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23 Feb 2015
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TRS Testifies Before House Pensions Committee

As the 84th Legislative Session presses forward, the Texas Retired Teachers Association (TRTA) and the Teacher Retirement System of Texas (TRS) remain focused. TRS has testified before both the Senate Finance and House Appropriations (Article III) committees about the health of the pension fund and the burgeoning TRS-Care retiree health insurance crisis.

Today, TRS spoke to those same issues before the House Pensions Committee. Although TRTA has represented our retirees’ voices in the aforementioned committee meetings, today’s event was invited testimony only.

Speaking on behalf of TRS, Executive Director Brian Guthrie provided preliminary comments to the committee members about the state of both the TRS pension trust fund and the TRS-Care retiree health insurance program. He reiterated last week’s testimony that the pension fund is in good shape, but TRS-Care’s financial stability remains in peril.

With nearly a quarter of a million participants in TRS-Care, addressing the $768 million shortfall facing the program is vital and must be done this session. If nothing is done by the Legislature to resolve this funding issue, retirees could face exorbitant premium increases—potentially double—by September 2015.

The average monthly income of a TRS retiree is just under $2000. Most TRS retirees also do not receive Social Security benefits and rely upon TRS as their sole source of retirement security. Retirees also pay premiums, deductibles and co-pays, and are not receiving a free ride for their access to TRS-care. TRTA is fighting this session to prevent the burden of the shortfall falling onto the backs of our retirees.

TRS has requested an exceptional budget item for this biennium to cover the $768 million shortfall. A similar crisis occurred in 2003, which resulted in multiple changes to both contributions and benefits to shore up the fund. As the session continues, all options are once again on the table.

The funding structure for TRS-Care is not based upon medical expenses, but on active teacher payroll, which at times over the past 12 years has been flat. The state’s use of active teacher payroll to fund TRS-Care is the primary reason for the fund’s shortfall. TRS-Care will become insolvent within the next calendar year if systemic changes are not made.

Pensions Committee Chairman Dan Flynn commented that this issue is one he and the committee members are well aware of and are very interested in addressing. Much of the reason for this interest and concern is thanks to our hard-working members, who contacted their legislators diligently throughout the interim and continue to call and write to their Senators and Representatives now.

“There is no member on the House floor that doesn’t want to take care of this problem,” Flynn said.

Representative Roberto Alonzo, Vice Chairman of the House Pensions Committee, echoed this sentiment saying that the House was extremely focused on TRS-Care as a major priority this session.

Elected officials have the will to address TRS-Care, even if many possess different approaches. It is our job at TRTA, and yours, to continue expressing the desire of our retirees to have access to quality, AFFORDABLE health care.

As the legislative session continues, any bills that are filed addressing the pension fund or TRS-Care will be heard before the Pensions Committee. We will keep you informed about any bills that affect your retirement benefits or security and let you know when those hearings will occur. The Appropriations Committee, which you will read more about below, is responsible for determining if funding is available for any bills passed by the full body of the Texas House.

House Appropriations to Hear More Testimony Tomorrow!

Tomorrow, February 24, TRS will expound upon the TRS-Care Sustainability Study options before the House Appropriations Sub-Committee on Article III. If you would like to view a live webcast of the testimony, please visit this link tomorrow at about 7:30 a.m. TRS is among several agencies testifying, so the exact time of their comments is not known.

If you have not read the TRS-Care Sustainability Study, you can download it here. In 2014, TRTA conducted a full review of all of the study options, which you can read by clicking here. Please bear in mind that the study addresses all possible options, some of which are more favorable than others. As the Legislature considers how to address the TRS-Care funding shortfall and the long-term solvency of the program, we will know more about which options are being seriously considered as viable solutions.

TRTA will continue to voice your concerns to the Legislature during one-on-one meetings with legislators and numerous public committee hearings as session continues. We will work hard to ensure that the cost of this shortfall does not fall squarely onto the backs of retirees on fixed incomes!

We know that many of our members are ready to start sending emails on this important topic. As the session rolls along, we will create more communication opportunities.

Many of you sent a personal letter to your legislators from our last quarterly publication. We are still receiving letters at the TRTA office, and we have delivered thousands of them directly into the hands of our elected officials. Legislators have told us that these letters are meaningful, heartfelt, impactful, and are making a real difference in framing this situation for the legislative members. Thank you for your efforts!

Thank You!

Please be sure to stay tuned into the Inside Line throughout the 84th Legislative Session, as we will be bringing you all the latest updates on our broad legislative agenda, including any bills concerning TRS-Care, the continued funding of the TRS pension trust fund, pension increases for all TRS retirees, and also congressional issues such as the WEP and GPO.

Thank you for your membership in the Texas Retired Teachers Association (TRTA). If you are not a member of TRTA and want more information about joining, please contact us at 1.800.880.1650. Follow us on Facebook! Visit our YouTube channel for regular video updates.

