23 Dec

TRTA: Looking Forward to 2014!

The Fight to Preserve our TRS-Care, Pension Protection, TRTA Members Focus on Upcoming Primary!

We have come to the end of 2013. What a great year this has been for TRTA members and all TRS retirees! The TRTA Board of Directors, state and local leaders and staff are grateful for your support.

Many of you have paid your annual dues for the current membership year. Thank you for your tireless support. We appreciate your dedication to making TRTA the most knowledgeable, active, and effective organization protecting and improving retirement benefits for all current and future TRS retirees.

If you have not had a chance to renew your dues, or if you are new to TRTA and want to join in our efforts as we work to protect your pension and health care benefits, you still have time! Though our TRTA office is closed for the holidays December 23 through January 2, you can send an email to our TRTA membership team directly at

Recent News Further Indication TRS Fund is in Good Shape

Both the Teacher Retirement System of Texas (TRS) and the Employees Retirement System of Texas (ERS) recently reported on their actuarial condition. TRTA members worked to pass vital legislation this past session to protect the long-term solvency of the TRS pension trust fund. The Actuarial Soundness Bill (SB 1458) made our pension fund actuarially sound, provided a benefit increase to 2/3 of all current retirees, and put us on a path to provide benefit increases for retirees in the future. In fact, TRTA believes these enhancements have made TRS Texas one of the best funded public retirement plans in the country (especially amongst other funds that are not coordinated with the Social Security program).

TRS also has more money in the trust fund than any other time in its history: over $119 billion protecting the retirement security of 1.3 million Texans who have or are working in our great public schools!

Shortly after TRS reported on its actuarial condition, we learned that ERS is not as fortunate. While ERS also had landmark legislation passed to improve its actuarial condition, the ERS fund does not have a “funding” period and does not meet the statutory definition of actuarial soundness.

We raise this point simply to point out that TRS Texas ended the legislative session and the state fiscal year in better shape than many pension detractors said was even possible, and is one of the best public pension plans in Texas. We know that there are still many challenges ahead of us and that changing market conditions could create a circumstance that makes the fund not “actuarially sound.” Today, though, if you are an education employee or retiree in the TRS Texas pension fund, you are in one of the best funded, most secure retirement systems in the state!

This is all thanks to the work of each and every member of TRTA!

Looking Ahead to 2014

We end 2013 with this as just one of TRTA’s many accomplishments; but as we look ahead to 2014, the challenges for our TRS retirees continue to grow.

One of our members wrote to us asking a great question about media coverage and public perception of state retirement funds. We have reprinted this question and our official TRTA response at the end of this update. It is a great question and provides vital information for every TRTA member.

The truth is that our TRS fund and its defined benefit traditional retirement plan will remain under attack by the ideologues and political powers that simply hate public pension funds. News about pension funds that are struggling due to bad decisions made by political leaders in other states or cities will influence opinions about pension plans here in Texas. Most of the time, these “comparisons” do not hold up to scrutiny; but those who are anti-public pensions will not care about the facts—they simply want to incite distrust of the plans and dismantle them altogether.

These struggles may grow even more challenging as other state or municipal funds make more drastic changes to their plans and influence decision makers here. We must remain vigilant and prevent those attacks from impacting our TRS Texas pension benefit plan.

TRTA is also preparing for serious challenges with TRS-Care. If you are a TRS retiree or you will be, and you participate or plan to participate in this retiree health insurance program,we need your help.

The health care plan will have a serious funding shortfall in the coming legislative session.TRTA will spend an entire year meeting with legislators, retired TRS members, active school employees, media representatives, and anyone else who may have an interest in addressing this upcoming crisis. We know the crisis is coming. We have 2014 to rally every TRS retiree and future retiree together to help maintain this vital health care coverage.

While we will be extremely focused on TRS-Care, we will also be watching the progress of ideas through Congress that could impact TRS benefits. This includes mandatory Social Security for states like Texas (where not all employees are coordinated with the federal program), as well as progress on repealing or modifying the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). These federal issues and others may keep TRTA very active with our federal legislative agenda in 2014.

TRTA members have been very effective this year during and after the legislative session by reaching out to legislators. As the new year approaches, we should be ready to educate, advocate for our important benefits, and VOTE.

While you may think your vote in a primary is not important or may believe your friendly legislator does not need your support in a primary election, please know that EVERY TRTA MEMBER SHOULD VOTE IN THE UPCOMING PRIMARIES. Your power is in your vote! We MUST know where the candidates stand and send people who are dedicated to preserving our benefits to Austin.


Again, thank you for a great year. This was one of the most successful years in TRTA history! 2014 will bring new challenges and opportunities for success. Please be ready to stand with us and fight for the benefits you have earned serving Texas public schools.


