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24 Jan
0

TRTA Calls for Additional Funding

Senate Searches for Answers

 TRTA Advises Senate to Increase Contributions

The Senate Finance Committee met to discuss the Teacher Retirement System of Texas (TRS) budget allocation in their version of the budget, or SB 1. The meeting did not provide much new information, but it did provide TRTA a forum to push for increased appropriations to the pension trust fund and the TRS-Care health insurance program. Perhaps most notably, though, was the sense of immediate crisis that surrounds the funding of the TRS-Care health insurance program and what may happen to retiree health care if new solutions are not developed.

Stating that the TRS-Care projected funding shortfalls represented an “immediate crisis,” Mr. Brian Guthrie, TRS Executive Director, said there are no easy answers to solve this problem and that waiting to deal with it would cause more pain down the road. Prefacing these comments, TRS officials did say the vitally important TRS-Care program could survive another session of no additional state funding, no retiree premium increases, and no additional revenue enhancements IF the retiree population stayed in the TRS-Care Medicare advantage program and the Medicare D prescription drug program at levels of 80 percent or more. Early estimates from TRS do not indicate participation in the TRS-Care Medicare advantage program at an 80 percent range, and may be more like 75 percent participation. When asked about this lower enrollment, TRS said that there are pockets of medical providers that are not accepting the Medicare Advantage plan and those retirees have less incentive to remain in the advantage plan.

The news for enrollment participation in the Medicare D option for Express Scripts is much higher. TRS reports an overall 95 percent participation rate in the Medicare D plan. TRS testified that the savings to the plan are realized without a disruption of service to the members. The Medicare D option is not contingent on medical professional participation, and is a transparent savings to the plan and to the member that occurs simply by the retiree’s willingness to participate under the plan so that TRS can receive the cost savings yielded by the program.

Special Note (Tim Lee): This does not mean that both TRTA and TRS are unaware of some of the service issues that have resulted from Express Scripts’ transition to take control of the plan last September. These disruptions of service have little to nothing to do with TRS participating in the Medicare D savings and are being handled by TRS and Express Scripts at an administrative level. TRTA will continue to provide TRS with your updates, concerns, and frustrations if you have experienced any such issues.

The total savings to the plan by the participation in the Medicare Advantage option (though less than the 80 percent) and the TRS Medicare D option (which is about 95 percent and helps offset for some of the lower participation in the Medicare D option) is close to $500 million for the biennium.

Senator Kevin Eltife (R-Tyler) spoke up for retirees and said that his constituents are very fearful of losing their health care benefits if the legislature does not offer better solutions this session. He said that retirees have not had an increase in their base retirement benefit in over a decade and they cannot afford exploding premiums, nor should they have to. Senator Royce West (D-Dallas) echoed this sentiment and said that retirees need to be treated with the same dignity and respect that they gave this state and their students when they were actively working in our state’s public schools.

TRTA commends this strong show of support by two long-time champions for TRS retirees. Tim Lee, TRTA Executive Director, testified that a primary association goal this session is to assure all TRS-Care participants that their health care plan will remain intact, viable, beneficial, and affordable.

Tim Lee also testified that the state subsidy for a TRS-Care participant is about $110 per month. “There is no private sector option that can provide the level of coverage, the equivalent prescription drug benefit, the low administrative cost, or the assurance of quality service like the TRS-Care plan,” Lee said. TRS-Care participants are paying the highest portion of cost related to their health care through premiums, deductibles, copays, and other out of pocket costs.

In addition to retiree costs, the active school employees and the school districts are also paying into the TRS-Care plan. Their portion is not paying to pre-fund the benefit (like the TRS pension contribution is pre-funding their retirement benefit), but to help cover the current retiree population.

TRTA did express the association’s appreciation for having a baseline budget proposal that is higher for TRS-Care this session than what we received last session.

That, though, will not be enough to avert a funding crisis for the TRS-Care program in the coming years. TRS reports that by 2015, the TRS-Care plan may have a $1.2 billion shortfall. It seemed clear to everyone in the hearing today that pushing this issue down the road was not the best public policy decision. It certainly is not in the best interests of TRS-Care participants. As TRTA member Tom Rogers testified, “it’s pay me now or pay me later…,” but the cost to wait is exponentially higher than finding solutions today.

Health care was not the only issue discussed by the Senate Finance Committee. A considerable amount of time was dedicated to discussing funding or benefit change options that may reduce the pension fund’s unfunded liability.

TRS reported that a state contribution to the TRS pension trust fund of 8.62 percent is needed to make the pension trust fund actuarially sound today. It is important to point out that the legislature has not made a contribution to the TRS pension trust fund in an amount higher than 7 percent for almost two decades. TRTA believes the savings the state has realized from this underfunding benefited other legislative priorities, but NOW is the time to focus on the TRS fund.