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20 Feb 2015
0

Special Election Runoffs TODAY! Plus New TRS Value Video

Election News
Several special elections are happening today in Texas! Elections are being held to determine Texas Representatives for House Districts 13, 17, and 123, as well as the Senator for Senate District 26. If you live in one of these districts, get out and vote TODAY!

All registered voters living in these districts are eligible to vote in Tuesday’s runoff elections.

Following is a list of school districts that are located all or in part in the legislative districts where there are runoffs:

Texas House District 13: Anderson-Shiro Consolidated, Bellville, Brazos, Brenham, Burton, Caldwell, Columbus, Ezzell, Fayetteville, Flatonia, Giddings, Hallettsville, Iola, La Grange, Madisonville, Moulton, Navasota, Rice Consolidated, Richards, Round Top-Carmine, Schulenburg, Sealy, Shiner, Snook, Somerville, Sweet Home, Vysehrad, Weimar, and Yoakum ISDs
Candidates for District 13

Texas House District 17: Bastrop, Dime Box, Elgin, Falls City, Giddings, Gonzales, Karnes City, Kenedy, Lexington, Lockhart, Luling, McDade, Moulton, Nixon-Smiley Consolidated, Pawnee, Pettus, Prairie Lea, Runge, San Marcos Consolidated, Smithville, and Waelder ISDs
Candidates for District 17

Texas House District 123: Alamo Heights, North East, Northside, and San Antonio ISDs
Candidates for District 123

Senate District 26: Alamo Heights, Edgewood, Fort Sam Houston, Judson, North East, Northside, San Antonio, South San Antonio, Southwest ISDs.
Candidates for District 26

When and Where to Vote
Election Day voting hours are 7:00 a.m. to 7:00 p.m. On Election day, generally, you can only vote at the election day precinct assigned to you. Your residence is located in a specific “precinct” or area within the county where you will vote on Election Day.

For questions regarding polling places, always consult your County Elections Office. The phone number for the county voter registrar’s office is on the upper left-hand corner of your voter registration certificate. Your county voting precinct number (Pct. No.) is located next to the “valid from/thru” box on your voter registration certificate.

More information is available at the Texas Secretary of State website. You can also find answers to frequently asked questions about voting at this link.

Special elections typically have low voter turnout. Let’s not let that happen today! Get together with your fellow retirees, neighbors, and friends and VOTE!

TRS Shares New Value Video
Recently, the Teacher Retirement System of Texas (TRS) produced and released a new video about the value of the system and its impact on the Texas economy. The TRS Value Video can be viewed by clicking here.

 

As our members know, TRS is the sixth largest pension fund in the nation and presently serves over 350,000 retirees. Additionally, TRS works on a daily basis to ensure the longevity of the pension fund for current public education employees.

The TRS Value Video is a great way to learn more about the economic benefits that retirees provide to communities across the state. You can also hear from TRS Executive Director Brian Guthrie, Deputy Director Ken Welch and Chief Investment Officer Britt Harris about the work that happens every day at the TRS headquarters in Austin.

The video is approximately 10 minutes long and features interviews with retirees (many of whom are members of the Texas Retired Teachers Association (TRTA)), active teachers, and TRS Board Vice Chair Nanette Sissney.

As TRS Executive Director Guthrie says “TRS is in the forever business,” and this video demonstrates many of the reasons why the system is so important to thousands of people. One of out every 20 Texans is a member of TRS! We hope you will view and share this video with your fellow retirees and any active educators you may know.

Thank You!
Please be sure to stay tuned into the Inside Line throughout the 84th Legislative Session, as we will be bringing you all the latest updates on our broad legislative agenda, including any bills concerning TRS-Care, the continued funding of the TRS pension trust fund, pension increases for all TRS retirees, and also congressional issues such as the WEP and GPO.

Thank you for your membership in the Texas Retired Teachers Association (TRTA). If you are not a member of TRTA and want more information about joining, please contact us at 1.800.880.1650. Follow us on Facebook! Visit our YouTube channel for regular video updates.

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20 Feb 2015
0

House Appropriations Committee Discusses Pension Fund, TRS-Care Issues

Today, February 20, the House Appropriations Subcommittee on Article III met and heard vital testimony about the Teacher Retirement System of Texas (TRS) pension fund and the TRS-Care retiree health insurance program. The Texas Retired Teachers Association (TRTA) was able to provide public testimony, in addition to TRS Executive Director Brian Guthrie.

Guthrie’s testimony very closely matched his comments from last week’s Senate Finance Committee hearing. He discussed the robust health of the pension trust fund, which has about $132 billion and presently serves about 1.4 million retired and active members. The system pays out over $8 billion in retirement benefits each fiscal year.

“Everyone in this room has a friend or someone in their own family who is an educator or may be an educator themselves,” Guthrie said.

During fiscal year 2014, the pension fund earned nearly 17% in returns. TRS recently released its new Great Value for All Texans brochure, which demonstrates that nearly 64% of the value of the fund is generated by investment income. The 25 year return rate for the fund is 8.8%.

Guthrie noted TRS’s unfunded liabilities will increase over the next couple of years, but then begin to recede as Senate Bill 1458 is phased in.

