16 May

Teacher Retirement System Responds to Dallas Morning News Article

“Cherry picking one investment, either bad or good, amounts to viewing everything with 20/20 hindsight.”—TRS response to DMN

The Teacher Retirement System of Texas (TRS) provided a response to the Dallas Morning News (DMN) story, “Texas teachers’ pension fund invests in casinos, loses $99 million.” In the response, TRS states that the reporter, “…selectively ignored relevant data, knowingly printed incorrectly calculated losses, and presented misleading or incomplete information when writing his article.”

TRTA has received numerous emails about this story. As we indicated in our last email update on this issue, we are committed to investigating this matter so that our members are comfortable with the facts and information presented in these reports. As TRS states in their response, we are all disappointed with any and every investment loss, but it is “unrealistic to expect every investment to be successful.”

The Teacher Retirement System response shows a track-record of TRS investment success. In the last three-years ended March 31, 2012, TRS made $45 billion in investment gains returning 17.8 percent per year. TRS also indicates that the $99 million loss is one tenth of one percent of the $14 billion Real Asset program at TRS.

Most TRTA members know the track-record of TRS and that its investment division has worked to find the best investments with the best terms to produce the highest possible returns for the trust. Yes, there are real questions being raised about how TRS is moving in various directions to ensure maximum return. Yes, some have raised real questions about other TRS investment policies such as the incentive compensation plan used to reward employees for their work with the fund. Yes, TRTA is working closely with our members to ensure that your questions and concerns are expressed to the TRS Board and the reasonable steps are taken to ensure the highest level of return and protection of your TRS pension system.

The Teacher Retirement System of Texas has many policies and procedures in place to protect your pension fund and the integrity of the investment process to ensure that outside political influence is not part of their decision making process. The pressure exerted on TRS from numerous outside parties (not just political figures) demands that these policies are understood and enforced.

At this time, TRTA does not have any evidence to suggest that any investment was made as part of a pay-to-play scheme or that campaign contributions were made to any elected official as a reward for a TRS investment. If evidence is provided, TRTA is certain the proper investigation would occur not only by TRS, but by all other oversight authorities connected to TRS.

We believe that good investigative journalism is a critical element of the public trust in any government institution. The Dallas Morning News and the Teacher Retirement System of Texas are both presenting information they believe is relevant. It is important to read this information and ask questions about these investment decisions.

TRTA has questioned TRS about these issues. At this time, TRTA is satisfied with answers provided by TRS about the implications of the investment gains and losses as they relate to the Station Casinos investment, as well as the $45 billion in investment gains TRS has made in the last three years.

TRS has a great burden of investing these pension trust fund assets on behalf of its 1.3 million active and retired education employees. That burden does not begin and end with their investment procedures. It has a lot to do with trust, and proving to the members, taxpayers, elected officials, and the business community that their decision making process will not be corrupted by anyone for any reason. TRS Texas has many awards and numerous accolades recognizing their ability to make solid investment decisions that have resulted in great returns for all TRS members.

TRS Texas is regarded as one of the best managed large public pension plans in the country. TRTA members’ expectations on “good fund management” also means their actions will always put the interest of the trust fund members ahead of any political figure or business interest. While all these trustees may be appointed by the Governor, their fiduciary responsibility and loyalty is to the pension fund member and no one else. This is not only our expectation, but it is what is required by the Texas Constitution.

The actions made by this agency must always reflect the prudent management of this pension fund for its members…the active and retired school employees of Texas. TRTA believes these volunteer trustees do act in your best interest. That said, TRTA will always be a part of the process watching and listening to the decisions that are made about your TRS fund. It is the responsibility of Teacher Retirement System of Texas to manage this fund in a way devoid of political influence. It is TRTA’s responsibility to be engaged in this process, watch and listen as decisions are being made, and take any action that may be necessary to help protect and improve your TRS benefits.