The Senate Finance Committee, however, focused more so on benefit changes for future retirees and marginal state increases to the pension fund. TRS was asked to report on various cost savings proposals by changing benefit levels for future retirees. Options such as raising the retirement age, changing the Rule of 80, modifying benefit calculations based on final average salary and others were all discussed, BUT NO RECOMMENDATIONS OR CONCLUSIONS WERE MADE ABOUT ANY OF THESE POTENTIAL CHANGES. TRS did not advocate one option over any other; they did, though, answer direct questions that were asked by Senate Finance Committee members. Nearly all of the discussed benefit changes were consider in a context of grandfathering existing employees who are close to retirement.

TRTA testified that the state has saved billions of dollars on retirement security costs for public school employees, because 95 percent of those employees do not participate in Social Security.

In addition, the state contribution for public school employees is less than the average private sector hourly employee whose employer pays into Social Security and some form of defined contribution plan (a much less beneficial and far less secure retirement plan).

TRTA testified that the national average for employer contributions on hourly workers to Social Security and private retirement plans is 9.5 percent, or 3-plus percent higher than the state contribution for TRS active members.

Since 1995, the state contribution to TRS has never exceeded 7 percent. It has rarely exceeded 6 percent. If the legislature had maintained the 7.31 percent state contribution that was changed in 1995, TRS unfunded liability would be $7 billion less than it is today.

TRTA is very appreciative of the state’s commitment to increase contributions in the base budget to an amount equal to what active members are contributing! This was a promise made to TRTA and all TRS retirees last session and is a promise kept by the Senate and the House in their base budget proposals.

That said, the 6.4 percent state contribution rate by itself is simply not enough to improve the actuarial condition of the fund in a way to ensure its long-term soundness or to provide existing retirees a much needed pension increase.

TRTA encouraged the Senate Finance Committee to continue their good work and to adopt a minimum level contribution for the TRS trust fund at 6.9 percent in FY 2014 and 7.4 percent in FY 2015. These amounts are based on the TRS actuary recommendations. Increasing the TRS contribution by .5 percent in each year of the biennium would move TRS in the right direction, but more must be done to help retirees who are in desperate need of a cost of living increase.

Considering that over 40 percent of all current TRS retirees do not earn more than $1,500 per month in their retirement benefit, the state legislature MUST make pension funding and actuarial soundness a real priority now.

Thousands of TRS annuitants NEED an increase in their base annuities and getting the system to actuarial soundness as quickly as possible will provide the legislature numerous options to help these retirees.

TRTA is committed to helping find solutions to these big challenges. TRTA’s professional legislative team and our 75,000-plus member advocates must take every opportunity to work with the legislature this session.

Over 3,000 TRTA members responded to yesterday’s call to email your senator. We know your efforts are making a strong impact and are providing insight, encouragement, and clarity to these elected officials. TRS retirees MUST be a priority for this legislature!

As always, thank you for your continued support. TRTA works every day at all levels with one thing in mind…your retirement security! Our business is to protect and improve your annuity and your TRS-Care health insurance program. We are facing substantial challenges this session, but TRTA has a motivated and powerful membership. I know we can and will make a difference.

If you are not a member and want more information on joining TRTA’s legislative and membership efforts, please contact our office at 1.800.880.1650. We will continue to update you throughout this legislative session.

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23 Jan
0

TRTA Action Alert: Senate Finance Hearing on TRS set for Thursday

Senate Budget Hearing on TRS set for Thursday

TRTA Members Called to Action (TRTA Action Email Provided Below)

The Texas Senate Finance Committee will hear public testimony on budget requests for the Teacher Retirement System of Texas (TRS) tomorrow (Thursday, January 24, 2013). The meeting is one of the first steps in the legislative process, and provides the Texas Retired Teachers Association (TRTA) with an opportunity to promote our members’ interests.

TRTA will use this opportunity to express our appreciation to the Texas Senate for increasing its budget commitment to TRS for the coming biennium. The Senate version of the budget is already a major improvement from the previous legislative budget, which cut TRS pension fund and health care contributions. TRTA members made a strong case during the interim to have a baseline budget that was higher than last session’s, and the Legislature responded proactively with the current budget proposal.