TRTA Response to Member on Media Attacks Against Public Pension Plans

TRTA Member Question:

“Bill King of the Houston Chronicle keeps writing articles saying that public pensions should be stopped. Some might be bad but not TRS. From a quick reading of one of King’s articles I saw no reason to stop TRS and it appeared to me that maybe he is hoping that the mutual fund companies can get their hands into the money of TRS.

I mentioned this to a friend in Houston who is a retired realtor and he is for King and said that the State of Texas has to help with funding TRS when they run out of money. I emailed TRS and they said that had never happened. The State does put some matching funds in at the beginning but I consider that their part in helping to support education for the Texas citizens.

Do you have any thoughts or information you can send me on this?”

TRTA Response:

This is a great question and one that many of our members have probably heard before or thought of themselves. The information our member received from TRS is correct: the state of Texas makes a yearly contribution to the TRS pension fund. Active employees that will benefit from TRS when they retire also make contributions to TRS. These contributions are used by TRS to make investments and generate more money, which goes directly into the pension fund.

The state contribution is presently 6.4% (of active employee payroll), and will increase to 6.8% in 2014. The active employee contribution is presently 6.4%. This means that 6.4% of an active teacher’s paycheck goes directly into their retirement fund. This will increase gradually over time to 7.7%, starting with a small increase in 2015 to 6.7%.

In all, the contributions from both the state and the active members equate to approximately 40% of the value of the TRS pension fund. The other 60% is generated by investment earnings. TRS is the fiduciary of these funds, meaning its employees are responsible for making both long and short-term investment decisions that will protect and grow the fund’s value.

Just yesterday, TRS reported a total fund value of $119.7 billion! This means that 60% of that value, or $71.82 billion, was generated by investment earnings alone!

The Texas Legislature has a constitutional responsibility to provide for a retirement plan for our public education employees. Unlike some other states, Texas has never skipped a “payment” to TRS, meaning they have always made a contribution to the pension fund that is between 6% and 10% of active employee payroll. 6% is the statutory minimum, while 10% is the statutory maximum that the state may contribute.

Without a doubt, contributions from the state provide a stable source of revenue for TRS, as do active employee contributions. After the passage of Senate Bill 1458 in 2013, another revenue stream for TRS will go into effect. In 2015, school districts that do not contribute to Social Security will provide a 1.5% (of payroll) contribution to the pension fund. These sources of revenue, combined with the expert ability of the TRS investment team, ensure that your pension fund will be healthy for many years to come.

Today, TRS is considered “actuarially sound.” The state of Texas’ definition of “actuarially sound” is that a fund should be able to pay for all of its liabilities within a 31 year period. If you think of this like a mortgage, this would translate into TRS being able to pay the entire pension for every current and future retiree already vested in the system within a 31 year period. TRS could accomplish this goal within a 28 year period based on its present value and revenue sources.

TRS is not in danger of running out of money and has a strong financial plan for the future. Even when TRS lost billions of dollars during the market crashes in 2008 and 2009, the state did not have to rescue the fund. Market fluctuations do occur and will again in the future, but it is the smart investment decisions made by TRS that enable the fund to ride the waves and recover. TRS reached a funding level of $68 billion in February 2009, and has since gained back more than $51 billion.

Our members also know that TRS is the only form of retirement security guaranteed to our public education retirees in Texas. This is because 95% of school employees in Texas do not pay into Social Security. The TRS fund is more stable than the federal Social Security (SS) program, and provides nearly three times as much in benefits to TRS retirees as SS does to SS participants. The cost to pay into TRS or Social Security is the same for public education employees and Texas taxpayers, but the benefits and retirement security provided by TRS are far greater.

It is to the benefit not only of our retirees but also the state of Texas that TRS remains strong. TRS retirees stimulate the economy by spending their benefits in Texas. Retirement benefits generated $694 million in state revenues and $272 million in local government revenues in 2012. TRS benefits also provided for almost 92,000 jobs across Texas in 2012.

While naysayers such as King will continue to be critical of pension funds, not all pension funds are alike. TRS Texas is the sixth largest pension fund in the nation and one of the strongest in the world. The success of a pension fund depends on a variety of factors, and TRS Texas uses a balanced and educated approach to managing the retirement security of hundreds of thousands of retirees.

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26 Nov

Thoughts of Thanksgiving

Thanksgiving is just a couple days away and, like you, I too am reflecting on all that I am thankful for. Of course, at the top of the list I am thankful for my wonderful family, their health, for safe travels as I visit local TRTA meetings and attend conferences around the country.

I am also thankful for TRTA, for you, and for our TRTA members and all those who have or are serving in our public schools.

We have much to be thankful for this year. TRTA members worked tirelessly during the past legislative session and we passed legislation that made our TRS pension trust fund actuarially sound! What a great accomplishment to know that our TRS pension trust fund is on sound financial ground and that we are on track to have one of the best funded public pension funds in the country.