The TRTA Board of Directors and the TRTA staff will continue to follow this situation. We are working on additional updates to help explain the TRS investment decision process and provide details on how TRS works to avoid potential conflicts of interest.

Your questions and comments on this topic have been very helpful. We appreciate all the feedback you have provided. We are using these comments to frame our questions back to TRS on these important issues. As always, your voice is being heard and TRTA is working to get the answers to your questions.

We will keep you posted as these issues develop. (Resources: DMN article from 5-13-2012; DMN Article from 5-14-2012; TRS of Texas Response to articles)

Early Voting Underway

You may already know that the Texas Retired Teachers Association does not have a political action committee (PAC), and that we do not endorse candidates for political office. What TRTA members do, though, perhaps more than any other group is VOTE! Many of you have already gone to the polls during this important primary. Our members’ voting is the most effective way to help advance the TRTA legislative agenda and enhance our ability to make a difference in the legislative process. If you have questions about an incumbent’s work with TRTA or the bills they have sponsored or cosponsored, please feel free to contact us.

Thanks for the Great Early Response, Let’s Keep it Going!

So many of you have taken the time to renew your membership with TRTA, and at this early stage in the membership drive we want to say “Thank You!” Inside Line subscribers know the great threats we face in the coming months. Your membership is TRTA’s primary source of revenue to conduct all operations including our legislative outreach and education programs. We are grateful for all our members and appreciate your response to our recent TRTA renewal letter.

Many of you join through a local unit and we encourage all TRTA members to get involved in one of our more than 260 local chapters around the state. We also have a growing out-of-state membership that is a vital part of this organization. To all of you, thank you.

We know times are tough and there are many demands on your resources. Your confidence in and support of the Texas Retired Teachers Association is greatly appreciated. Last year was another record setting membership year. TRTA would love to tell legislators our membership has swelled to 80,000 or more! We can do it. Let your friends, fellow retirees, and colleagues know that TRTA dedicates all its time and organizational efforts to protecting and improving your TRS retirement benefits.

If you are not a member or want to know more about renewing your TRTA membership, please contact our office at 1.800.880.1650. We are open Monday through Friday from 8 AM until 5 PM. We are happy to help in any way we can.

Read More
13 May

TRTA Members Concerned over Investment Loss

A news story in the Dallas Morning News is causing concern for many TRTA members about the safety of their pension trust fund. TRTA is investigating the TRS story in the Dallas Morning News. As you know, TRS has thousands of investments and this story, while it may be accurate, is not a significant reflection of how TRS works or the many other investments that succeed on TRS members’ behalf. This loss, while disappointing and costly, represents less than 1 percent of the fund’s overall value. The newspaper may have reported factually, but the frame of reference and the impact this one particular loss will have on the overall health of the fund is being reviewed.

The TRS Board of Trustees manages the $110-plus billion pension trust fund. The TRS Board is a volunteer group of business professionals and public servants working together to manage the assets held in trust for Texas educators and education retirees. In addition to the Board’s leadership, TRS has a very experienced staff dedicated to investing your pension trust fund dollars. Last year, the TRS Board and staff  achieved a TRS investment return that exceeded 15 percent. That translates into a $15 billion-plus investment return last year alone. Again, while some investments may be winners and others may not, it is important to maintain perspective and do our due-diligence when researching these stories. TRTA believes the Dallas Morning News has a very good reputation of reporting on TRS issues and this story is further evidence that many people are paying attention to this important state pension fund. TRTA will review the information in this article and work with TRS to report other details about the impact this loss may have on the fund.

As is the good news about the TRS fund, it is a professionally managed fund with a strong investment track record. The system is able to weather market ups and downs significantly better than other plans or individual investors. This is one of the key benefits of participating in a well-managed defined benefit pension system. TRTA is reviewing this article and we will provide additional information soon. For now, TRTA members can be assured that their pensions are safe and that we are working with the experts to gain additional perspective on this newspaper report.

