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21 Feb
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House Appropriations Subcommittee Hears Testimony From TRS, TRTA

Today, February 20, 2017, the House Appropriations Subcommittee on Article III listened to invited testimony from multiple state agencies, including the Teacher Retirement System of Texas (TRS), as well as public testimony.

The House budget bill will include funding for the TRS-Care retiree health insurance program. The Appropriations Subcommittee on Article III is responsible for education issues in the House budget.

The Appropriations Subcommittee on Article III members are: Rep. Trent Ashby, Chair; Rep. Helen Giddings, Vice-Chair; Rep. Mary E. González; Rep. Donna Howard; Rep. Linda Koop; Rep. John Raney; and Rep. Gary VanDeaver.

Trevor Simmons of the Legislative Budget Board (LBB) testified about TRS’s legislative appropriations request (LAR), and indicated that House Bill 1 (the budget bill) includes $4.8 billion for the TRS pension fund and health care programs for the coming biennium.

Simmons said the budget changes from the previous biennium are due to payroll growth. As our members know, contributions to the pension fund and TRS-Care from the state, school districts, and active employees are based on a percentage of payroll.

Simmons said TRS’s 7.3 percent rate of return in 2016, though less than the projected return of 8 percent, was higher than most other retirement systems for the year. He said the pension fund is in good shape and is moving in right direction.

For TRS-Care, HB 1 includes a total of $650 million for FY 2018-19, which is the projected amount based on the statutory contribution of 1 percent of payroll. HB 1 also deletes Rider 15, which in previous sessions has included legislative intent not to increase retiree premiums.

In TRS’s LAR presented in August, the agency requested $1.35 billion in exceptional funding for the TRS-Care shortfall. The most recently updated estimate is now $1.05 billion. This amount will continue to be updated throughout session.

LBB also presented a possible funding scenario, whereby the state would cover 50 percent, retirees would cover 25 percent, and school districts and active employees would cover 12.5 percent each. The state’s contribution would include $673 million additional dollars for the 2018-19 biennium, equivalent to 2 percent of active payroll.

HB 1 includes a new rider (18) that would provide for shared financial responsibility of the TRS-Care shortfall for 2018-19 (such as what is seen in scenario above).

Brian Guthrie, Executive Director of TRS, said the major focus on TRS’s budget requests for the biennium pertains to TRS-Care. For the third session in a row, TRS-Care shortfalls have been an issue.

Guthrie stated that TRS-Care is in distress, and the agency has done everything it can to forestall insolvency without help from the Legislature or major program changes.

Chair Ashby, who also served on the joint committee to study TRS-Care during the interim between legislative sessions, referenced the joint committee report and encouraged his committee members to read it. He also asked Guthrie about the worst case scenario, pondering what happens to TRS-Care if the Legislature does not add any additional money or make any program changes this session.

Guthrie said the program is unsustainable without additional funding or legislative changes, saying this is due primarily to the funding mechanism, which is based upon metric not associated with rising cost of health care. Though active member payroll is growing, it is not increasing at the same rate as medical inflation. Health care costs will continue to increase, widening the gap between program revenues and costs.

Guthrie also said the Legislature’s decision to remove the rider would allow the TRS board to increase retiree premiums, but reminded committee members that TRS-Care 1 is a free option. Large premium hikes in Care 2 and 3 could result in a migration to the free option. This would create a “death spiral” for the program as a whole: as premiums become unaffordable, members will gravitate to free option which would no longer be supplemented by revenues from Care 2 and 3. The program would quickly run out of money and be forced to close.

Chair Ashby also asked about the Medicare Advantage plan. Ashby said his constituents say many doctors in his district don’t accept Medicare Advantage. Guthrie said TRS is working with providers to educate them about the program, but there are still holdouts. He also said that as long as a physician accepts Medicare, retirees would still have access to coverage and service through TRS-Care Medicare Advantage.

Tim Lee, TRTA’s Executive Director, provided testimony on TRS-Care. He expressed the gratitude that retirees had for the state’s $768 million contribution last session, and he said retirees want “to do all that we can” to help legislators.

“We are fighting the rising cost of health care in this country,” Lee said. “These costs are so huge.”

TRTA believes that retirees can be a part of the solution with some consideration of benefit changes or premiums increases, but it is the rising costs of health care that are jeopardizing TRS-Care sustainability.

TRTA believes a shared-pain solution is the best approach for resolving the TRS-Care issue, and is more representative to how funding shortfalls have been resolved in the past.

Health care costs keep going up and without adding much needed funding to the TRS-Care program, retired teachers will be hit the hardest through massive premium increases and drastically cut health care benefits.

There are no sliver-bullets left for cost savings in TRS-Care. If retired school employees are going to have reasonable health care benefits at an affordable cost, more money is need for TRS-Care.

