- The House Appropriations Committee received testimony from TRTA and TRS
- The committee will be a key part of negotiating a raise when the legislative session begins in January
- The TRS Board of Trustees will meet on Sept. 15-16
- RSVP for TRTA District Conference Meetings!
The Texas House Appropriations Committee (HAC) met on Thursday, September 8 to discuss the status of the Teacher Retirement System of Texas (TRS) pension fund and the possibilities for providing TRS retirees with a cost-of-living adjustment (COLA) or supplemental payment in the coming legislative session.
As members of the Texas Retired Teachers Association (TRTA) know, more than half of current TRS retirees have never received a COLA. The last COLA that was passed by the Texas Legislature went to those who retired in August 2004 or before. A COLA for retirees could be considered when the 88th Texas Legislature convenes in January.
TRTA Executive Director Tim Lee provided public testimony during the hearing. With 458,000 TRS retirees, Lee commended the state’s efforts to have a well-funded pension system, something TRTA made a priority and worked with the Legislature on for many years.
“Our members have told us very clearly that they want our work to focus on some form of benefit increase, preferably a COLA,” Lee said to the committee members.
Lee said that TRTA and its members want to work with the Legislature to make the COLA a reality.
Lee also said that while TRS retirees are grateful for supplemental checks that were provided in 2019 and 2021, the funds went quickly to pay for unpaid bills, property taxes, and healthcare costs.
TRS Executive Director Brian Guthrie also provided testimony. Guthrie made a similar to a presentation made to the Pensions, Investments, and Financial Services Committee (PIFS) on June 6.
Guthrie stated that the pension fund is considered actuarially sound as of today, mostly due to the passage of Senate Bill 12 in 2019, which gradually increased contributions to the fund by the state, active school employees, and school districts. The last set of contribution rate increases will occur in FY 2024 and FY 2025. The state and active employee contribution rates will be 8.25%, while the employer rate will rise to 2%.
Guthrie also explained that the TRS Board of Trustees recently voted to lower the pension fund’s investment return assumption from 7.25% to 7%. That change is now in effect, and Guthrie said he was “pleased to say that lowering it did not have a significantly negative impact on the health of the fund.”
He also said that the fund is on a path to reduce its unfunded liabilities to 0 by the year 2048, a funding period of 26 years. TRS will provide updated numbers to the Legislature in February when it conducts a fund valuation.
Legislators Speak Up About Helping Retirees
The topic of funding supplemental payments and COLAs generated much interest and many questions from the legislators on the committee.
A bill filed by Representative Giovanni Capriglione in 2021 would have provided a 6% COLA to retirees (with a cap of $100 per month) would have cost $2.8 billion if paid for upfront by the state, or $17.2 billion if financed through the pension fund.
Guthrie said there are many ways to pay for a COLA, including the option to increase contribution rates, which are based on active teacher payroll, from the state, active employees, or school employers. Rep. Capriglione asked what the contribution rate increase would have to be to fund a 6% COLA and Guthrie answered that the figure would be approximately .45%.
Rep. Capriglione added that for retirees, one-time supplemental payments “are worth less in today’s dollars due to inflation . . . it means less and less each year.”
Chairman Bonnen elucidated the combination of possible ways to pay for a COLA, saying it could include both increasing contribution rates as well as providing money upfront.
Rep. Gary VanDeaver asked what the purpose was last session for including a cap of $100 per month in the COLA bill that ultimately did not pass. Guthrie explained that it was meant to benefit retirees who receive significantly lower monthly annuities and can help to control the overall cost of a COLA to the state or the system.
Rep. Donna Howard reminded committee members that most TRS retirees do not receive Social Security benefits, saying “TRS is all they are getting.”
Rep. Mary Gonzalez reiterated the need for information about a graduated COLA, which could provide insight on the cost to give higher COLAs to older retirees.
Rep. Steve Toth pointed out retirees rely on TRS-Care for their health insurance and that controlling the cost of TRS-Care was important to having a sustainable retirement.
TRTA thanks Chairman Bonnen for inviting TRTA to present at today’s committee meeting. We also thank all the members of the Appropriations Committee for making TRS retirees a high priority ahead of the next session. Our work to help TRS retirees receive a COLA is kicking into high gear! Please stay tuned to the Inside Line as we continue our work to get all TRS retirees much needed financial relief.
Mark Your Calendars: TRS Board of Trustees to Meet September 15-16
The TRS Board of Trustees is scheduled to meet Thursday, September 15 and Friday, September 16 for their quarterly meeting. TRTA will provide additional details and links to the live meeting webcasts once they become available. The agenda is available here.
Reminder: TRTA District Fall Conferences Underway
TRTA is asking all members interested in attending one of the upcoming 20 District Fall Conferences to RSVP to the event of their choosing. TRTA Executive Director Tim Lee will be the featured speaker at 15 of these events.
Hundreds of members have contacted us wanting to attend, and an RSVP system will ensure that each event space may accommodate all attendees who are interested. (If you have connected with a district leader already to let them know you are attending, you do not need to complete the RSVP below).
- Please click here to RSVP to the conference of your choice!
- View a complete list of the fall conferences by clicking here.
We encourage every TRTA member, whether you are in a local chapter or not, to attend the district fall conference in your area. Let’s join forces and come into the next session with a unified voice and send a clear message to the Texas Legislature that RETIREES NEED A COLA NOW!
Please, encourage your friends and colleagues who have not yet joined to become a part of the ONLY association in Texas that focuses solely on protecting and improving benefits for Texas retired public education employees. Join today!