We are also grateful for the much needed pension increase for almost 195,000 TRS retirees. We know this has been a long time in the making, and we are grateful to the TRTA members that helped make this legislation a top priority in the Legislature.

We are also grateful for a membership that is ready to get back to work and fight for an increase for those retirees who did not get the raise. We know that all our TRS retirees are hoping to get an increase in their annuity and TRTA is not done working for you! We will continue to fight and represent your needs before the Legislature next session.

We are thankful for all the Texas legislators who unanimously supported our TRTA legislative agenda. We are especially grateful for Senator Robert Duncan and Representative Bill Callegari for authoring SB 1458 and who worked so closely with TRTA to ensure the passage of this vital legislation.

Beyond all else, the TRTA Board of Directors, our TRTA volunteer leaders, your TRTA staff and I are thankful for our TRTA members! It is your support, dedication, organization, leadership, tenacity, and heartfelt commitment to this organization that has made our efforts so successful this year.

Thank you for reading these emails, taking action when asked, working with your legislators, communicating with your fellow TRS retirees and for helping protect TRS benefits for all current and future TRS retirees.

As a final note, I am passing along a special greeting from Beth Unite who is our Texas Retired Teachers Foundation Coordinator. The TRTF Board of Trustees has been very active helping retirees in need, working with the West, Texas relief efforts, promoting our defined benefit retirement plan as a true legacy in this state, and helping Texas active school employees. Please read the message below and know that your generosity is making a difference in hundreds and thousands of lives around Texas.

Tim Lee

With Thanksgiving just days away, it is the perfect time to reflect on the many things for which I am most thankful.  Of course, my family, friends, and health are some of the more obvious reasons to be grateful, but I am also extremely thankful for YOU, our devoted TRTA members and advocates.  In trying to live a life filled with more gratitude, I feel especially indebted to you for the support you have shown our sister charitable organization, the Texas Retired Teachers Foundation.  It is humbling to be a part of an organization that cares so much for their fellow educators.

Since the beginning of November, you have helped us to raise over $72,000, allowing us to be only 28% from reaching our goal!  These generous donations in response to our annual appeal are overwhelming and are going to a great cause.  Just last week, TRTF received three “A Helping Hand” applications from retirees who are unable to make ends meet due to unexpected illnesses, car and home repairs.  Your thoughtfulness will make a difference, not only in the lives of retirees, but in future educators as student scholarships are awarded.  Also, active teachers will receive grants to fund innovative projects that further enhance the educational experience of our students.

Many of you have written notes that express your wish to give but the inability to do so due to financial constraints.  Your support is equally important to our cause and your desire to help is much appreciated.  Contributions come in all different shapes and sizes and your willingness to spread the word of our Legacy Campaign is priceless.  Promoting a positive image of public education and educators by providing factual information to our retirees, active teachers, community and legislators on the many issues, including healthcare is invaluable.

May you all have a safe and enjoyable Thanksgiving as we celebrate not only our freedom but the joy of being included in a family of individuals with a common interest and aspiration to take care of our own.

–Beth Unite, TRTF Coordinator

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12 Nov

TRS Releases August 2013 Actuarial Valuation; Provides Update on TRS-Care

Today, November 12, 2013, the Teacher Retirement System of Texas (TRS) held a meeting to share its August 2013 actuarial valuation of the pension trust fund and to provide an update on the TRS-Care retiree health insurance program. While much of the news shared was good, a common sentiment that was shared by both actuaries and TRS staff members was that legislative changes made in 2013 need to be maintained.

TRS Executive Director Brian Guthrie thanked everyone attending the meeting for their support during the 83rd Legislative Session, stressing that Senate Bill 1458 successfully made the pension fund actuarially sound for the first time in many years.

Mostly Good News

The forecast for the pension fund is dramatically improved, almost entirely as the result of the SB 1458 legislation. This is because SB 1458 increased revenues from the state, the active employees and added a new revenue stream from the school districts which goes into effect in 2015.It is important to know that when revenues change, the accumulation occurs over time. In other words, it is vital that TRS continues to receive these contribution levels in order to maintain actuarial soundness in the future.
As of August 31, 2013, the fund has a market value of $117.4 billion, compared to $111.4 billion a year ago at the same time. The funded ratio was 80.8% as of August 31, 2013, which is higher than expected. The market value of the fund also improved since last year, and is now at 77.9% compared to 77.2% last year.

TRS had a return of 8.9% in investments, higher than the projected return of 8%. Liabilities for the system grew more slowly than expected, partly due to lower than projected salary increase for active employees (this was 2.5% as opposed to the expected 5.5%). This resulted in an actuarial gain of almost $2 billion. Payroll growth increased slightly over projections as well due to a population increase in active employees in 2013.