Chair Ashby said he looks forward to working with TRTA to develop a solution, and that he has appreciated working with TRTA in the past.

Stay tuned to The Inside Line for future updates from the House Appropriations Committee. Changes to TRS-Care funding will be coming hard and fast as the Legislature picks up steam. If you haven’t already, please use our legislator hotline (1-888-674-3788) to contact your Senator and Representative and inform them that TRS-Care is important to you. Our phone script can be found here. Looking for more ways to get involved? Use our TRS-Care page!

Thank You

Thank you for your membership to TRTA. We are ardently fighting for your benefits every day at the Capitol. If you are not yet a TRTA member, please join here.

Be sure to like us on Facebookfollow us on Twitter and subscribe to our YouTube channel.

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09 Feb
0

House Committee Assignments Announced

House Speaker Joe Straus (R-San Antonio) released his committee assignments for the 85th Texas Legislature today. In particular, Texas Retired Teachers Association (TRTA) members should be aware of the House Appropriations Committee and the Pensions Committee.

The House budget bill will include funding for the TRS-Care retiree health insurance program. The Appropriations Committee will be responsible for crafting and passing the House budget bill. Specifically, the Subcommittee on Article III of Appropriations works on education issues. TRTA will keep members informed about any upcoming hearings about their retirement benefits.

The Appropriations Committee members are: John Zerwas – Chair (R-Richmond), Oscar Longoria (D-Mission), Trent Ashby (R-Lufkin), Sarah Davis (R-West University Place), Dawnna Dukes (D-Austin), Helen Giddings (D-DeSoto), Larry Gonzales (R-Round Rock), Donna Howard (D-Austin), Sergio Muñoz (D-Palmview), J.D. Sheffield (R-Gatesville), Ron Simmons (R-Carrollton), Armando Walle (D-Houston), Greg Bonnen (R-Friendswood), Giovanni Capriglione (R-South Lake), Scott Cosper (R-Killeen), Jay Dean(R-Longview), Mary Gonzålez (D-El Paso), Linda Koop (R-Dallas), Rick Miller (R-Sugar Land), Mary Ann Perez (D-Houston), Dade Phelan (R-Beaumont), John Raney (R-College Station), Kevin Roberts (R-Houston), Justin Rodriguez (D-San Antonio), Toni Rose (D-Dallas), Gary VanDeaver (R-New Boston), and Gene Wu (D-Houston).

TRTA continues to work with the Legislature on finding ways to improve benefits for TRS retirees, including pension increases. If a cost-of-living adjustment (COLA) or supplemental payment is passed this session, it will be considered by the House Pensions Committee.

The Pensions Committee members are: Dan Flynn – Chair (R-Canton), Roberto Alonzo(D-Dallas), Justin Rodriguez (D-San Antonio), Rafael Anchia (D-Dallas), Cole Hefner (R-Mt. Pleasant), Dan Huberty (R-Houston), and Dennis Paul (R-Houston).

You can view the full list of the committee assignments here. Stay tuned to the Inside Line throughout legislative session to learn more about upcoming hearings, opportunities to share public testimony, and action alerts.

Thank You

Thank you for your membership to TRTA. We are ardently fighting for your benefits every day at the Capitol. If you are not yet a TRTA member, please join here.

Be sure to like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

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03 Feb
0

Senate Finance Work Group on Health Care Costs Meets

Today, Friday, February 3, the special work group appointed by Senate Finance Committee Chairman Jane Nelson to consider cost containment measures for state-vested health care plans met and heard testimony. Texas Retired Teachers Association (TRTA) Executive Director Tim Lee was invited to testify.

The following Senators serve on the work group: Charles Schwertner, Chair; Joan HuffmanLois KolkhorstRobert NicholsCarlos UrestiKirk Watson; and John Whitmire.

The Employees Retirement System of Texas (ERS) and the Teacher Retirement System of Texas (TRS) made presentations.

If you have Microsoft Powerpoint, you can download the slides Tim Lee used in his presentation here.

TRTA is encouraged by the work being done in the Legislature to make healthcare costs a priority. Unfortunately, the TRS-Care program is not immune to ever skyrocketing costs for healthcare. TRTA believes it is important for all of us to work with the legislature on plan design, cost-containment and cost reduction. TRS-Care has a $1 billion shortfall. We need to help the Legislature make good decisions on how this shortfall may be eliminated, and do so in such a way that retirees have access to affordable healthcare options.

TRTA will have a full breakdown of the meeting in an upcoming Inside Line.

Thank You

Thank you for your membership to TRTA. We will continue to follow the progress on TRS-Care. TRTA will provide you many more opportunities to get involved as we protect your hard earned retirement benefits!

If you are not yet a member, we need you to help us protect your retirement security. Please join TRTA today!

Be sure to like us on Facebookfollow us on Twitter and subscribe to our YouTube channel.

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