that cost apply to the spending cap.
To be clear, Texas has the funds, they simply fall outside the scope of the mandated budget amount.
Yes, TRS has posted its 2023 benefit enhancements FAQ here. Visit this link to learn more about tax and Social Security implications.