House Appropriations Committee Discusses TRS Budget
Full Committee Hears Testimony on Proposed Cuts
TRTA Action Alert—Click Here to Send Email Now Asking Legislators to Restore TRS Funding. TRS-Care participants could see premium increases of 30 to 80 percent in the coming biennium! TRS pension funding is being cut by nearly $500 million. Action is needed now. See complete update below.
The House Appropriations Committee listened to testimony by representatives of the Legislative Budget Board (LBB) and the Teacher Retirement System of Texas (TRS) on the current House budget recommendations. TRTA was at the hearing and the news is troubling.
Pension Trust Fund Contribution
The proposed budget recommendation offered by the House Subcommittee on Education and the LBB is to cut funding for the TRS pension trust fund from 6.644 percent to 6 percent. This will cost the fund nearly $500 million for the biennium from all funds. The current plan does not lower active member contributions; but a law passed in 2007 that requires that the state never pay less in contribution than the active members. This is an issue. Still, the House budget writers suggest the active members will make the same contribution of 6.4 percent that they have been making since 1984.
TRTA Comments: This reduction will do nothing to make the system actuarially sound and is in conflict with current Texas statute that prevents lowering state contributions when the fund is not sound. The TRS pension fund can sustain this reduction for the biennium with little change to the system’s actuarial condition, but it does NOT create a plan to provide retirees with a real cost of living increase.
TRTA Recommendations: The legislature should restore a level of contribution to the TRS pension trust fund of no less than 6.4 percent. Further, TRTA recommends that the state adopt a funding plan that raises the contribution to 7.2 percent for the first year of the biennium and 7.7 percent for the second year.
The House budget proposal cuts TRS-Care funding in half, from 1 percent of the aggregate active teacher payroll to 0.5 percent. This will cost the health care plan $300 million in state funding for the biennium. The state risks leaving $135 million in federal dollars on the table by not demonstrating maintenance of funding effort for the plan. While the state legislature may save money in general revenue outlay, it is costing the health plan nearly $600 million in funding from all sources.
TRTA Comments: TRTA members who participate in TRS-Care need to know that the legislature’s inadequate funding of this program will lead to premium increases. There is much speculation about how much those increases may be. With a flood of new retirees entering the program due to state budget cuts to public education, the projected premium increases are in the double digits. TRTA has heard that they may be as much as 30 to 80 percent, depending on legislative action this session.
Special Note: State Representative Craig Eiland made a special effort in this afternoon’s hearing to draw his fellow members’ attention to the FACT that an increase in TRS-Care premiums is a drain on TRS retirees’ fixed incomes. Representative Eiland stated the following: retirees have not had a permanent increase in their annuities in 10 years; as TRS-Care premiums go up, the drain on pensions is immediate; TRS retirees are already paying substantial premiums for access to their health care.
TRTA can once again credit Representative Eiland for speaking plainly about how these cuts will impact TRS retirees.
TRTA Recommendation: TRTA is calling on the Texas Legislature to restore full funding for the TRS-Care program.
Budgeting Process Continues
Today’s hearing is significant, as this was one of the last times the House Appropriations Committee could make significant changes to the budget plan they will take to the House floor. While the budgeting process is far from over, more progress on restoring the proposed budget cuts to TRS-Care and the pension trust fund is needed.
This meeting was just another step in a very long process. TRTA is meeting daily with members on making TRS funding a priority for our members. Legislators need to know that retiree “fixed incomes” are more aptly described as “diminishing incomes,” thanks to federal tax increases and a true loss of buying power. We must continue to work together and contact legislators throughout this legislative session.
Thank you for your tireless effort and your steadfast support for the Texas Retired Teachers Association. Please take a few minutes to email your legislators and ask them to restore funding to TRS-Care and the pension trust fund. Retired public education employees deserve better.