While this is a significant improvement over last biennium, TRTA will also impress upon the Senate Finance Committee the need to do more. TRTA will ask the Senate Finance Committee to:

  • Increase TRS funding to ensure the long-term solvency of the pension trust fund;
  • Take immediate funding action to help make the TRS pension fund actuarially sound as quickly as possible;
  • Increase TRS pension fund contributions to 6.9 percent of the aggregate teacher payroll in FY 2014 and 7.4 percent in FY 2015;
  • Consider some type of benefit increase for retirees who are in the most desperate need;
  • Develop a plan to ensure the pension trust fund is actuarially sound and is able to provide a true cost-of-living increase for TRS retirees as soon as possible;
  • Take immediate funding action to ensure the long-term sustainability of the TRS-Care health insurance fund;
  • Ensure that existing TRS-Care participants do not have premium increases or drastic changes in their health care benefits; and,
  • Take any funding action necessary to relieve the financial pressure that the TRS-Care program is now facing.

The legislative session is just now getting underway, but TRTA has made numerous legislative visits already. We are hearing a lot of support for the TRS pension fund, its benefit structure, the value it represents for its members and all Texans, and a true desire to help TRS retirees.

TRTA members can help push our agenda forward in the Senate by sending an email to their Senators asking them to support the TRTA legislative agenda. Your Senator does not have to be on the Senate Finance Committee to hear our message!

Click Here to send an email to your Senator asking for their support on the TRTA legislative agenda.

Many of you have sent emails in the past. The TRTA email system generates an automatic message featuring our key points on the topic. Our system also allows members to include any additional comments or suggestions. The TRTA email system delivers emails directly to your Senator or Representative, even if you do not know who that is!

This is the first mass email message our TRTA members will have an opportunity to send this session. Let’s make a strong first impression and send a loud and clear message to the Texas Senate that we appreciate what they have done so far, but retirees are asking them to do more.

TRTA is recognized by the Legislature for having one of the most active, organized, and professional legislative programs in the state. We know you are ready to carry on that tradition. Now is the start of a very active and productive legislative session!

TRTA will provide a complete update on tomorrow’s hearing after it adjourns.

Thank you for your involvement and support. TRTA members are the best advocates in Texas. If you are not a member and want more information on how to join, please contact us at 1.800.880.1650.

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11 Jan
0

The Texas 83rd Legislative Session Is Underway

On Tuesday, the Texas Legislature convened for the 83rd Legislative Session. As the session begins, I cannot help but think of the now famous political question “are you better off today than you were four years ago?”  Many TRS annuitants may be quick to respond that public education retirees have not had a pension increase in 12 years. It has been 5 years since the supplemental payment was provided to retirees in 2008 (passed in the 2007 Legislative Session). So, the obvious and painful answer for many TRS retirees is that we are not better off today than we were four years ago.

At the same time, think back to the start of session just four years ago. The national economy had taken a major blow, we were moving into a deep recession, jobs were being cut across the country and the markets had plunged. The TRS pension trust fund had decreased in value from $113 billion in August of 2008 to $67 billion by February 2009 (that was a $50 billion drop in just 5 and a half months!).

Indeed, both the 2009 and 2011 legislative sessions were very difficult as the state budget and the political will to make improvements for pensioners seemed low.

TRTA members rallied in those sessions to reassure legislators that the pension fund, and pension fund policy, is a long-term venture and one that does not warrant kneejerk reactions to daily trends. TRS is in the forever business, and TRTA members worked hard during those sessions to protect the pension trust fund and our TRS-Care health insurance program.

While TRS retirees did not receive an increase in their pensions, TRTA did prevent drastic increases in TRS-Care health insurance premiums and worked with the Legislature to ensure the pension fund was managed appropriately (the Legislature did not dictate how the pension fund managed its assets, but allowed the pension trustees to make those decisions without undue political involvement).

Perhaps most compelling in the aftermath of the trust fund suffering such major losses, not a single retiree was told their annuity check would be skipped or would even be delayed. In addition, no active teacher was told they could not retire during those difficult economic times. If you ever needed even more evidence why our TRS defined benefit plan is worth protecting, those are a few very poignant facts!

The start of the 83rd Legislative session is a much different time. State revenues are up, the state’s reserve fund (often referred to as the Rainy Day Fund) has increased, and many programs that were cut last session may see those cuts restored.

TRS must be one of the state’s vital budget interests this session! TRTA has been working with elected officials and budget writers since the end of the last regular legislative session demanding that the cuts made to the TRS pension trust fund and TRS-Care health insurance program be restored this session.

TRTA also is calling on the Legislature to increase their contributions to both programs. Our retirees have been asked session after session to work with the Legislature to help make the pension fund actuarially sound so that retirees can receive a real cost-of-living adjustment. TRTA has supported numerous efforts to improve funding, cut waste, and end retirement practices that were not deemed sound.

TRTA supported pension reforms back in 2005 long before other states even perceived that such action was vital to their own pension funds’ long-term health. We have worked closely with the Legislature to make incremental improvements.