Read More
06 Apr

TRTA Members Defend Pension Plan, Urge More Funding for Health Care Program

Important Announcement from TRTA: Former TRS Executive Director, Ronnie Jung, has joined the TRTA team! Mr. Jung retired from his TRS position this past January and is now bringing his exception pension fund knowledge and expertise to TRTA. Ronnie is a recognized internationally for his pension fund knowledge and we are honored to have him working with Tim Lee and the TRTA legislative team to protect and improve your retirement benefits. TRTA is committed to you and to having the best legislative team working on your behalf.

The TRS Board of Trustees continued their legislatively ordered study of alternative benefit/funding structures for both the pension and health care plans. More than 100 TRTA members attended the hearing (held in District 11 at the Birdville ISD Athletics and Fine Arts Center)making a strong statement that TRTA is the voice for all TRS public education retirees. TRTA wants to thank the many in attendance from the local Birdville Association of Retired School Personnel, as well as all in attendance from District 11 and District 10.

Mr. Bill Barnes, TRTA State Legislative Coordinator, provided strong testimony defending the TRS traditional defined benefits plan. “When I first started my career, I had a fellow educator tell me that one day I would depend on my retirement check from TRS. She said that while we may not earn a lot as educators, we have the promise of a good retirement,” he explained to the TRS panel. “She also told me that someday I may have to protect my retirement for both myself and for those still in the classroom…and that’s what we are here to do,” Barnes stated.

TRTA testimony pointed out that the TRS defined benefit plan is one of the best funded and best managed plans in the country and in the world. The demand for an alternative benefits structure stems from politically motivated individuals and groups that are not putting the best interests’ of educators or Texas first.

I am more and more convinced that this is nothing more than a manufactured ‘crisis,’ as I have heard no compelling argument to make change for Texas TRS,” said Tim Lee, TRTA Executive Director. “TRS has a great model of using combining private sector investment professionals with public servant trust fund members (both active and retired) to manage this fund…and the system’s performance cannot and should not be diminished,” Lee stated.

TRTA maintains that the study, while providing an opportunity to explain the great value offered to TRS members and all Texans, should bring a greater focus on the fact that the system’s benefit programs need additional funding to protect TRS retirees’ retirement security and their health insurance benefits.

“The real issue we need to work on this session is finding more funding to protect retiree health care premiums and the TRS-Care program,” Lee commented. TRS reported that the retiree health care program may be running a significant deficit in the next biennium without legislative action. “TRS retirees are already paying a great deal for their health care including premiums, prescription costs, and many other out of pocket costs. Forcing retirees to pick up the cost of fixing TRS-Care funding through increased premiums, benefit reductions, or both is not only unacceptable, it is impossible. Many retirees simply would not be able to afford it,” Lee explained. TRS-Care has been managed with great efficiency over its 25-year history, but medical cost increases are simply rising faster than the revenue streams that are used to support the TRS-Care program (retiree premiums, contributions by active employees, school districts and more).

In addition, the legislature reduced funding for the TRS-Care program last session. TRTA is calling for this funding to be fully restored and that any additional emergency appropriations be made next biennium to protect retiree premiums.

TRTA is working with many groups and coalitions to protect your retirement benefits. The power of retired and active TRS members working together cannot be overstated. As Mr. Barnes commented in his testimony, we are all in this together and we must stand strong against those who want to diminish the retirement benefits of our public educators.

Concluding Comments

TRTA values your membership and service! The war against public education retirees and active employee benefits is just now starting. TRTA is dedicated to protecting your TRS pension and health care programs. We are going to fight to help our retirees receive some form of pension increase. Protecting and improving TRS retirement benefits has been TRTA’s core operational activity for 60 years. We know the value of these benefits, we are the experts in pension protection, and you are the most vital part of our legislative outreach efforts. Thank you for all you do.

In the coming weeks, many of you will receive a TRTA membership renewal request. Some of you may receive an invitation to join TRTA for the first time. Please, we need everyone who is able to join with us in this fight to protect TRS benefits. Thank you for your consideration.

Read More