There was a slight increase in liabilities this year, due to the $700 million cost to fund a permanent cost-of-living increase for 200,000 TRS retirees. Actuarial calculations are based on a variety of factors and can be confusing at times, but because of SB 1458, TRS could have $31.3 billion in unfunded liabilities and still be considered actuarially sound by state law. This is good for the TRS investment team because it allows for more market volatility and results in much smaller swings in the funding period over time.

The current unfunded liabilities are $28.9 billion, and will grow slightly to about $32.2 billion in 2014 with a ratio of 79.5% (assuming 8% return on investments). TRS cautioned that the unfunded liability of the pension fund will grow slightly for a few years. This is due in part to the fact that the new contribution rates for the fund are going into effect over a period of several years.

The liability will actually appear to grow in dollar amount for the next 20 years, but the funded ratio will improve. This phenomenon is part of the plan. If the fund follows this pattern as projected, this will bring TRS to 100% funded status within 28 years. 20 years from now, the unfunded liabilities for the pension fund will actually be higher than they are today. However, they should be 0 by the end of 28 years if contribution levels remain the same.

TRS also stated that if contribution rates returned to what they were prior to the implementation of SB 1458, the fund will be right back where it started. If everything that was accomplished by SB 1458 was undone in 2015, there would not be much improvement to the system at all. We must fight to keep the changes put in place by SB 1458!

An independent actuary speaking during the meeting also recommended that any future COLAs ideally should be tied to an increase in revenues. He also stated that the fund would need to be 100% funded to grant regular COLAs without requiring additional revenue. Without it, the risk of having to cut benefits down the line for future retirees increases substantially. Right now, TRS says “we are not there.” He estimated that it takes about a 10% increase in revenues to pay for a 1% recurring COLA.

The GASB Effect

As you may have read in earlier articles produced by TRTA, many of the changes made to TRS this year were made to prevent a huge increase in pension fund liabilities with the advent of new Governmental Accounting Standards Board (GASB) rules in 2014.

The new standards force a fund to pass a test to determine if it can continue to use its usual investment return assumption. Based on last year’s funding level and unfunded liabilities, TRS would have failed the test. With all of the changes put into place by SB 1458, TRS expects to pass and be able to use the usual 8% investment return assumption. Again, this possibility is based upon the new contribution rates established by the legislation continuing into the future.

TRS-Care Briefing

An update on the TRS-Care retiree health insurance program yielded information that is similar to what we have been hearing throughout 2012 and 2013. TRS-Care is expected to be solvent through the end of FY 2015. However, it faces a shortfall into the billions after that time if nothing is done to improve it.

TRS Executive Director Brian Guthrie said that the sustainability study done on TRS-Care in 2013 will be updated this year. In February 2014, the TRS Board of Directors is meeting in Corpus Christi and will host a town hall meeting about health care. TRTA members are welcome to attend this meeting in person to provide feedback and ask questions. TRS will also address comments and questions via phone calls and emails. The exact date of the meeting has not yet been determined. TRTA will report this information as soon as it becomes available.

Many of our members ask why TRS-Care is experiencing significant financial issues. Although the new Aetna Medicare Advantage plan introduced this year did create some cost savings for TRS-Care, it has not been enough to overcome the cost drivers of the plan. The most significant cost driver of TRS-Care is the non-Medicare eligible category of participants. The cost for those participants is about 12 times as much as Medicare participants. Other drivers include increased prescription and medical costs, as well as increased utilization of the plans due to aging population.

The Medicare Advantage plan has about 70% of those eligible to participate using the plan, which is about 80,000 people. Participation in the Medicare Part D prescription plan is at about 83%.

Today’s report by the independent health care actuary confirms the concerns that TRS-Care faces a major funding shortfall in the very near future. TRS cautioned that the plan will need reform, possibly in the form of increased revenues, increased retiree premiums, benefit reductions, or a combination of factors. Right now, retiree premiums account for 34.2% of the cost of TRS-Care. Contributions from the state account for 23.2%.

Looking Ahead

TRTA already is working with all parties, legislators, our friends in the active educator community and more to protect the TRS fund and our vital TRS-Care program. Any retiree or active employee who cares about their retirement security needs to know that TRTA is committed to protecting and improving these plans for YOU!

Thank you to all of you who are members and who help us meet these challenges. If you are not a member and you want to be involved in protecting the TRS fund and the TRS-Care program, we need you to join the Texas Retired Teachers Association (TRTA). TRTA will be involved in every meeting, action opportunity, and hearing about these critical programs.

Thank you for being a valued member of TRTA. If you are not a member and would like more information about joining, please contact us at 1.800.880.1650 or visit us online at

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