Last session, though, the Legislature cut TRS funding to either constitutional or statutory minimums (in the case of TRS-Care, they cut the program to less than the statutory levels deemed necessary).

The Legislature cannot keep doing the minimum, then wait and see if the markets will make up for years of inadequate funding. TRS retirees and their loss of buying power cannot and should not be ignored by the Legislature. Putting retirees’ health care program at risk is not how our public education retirees should be treated after dedicating their lives to educating our children.

TRTA wants to champion any legislative effort to improve the overall health and fiscal soundness of the TRS pension trust fund, while protecting the current TRS defined benefit plan for all future public education retirees. We also call on the Legislature to make the necessary contributions to the TRS-Care fund and TRS pension fund. Retirees cannot afford health care premium increases. If our retirees are ever to receive a true cost-of-living increase, the state must increase its funding to the pension fund.

Achieving these goals will not be easy, but it starts with the Legislature recognizing that the state cannot keep doing the minimum and hoping for maximum results. Getting by with state minimum contributions is not the way to improve the pension trust fund or TRS-Care health insurance program. Our pension trust fund and the TRS-Care program are far more valuable to this state if they are well-funded and growing.

TRTA has a robust legislative agenda. Much of our early legislative work will focus on the budget. Perhaps the most critical goal for TRTA during this session is protecting the TRS-Care health insurance program. TRTA has been successful in keeping retiree premiums from increasing for 8 years. This is a tremendous accomplishment for all TRTA members that have worked on this legislative initiative.

As all TRS-Care participants know, the health care program is experiencing a number of changes to contain program costs. Many of these changes maintain, and have even improved, benefit levels for some TRS-Care participants; but the fact remains that these are cost containment measures being employed by TRS because the TRS-Care program is running out of money.

The Texas Legislature must address the TRS-Care funding situation. The program participants are paying the highest share of the cost of TRS-Care through premiums, co-pays, deductibles, and out-of-pocket expenses. The state likely will not find a better managed, more efficient, quality coverage program than TRS-Care. Funding to TRS-Care must be restored. Any supplemental appropriations that are needed to prevent drastic increases in retiree premiums or reduced coverage must be a part of this Legislature’s budget.

We have many challenges ahead of us in the next 140 days, including educating nearly 50 new legislative members.  We can use your help to accomplish this very important task as well as to help us maintain relationships with key legislators that influence decisions about TRS and the TRS healthcare program.

We are asking all of our members to commit to one or more activities this session.  It is never too soon to begin communicating TRTA’s goals to your Senators and Representatives!

Will you…

  • Contact your legislator with a phone call?

You can use a toll-free number to find out who your legislators are and to receive their contact information.  Call 1.888.674.3788!

Contact information for legislators can also be found on the Texas Tribune website at the following link: www.texastribune.org/directory.

  • Mail a TRTA Fact Sheet to your legislator?

You can download Fact Sheets from the TRTA website at www.trta.org (hover over the Legislation tab, then Select TRTA Legislative Initiative)

You can also detach the Fact Sheet found in the 4th quarter issue of The VOICEand mail it to your legislator!

  • Write a letter to the editor of your local newspaper?

Writing a letter to the editor of your local newspaper is a great way to inform the general public about the truth of TRS and its retirees.  Many people do not know, for example, that 95% of public school employees in Texas do not pay into Social Security.  Help us spread the message that TRS is not in crisis, our retirees have earned their financial security, and protecting TRS now protects current public educators too!

  • Respond to TRTA email action alerts and email your legislators during session?

As the session gets underway, we will be using this Inside Line e-newsletter feature to provide you with sample letters that you can email to your legislators with a few clicks of your mouse! Please check your email regularly for legislative alerts.  We may need you to contact your legislator to bring an important bill about TRS to the attention of the Pensions, Investments and Financial Services Committee or to tell your legislator how to vote on a bill.

Every session, TRTA is recognized as one of the most active, involved, educated, articulate, passionate, and organized groups working with the Texas Legislature. We are a large and strong voice for public education retirees. Thank you for your hard work. Thank you for the hours you put in helping your fellow TRS retirees. Thank you for your recruitment efforts that have grown TRTA into the organization that it is.

Now is the time to pursue these issues and address any others that may develop over the next 140 days. There are MANY competing interests working for their own good cause this session. I know, though, that no other group can be as effective as our public education retirees!

TRTA always has been the most successful when our members worked as active participants in our legislative initiatives. We are ready for the coming challenges and we know that you are too. Please feel free to address your questions and concerns about the session by emailing me directly at tim@trta.org or to our wonderful TRTA staff at info@trta.org.

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