On Wednesday, February 19, 2025, the House Appropriations Committee met to begin discussions on House Bill 1 (HB 1), the state budget. Only invited testimony from state agencies was allowed during this hearing, and the Texas Retired Teachers Association (TRTA) did not testify. The Teacher Retirement System of Texas (TRS) provided an overview of the pension fund and healthcare programs.
During the TRS presentation, Executive Director Brian Guthrie shared information about the funding status of the pension fund. Similar to the testimony Guthrie provided on February 10 to the Senate Finance Committee, he shared that the TRS Pension Trust Fund currently is actuarially sound, with a funding period of 28 years.
As of August 31, 2024, the fund had a market value of $210.5 billion and is the sixth largest pension fund in North America with more than two million members, including active school personnel. TRS will update its actuarial valuation of the fund as of February 28, 2025. Guthrie stated that he expects the fund to maintain a funding period of 28 years, which meets the statutory definition of actuarial soundness, once the valuation is completed later this month.
The state’s contribution to the TRS pension fund for the biennium as filed in HB 1 will be $6.4 billion, while TRS will pay out in excess of $31 billion to more than 500,000 annuitants. This includes the contributions to the TRS pension trust fund according to the contribution increase rate structure established under state law via Senate Bill 12 (SB 12), which passed during the 86th regular legislative session. The final phase of SB 12, which implemented gradually increased contributions from both the state and active TRS members, occurred in FY 2025.
The state’s contribution for the TRS-Care retiree health insurance program for the biennium in HB 1 as filed will be $1.2 billion. The appropriation maintains the state’s contribution rate to TRS-Care set at 1.25% of active educator employee salary. Currently, TRS-Care has a healthy fund balance, something Guthrie described as a “major milestone.”
The total appropriated general revenue to TRS and general revenue-related funding for the FY 2026-27 biennium is more than $8 billion.
Rep. Mary Gonzalez (D-Clint) asked if SB 2, the school education savings account (ESA) bill, would have an impact on the TRS fund’s actuarially sound status due to a potential reduction in “headcount” of public-school classroom teachers. Guthrie said that TRS projects that SB 2 won’t have a “material impact” on the pension fund. According to Guthrie, it would be “unreasonable” to project teachers to leave classrooms at a 1-to-1 ratio for each student leaving for a private school. He said that even at a one out of 10 ratio of teachers to students leaving, SB 2 wouldn’t take the pension fund out of actuarial soundness.
TRTA members are concerned about any legislation that may impact TRS. Legislators are still asking questions about any impact on the TRS pension trust fund by the current discussions related to ESAs. As such, TRTA will continue to monitor these discussions and work with leaders and friends in the Texas House and the Senate to ensure that TRS is always protected. We will keep our members updated with information made available throughout this process.
Legislators from both sides of the aisle are working to determine the effect education savings accounts could have on public schools and retirement systems. As such, TRTA will continue to monitor these discussions and provide updates throughout the process.
TRTA members would also like to know if any benefit enhancements will be passed this session for TRS retirees. During the 88th Legislative Session in 2023, hundreds of thousands of TRS retirees received stipends of either $7,500 or $2,400, and many also received a cost-of-living adjustment (COLA) at either two, four, or six percent.
Appropriations Committee member, Rep. Armando Martinez (D-Weslaco), asked what the cost of a “true 13th check” for TRS retirees would be, if passed. Guthrie estimated that the cost is close to $1 billion.
There have been bills filed this session to provide either supplemental payments (13th checks) or COLAs to TRS retirees. As those bills are considered by the House or Senate in their respective committees, TRTA will provide an update to our members as soon as possible.
Por favor, permanezca atento a la Línea interior for any urgent updates or action alerts. The session is just now getting underway with committee hearings and continues through June 2.
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