23 Feb

House Appropriations Committee Discusses TRS Funding

Executive Summary

  • This is the second update in a two-part series covering Senate and House budget plans for TRS this session.
  • TRS reported to the House Appropriations Committee
  • The TRS pension fund is actuarially sound, which opens the door for a COLA
  • TRTA believes TRS members can and should receive a COLA
  • TRS has been unable to sublease the Indeed Tower space

On February 23, 2021, the Texas House of Representatives Appropriations Committee met to discuss funding for several state agencies, including the Teacher Retirement System of Texas (TRS). The meeting was led by Chair Rep. Greg Bonnen (R – League City).

Pension Fund

TRS Executive Director Brian Guthrie reiterated the good news he shared about the pension trust fund with the Senate Finance Committee on February 22. He reported that the pension fund is actuarially sound.

Guthrie thanked the committee members for their commitment to helping make the fund sound last session through the passage of Senate Bill 12. SB 12 increased contributions using a stairstep from the state, school districts, and active employees. Eventually, state and active member contributions will match each other, starting in FY 2024.

Guthrie reported that the funding period, which is 27 years, is the lowest the system has been at since 2008. He also said that the 13th check received last session “was gratefully received by our members.” The supplemental payment was paid for through the Economic Stabilization Fund, also known as the Rainy Day Fund.

Guthrie reminded the committee members that the system lowered its investment return assumption last session from 8 percent to 7.25 percent based upon an experience study that is performed every four years, which led to the plan established by SB 12 to shore up the fund.

The fund reached a low point of $145 billion when the COVID-19 pandemic began. However, Guthrie said that the plan has “recovered quite nicely since then.”

Rep. Alex Dominguez prompted Guthrie about cost-of-living increases for retirees. “Could we get that done this session?”

According to Guthrie two criteria must first be met for a COLA.

  1. TRS must be actuarially sound (TRS currently meets that criteria).
  2. Any benefit enhancement would need to be authorized by the Texas Legislature.

Guthrie then reiterated his testimony from February 22, indicating that the two ways to pay for benefit increases are through upfront cash layouts or financed through the fund itself.

The Texas Retired Teachers Association (TRTA) not only believes that a COLA is possible this session, but also that the Texas Legislature should provide a COLA to retirees! We will provide more insight on a potential COLA in an upcoming Inside Line!


When discussing the TRS-Care retiree health insurance plan, Director Guthrie stated that it was the first biennium since he had become the system’s director “that we have not asked for supplemental funding for this program.”

He repeated his testimony from the Senate Finance Committee that the alterations made to the plan in 2017 had been successful in controlling overall costs and that the procurement of a new insurer will save $700 million over time. “Finally,” Guthrie added, “one of the impacts is we lost membership, primarily dependents.” Some TRS members left with them.

Though the fund has a positive balance now, costs will again outstrip revenues in the future. “But we don’t anticipate needing extra money this biennium or the next,” Guthrie stated. Premiums will stay the same for TRS-Care participants for the coming biennium.

Rep. Steve Toth said he still hears from retirees in his district who “say benefits have decreased with their healthcare plan” and the cost of premiums “eats into their annuity check.”

Other committee members expressed similar concerns, particularly about the 30,000 people who left after changes were made in 2017 to overhaul the plan. Many inquired about whether or not those who leave the plan can come back.

TRS Chief Health Care Officer Katrina Daniel responded that if they left before the age of 65, they may return to enroll in the Medicare Advantage (MA) plan when they turn 65 or through a special enrollment event such as loss of coverage.

Daniel said, however, that once someone leaves the TRS-Care system, TRS has no way to track if they received health care coverage elsewhere.

The cost of healthcare nationally has been increasing, and the primary cost driver in TRS-Care is the population that is not Medicare eligible. About 67,000 plan participants are under age 65, while 160,000 are in the MA plan. Guthrie indicated that the average retirement age of a TRS member is 61, which is up from 59 in 2008.

Rep. Julie Johnson asked why it is so difficult for people to return to the plan once they leave. Daniel and Guthrie answered that it is hard to predict how participants returning will impact the financial position of TRS-Care, as it depends on a balance of healthier lives versus less healthy lives using the benefits. Anecdotally, Daniel indicated that there is a tendency for healthier people to leave insurance plans and to return to plans with richer benefits when their health declines.

Other committee members pointed out that the exodus of people from TRS-Care after the changes in 2017 had a lot to do with confusing and difficult decisions that members had to make in a very short period of time.

TRTA supports the idea of an open enrollment under controlled circumstances that would address these real-world scenarios.