“By 2044, we will be able to say that we have no more unfunded liability,” Guthrie said.

Our members are very appreciative of the efforts made by the Texas Legislature to make the pension fund actuarially sound and very proud of the success TRS has had over the years.

The main concern of both TRS and TRTA this session is funding for TRS-Care. The projected shortfall to this health care program is $768 million, though that number will be updated again at the end of February and again during late session when budget writers from both the Texas Senate and House meet in conference committee. The shortfall, however, has been tracking between $700 and $800 million for the past year.

The TRS-Care shortfall is not a new problem, but a systemic one. Some of the major cost drivers for the plan include ever-increasing medical costs. For example, prescription drug costs have been trending upwards at a rate of about 8% per year.

“Revenue streams for TRS-Care are based upon a source (aggregate teacher payroll) that has nothing to do with medical costs,” Guthrie said.

TRS-Care will start to trend negative beginning in FY 2016, and if nothing is done by the Legislature to address the shortfall it will run out of money in January 2016. Even if the Legislature paid for the $768 million shortfall without addressing the program’s long-term solvency issues, we would be facing yet another shortfall in two years that would reach nearly $1.5 billion!

A similar shortfall occurred in 2003, and at the time, the Legislature made a variety of changes, including new contributions, benefit changes, and increasing retiree premiums. As we face this problem again, all options are on the table once more.

Retirees pay for approximately 38% of TRS-Care’s total costs through premiums, deductibles, co-pays and other out-of-pocket costs! The state’s contribution accounts for approximately 23%. School districts and active school employees also contribute.

Premiums are significant portion of our retirees’ take home income each month, and the vast majority do not receive Social Security. Though premiums vary based on years of service and retirement date, the average TRS-Care 3 participant with 20 years of service pays $310 per month in premiums. The average monthly annuity of a TRS retiree is less than $2000.

Executive Director Guthrie referenced the TRS-Care sustainability study, explaining that he asked his staff to review all possible options. In 2014, TRTA did a review of all of the options which can be found by clicking here.

Next week, TRS will again meet with the House Appropriations Subcommittee on Article III to discuss the options in detail. The meeting will be held Tuesday, February 24 at 7:30 a.m.

TRTA also provided public testimony during today’s hearing, stressing that our TRS-Care participants need access to affordable health care coverage with reasonable benefits. TRS-Care operates with twice as many retirees and half as much funding as the Employees Retirement System of Texas (ERS) plan!

Texas statute indicates that the state should pay for no more than 55% of the cost of TRS-Care, but right now, the state is far from that number (23%)! Our retirees are shouldering most of the burden of the program (38%).

TRS-Care is running out of money quickly and no progress has been made on pre-funding the plan. If TRS-Care funding is linked to active teacher payroll, the state must provide a greater financial commitment to its public education retirees.

TRTA believes that the work of the House Appropriations Subcommittee on Article III should yield an immediate budget increase to TRS-Care of an additional 2% in state funding, raising the level of state commitment to TRS-Care to no less than 3% of payroll.

We believe that 3% is the minimum level of state contribution necessary to begin any conversation about “sharing the pain” of addressing the shortfall and the program’s long-term sustainability issues. TRTA does not believe our retirees can shoulder this load. We also believe that additional costs cannot be foisted onto the backs of active school employees who already bear very high costs for their TRS-Active Care program.

TRTA is, therefore, suggesting the 3% state contribution rate as the new normal state contribution for TRS-Care from this point forward. TRTA Executive Director Tim Lee passionately implored the committee, saying that “some shoulders are broader and some backs are stronger and should carry more of this load.”

We do not know what is in store for the future of health care. This uncertainty, and the reality that we implemented changes last session using SB 1458 that may help reduce long-term TRS-Care costs, might give our legislators pause when thinking of “fixing” TRS-Care now. However, action must be taken.

Even if the actions taken this session do not fix the health care program entirely, taking steps toward a pre-funding approach is the smart thing to do!

We have all heard the phrase “kicking the can down the road.” The proverbial TRS-Care can has been kicked to the edge of the cliff! There is no road left. We may be able to get to the other side of this great chasm, but our retirees need a bridge. The cost of that bridge may just be $768 million.

TRTA and our hard-working, ardent members will NOT let this happen! Our strength has always been our ability to work together, stand together and face the issues head on. We need you, your fellow retirees, and any active educators you know to stand with us this session as we fight to keep that can from going over the edge of the cliff!

Thank You!

Please be sure to stay tuned into the Inside Line throughout the 84th Legislative Session, as we will be bringing you all the latest updates on our broad legislative agenda, including any bills concerning TRS-Care, the continued funding of the TRS pension trust fund, pension increases for all TRS retirees, and also congressional issues such as the WEP and GPO.

Thank you for your membership in the Texas Retired Teachers Association (TRTA). If you are not a member of TRTA and want more information about joining, please contact us at 1.800.880.1650. Follow us on Facebook! Visit our YouTube channel for regular video updates.

Read More