Indeed Tower Discussion

Rep. Steve Toth asked Director Guthrie to expound upon TRS’s decision to lease space in the luxurious downtown Austin Indeed Tower.

Guthrie said that the decision was “based upon the fact that we have a significant ownership stake in the building and were already paying rent in another building downtown that we did not own.”

“Obviously, that was a poor decision,” Guthrie added. “We were not able to communicate the fact that we owned the building” with members of TRS. He said that the inability to disclose the ownership stake was included in a written opinion received from the Attorney General.

“My goal is to get all of our employees in a building that we own, in the same space,” Guthrie added. The system hopes to eventually have no lease space at all.

TRS receives an investment return on the Indeed Tower and that occupying the space builds investment value. However, if TRS is unable to lease the space, it will carry the bill for the space.

Rep. Terry Wilson asked if TRS members would have benefitted from this business decision.

Guthrie said the building was meant to be part of the system’s real estate portfolio, long before a decision was made to lease space for the Investment Management Division (IMD) employees. The IMD is presently housed in another building at 816 Congress, where the monthly rent is $350,000.

With the Indeed Tower, Guthrie said that TRS would have been “paying some portion of that rent back to ourselves.” The rent at Indeed Tower will be $400,000 per month, a fee the system must begin paying by November 2021 if the space cannot be sub-leased by that time.

TRS is actively working to find a tenant, though snags were encountered when the pandemic began. Guthrie feels confident that the space can be leased, as the “real estate market starting to wake up,” but confirmed that TRS will not move into the building even if is not subleased by November.

Retire, Rehire

Rep. Cecil Bell asked Guthrie about retire/rehire policies. Under current statute, TRS members can lose an entire monthly annuity even if they only worked one or two hours over their allotment. Guthrie said TRS was “trying to come up with a solution that does not have a negative actuarial impact on the fund.”

Rep. Gene Wu, who tried to get a bill through last session to help rehired retirees who may have exceeded their work hours inadvertently, said “the cure is so punitive … it’s heartbreaking.”

Wu said the issue of retirees going back to work has come up a lot during pandemic because school districts need extra help. He asked if TRS can give them a warning before penalizing them. Guthrie said no solution had been created yet and that TRS receives monthly reports from the school districts, but by that time a retiree may have already exceeded their hours.

“We don’t know until after a violation has occurred,” he added. Guthrie said he does not have the flexibility based on current law to remove penalties and that statutory change is required.

Thank You

The Texas Legislative session is really heating up. We are covering the issues that matter to you from all angles. Please let your fellow TRS retirees know that TRTA staff and volunteers are working on their behalf and ask them to join the organization if they are not already a member!

The next major item this week will be a House Appropriations Subcommittee meeting on TRS set for Thursday, February 25, 2021. TRTA will be ready to testify for our members at that hearing. The meeting will begin at 9:00 a.m. and live link to the meeting webcast will be available from this link a few minutes before it convenes.

Thank YOU for being a member of TRTA! Be sure to download the TRTA app to receive all of the latest legislative updates.

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23 Feb

Senate Finance Meets, Discusses Funding for TRS and Potential COLA for Retirees

Executive Summary:

  • This is the first update in a two-part series covering Senate and House budget plans for TRS this session.
  • The TRS fund has met the standard for actuarial soundness!
  • Any cost-of-living increase will have to go through the Texas Legislature.
  • The TRS-Care fund won’t require additional funding this session.
  • TRS is seeking to add 25 new investment team members.

On Monday, February 22, the Senate Finance Committee met to discuss budget items for several state agencies, including the Teacher Retirement System of Texas (TRS). The committee is chaired by longtime state Senator Jane Nelson (R – Flower Mound).

The Legislative Budget Board (LBB) presented its proposed recommendations for funding TRS, with all funds totaling $6.2 billion. The figure represents an increase over the previous legislative session, which is primarily due to the passage of Senate Bill 12 in 2019. SB 12 increased contribution rates to the pension fund. Over time, the state contribution will increase from 6.8 percent to 8.25 percent by 2024, the school district contribution from 1.5 percent to 2 percent by 2025, and the active employee contribution from 7.7 percent to 8.25 percent by 2024.

The Pension Fund is Actuarially Sound

TRS Executive Director Brian Guthrie gave a few brief remarks about the system, which presently serves approximately 445,000 retiree members and 1.2 million active members. He reminded the committee’s members that 96 percent of TRS members do not participate in Social Security, making a TRS annuity the only source of retirement income for the majority of TRS members.

Guthrie shared positive news about the fund’s status. “We are actuarially sound,” said Guthrie. He said that the pension’s funding period is now 27 years. The fund has $176 billion in assets and the anticipated funding period will likely go down to 26 or even 25 years as of the next valuation, which will occur at the end of February.

As members of the Texas Retired Teachers Association (TRTA) know, the TRS pension fund must be actuarially sound with a funding period of 31 years or less in order for the Legislature to approve a cost-of-living increase for retirees. TRTA is actively working with legislators to file bills that provide a much-needed COLA for our retired school personnel.

Senator Joan Huffman (R – Houston) asked how a COLA would impact the pension fund.

“This is something we have looked at,” said Guthrie. “My answer depends on how that increase is financed.”
He explained that if the Legislature provides the funding for the COLA upfront (as they did for 13th check for retirees in 2019), the overall cost is less. Financing a COLA through the system is a several billion-dollar cost that would be amortized over time. “Both are legitimate options, but one is more expensive than the other,” said Guthrie.

Senator Eddie Lucio (D – Brownsville) and several other members of the Senate Finance committee made impassioned statements on finding a path to helping TRS retirees.

TRTA will cover the cost-of-living adjustment discussion and our view of this important item in an upcoming Inside Line article. We want our members to be fully informed on all the comments made at Senate Finance, as well as the upcoming House Appropriations Committee hearing that concluded earlier today, Tuesday, February 23, 2021. Stay tuned for that special report. 

TRS-Care is in a Healthy Financial Position

Guthrie also reported that for the first time in nearly a decade, TRS doesn’t require supplemental funding for TRS-Care. He cautioned that income for the program does not match outflow and the balance will reduce over time and create another shortfall in 2 to 6 years. Premiums for retirees increased in 2018 but will remain the same in 2021.

Senator Huffman asked if any additional reforms are needed for TRS-Care. The plan underwent significant changes in 2017 meant to help sustain the plan for a longer period of time.

Guthrie said that those changes, along with switching to new providers in 2021, have helped improve the fund’s balance.

Senator Lois Kolkhorst (R – Brenham) asked for a deeper explanation for the plan went from a deficit to solvency.

Guthrie said the change was a result of a “confluence of events.” He said that the plan saved a lot of money when 30,000 people left due to increased costs. He said that the procurement of new health care providers, which saves the plan $700 million over time, went into effect. Finally, he said that “our overall experience has been very good the last couple of years.”

TRS Bonuses, Indeed Tower Lease Come Under Fire

Director Guthrie’s overall comments also included a deeper look into the TRS budget request asking for an exceptional budget item to add 25 more staff members to the investment team at a cost of $5.4 million over the biennium. This increase in staff would be paid for out of the pension trust fund. The agency asserted that the additional staff would support the investment team and policy. Investment returns represent 63 percent of the payments TRS provides to retirees.

After these comments, a contentious conversation ensued over the issue of TRS investment staff bonuses and the lease of space at the Indeed Tower in downtown Austin.

Senator Huffman asked how bonuses for investment staff are justified. Guthrie said that bonuses are paid out when the team has exceeded their benchmarks. “We believe this incentivizes our investment staff to overperform,” he added.

Senator John Whitmire (D – Houston) asked what investment staff team members earn as base pay. Guthrie replied that base pay for a mid-level team member is between $200,000-225,000 per year and as high as $350,000 for a senior member of the team. Other Senate members commented that TRS is competing for talent in a highly competitive field and that salary and bonus options for TRS were necessary to keep TRS positions marketable.

Whitmire asked pointedly, “Why do they need to be incentivized to do their job?”

He also pressed Guthrie about the status of the lease at the Indeed Tower in downtown Austin, which TRS is still attempting to sublease. A pause in the real estate market has hampered that effort, said Guthrie.
Senator Whitmire pursued the issue and pointed out that “. . . your retirees are alarmed about it!”

Guthrie answered that TRS had done a significant cost benefit analysis and determined that the lease was the right plan for the trust fund. He also conceded that the optics of the lease were not good and the Board pivoted to find space for their employees in a less costly building (eventually choosing to stay in their current leased offices in downtown Austin).

Senator Eddie Lucio (D – Brownsville) also expressed concern. “We see the face of the retirees each day. Can you imagine what has happened to them because of the pandemic? They can’t live on the little check they get monthly,” Lucio said.

“The people I represent in my district and people just like them…are getting the short end of the stick here,” Lucio added.

The Indeed Tower discussion was intense and probing, and it led to many more questions and statements that TRS members want and deserve to know more. TRS has said that laws governing how they invest in certain assets prevents them from sharing all the details about those investments. Additional comments were made about changing these laws so that TRS members are not in the dark about high profile decisions such as this.

While it had been widely reported on and something that TRS had not confirmed or denied over the past year, the public disclosure that TRS is a major investor in the Indeed Tower building was also made. TRS had not publicly disclosed their ownership position until the Senate Finance Committee questions yesterday.

Senator Charles Schwertner (R – Georgetown) said that his work on the Sunset Committee and the Senate Finance Committee was to ensure that the pension plan was solvent. He expressed concerns about the system’s long-term investment return, which is 5.9 percent over a 20-year period. Schwertner encouraged TRS to think more about strategies in the event of major market declines.

Senator Huffman reminded the members of the committee, as well as TRTA and all TRS members, that the TRS pension fund has grown by $30 billion since the onset of the COVID-19 pandemic, adding that TRS is in the forever business.

TRTF Tutor Program

Senator Royce West (D – Dallas) asked about the Texas Retired Teachers Foundation (TRTF) Tutor Program. Retirees who work as tutors through the program are considered independent contractors, but some issues have been raised with contracting with them through school districts. Guthrie said a solution can be found this session so that their work as tutors does not count against the retirees’ annuities.

Learn more about this exciting new program here!

TRTA Executive Director Provides Testimony

Tim Lee, TRTA’s Executive Director, provided testimony to the committee. He thanked the Lt. Governor and the Senate Finance Committee for their proposed budget that FULLY FUNDS SB 12 (the hallmark funding plan for TRS passed last session) and keeps TRS actuarially sound, as well as for fully funding the state share for the TRS-Care program. He also expressed that all TRS members can be proud of the Senate Finance Committee for their dedication and deep interest and commitment to retired and active educators’ long-term retirement security.

Senator Larry Taylor (R – Friendswood) asked Lee how the TRTF Tutor Program is doing. Lee said that there are several hundred tutors across Texas currently involved in the program and is looking to expand that number. TRTA has a vital role to play in helping Texas students, parents, teachers, and schools recover from the effects of this pandemic. Virtual tutoring is a great way for our retirees to give back and earn more income. State elected leaders see the value in this program and we are eager to develop it further for the betterment of all Texans.

Thank You

Thank you for being a member of TRTA! Be sure to download the TRTA app to receive all of the latest legislative updates.

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19 Feb

TRTF Offers Assistance for Disaster Relief

The Texas Retired Teachers Association (TRTA) and Texas Retired Teachers Foundation (TRTF) are thinking of its members during this time of need. We know many of you have suffered greatly under the effects of the winter storm. The storm has caused more than four million Texans to lose power, and many have lost access to clean, running water.

If you or a loved one has suffered and is in need of financial assistance, TRTF is here to help. TRTF offers assistance through its Disaster Relief Fund. To request an application, please email Please be aware that it may take an extended amount of time to respond to requests.

If you have the ability to contribute to TRTF’s Disaster Relief Fund, we have a donation page set up here. All donations are tax deductible, and your donation will go directly towards helping retired Texas educators.

If you would like to share your story about how you’ve been impacted by the winter storm, you can do so via the comments section on this Facebook post.

TRTA’s and TRTF’s hearts are heavy as we know so many of our members and leaders have faced down freezing temperatures, no running water, sold out grocery stores, and other issues. Our team has faced these same issues during this time, and we are here to assist you even as the weather starts to improve. Thank you for your membership to TRTA and your contributions to TRTF.

TRS Testimony with Texas Legislature Rescheduled

The Teacher Retirement System of Texas (TRS) is set to meet this week with both the House Appropriations Committee and Senate Finance committee. Both meetings are tentative, due to the ongoing issues with the winter storm. Currently, TRS is scheduled to meet with the Senate Finance Committee on Feb. 22 at 10 a.m. TRS is scheduled to meet with the House Appropriations Committee on Feb. 23 at 9 a.m. TRTA will be monitoring both meetings when they occur.

A Message From TRS

“The TRS health programs are ensuring that members have access to critical health care services during this historic freeze. While TRS phone counselors were not available earlier this week with the power outages, we did ensure that each of our vendors, BCBS, UHC, and CVS, were and continue to be available to meet members’ needs. We communicated online and through our phone line messaging to let our plan members know that they can access uninterrupted, timely customer assistance through our vendors during this period.

Through the vendor’s customer service, members will receive information about liberalizations around prescription drug refills and pharmacy access, should they need it. CVS is reaching out individually to members who are taking specialty drugs, not available through retail pharmacies, to ensure they are on uninterrupted therapy. Emergency services are always available at in-network coverage if needed.

Yesterday, the Texas Department of Insurance issued the below press release with insurance tips following the winter storms and information on how to avoid scams.”

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