11 Apr 2013

Legislative Effort Aimed to Improve Actuarial Soundness and Provide for Cost-of-Living Increase

Modifications May Impact Current Active School Employees and Employers

The Texas Senate State Affairs Committee and House Pensions Committee both laid out bills for public hearing today that make numerous changes to the Teacher Retirement System of Texas (TRS). While the bills discussed future retirement benefits for active employees, they did so as a way to protect the existing defined benefit plan for many years to come.

TRTA testified neutrally on these changes, while supporting the general concepts of improving TRS funding, making the pension fund actuarially sound, and providing a real cost-of-living increase for TRS retirees.

There are a number of details about these bills that TRTA members, and those who will retire under TRS in the future, need to know.

It is TRTA’s objective, for now, to remain neutral in our advocacy efforts on behalf of these bills and present factual representations of what the bills do as they are written.

This means there is still plenty of time for these bills to be revised. Much more information is needed about the actual fiscal impact these provisions will have on the TRS pension fund.

It is important to note that in both the Senate State Affairs Committee and House Pensions Committee, TRTA testified about our association’s strong belief that retired and active interests must be aligned as closely as possible to ensure stakeholder buy-in to any potential bill. We believe it is in every TRS member’s best interest to develop joint solutions to these issues and find ways to protect the retirement system in the long run. TRTA has strong organizational relationships with all of the active school employee, administrator, school board, and other education interest groups. By working with our friends in the Legislature and these other groups, we are much more likely to develop cohesive long-term strategies for protecting TRS.

SB 1458 by Senator Robert Duncan (Lubbock)—Chairman, Senate State Affairs Committee
HB 1884 by Representative Bill Callegari (Katy)—Chairman, House Pensions Committee

Legislative Provisions (bills currently are identical in what they are working to achieve):

Pension Contribution Rate

  • State Rate is set in Legislative Appropriation Bill; however, there is ongoing discussion that the State may provide additional revenue to increase its contribution rate that is higher than either the current Senate or House proposal.
  • These bills are now subject to legislative Conference Committee action, as both the Senate and House have adopted their versions of the state appropriations bill and the next step is conference committee work.
  • Member Contribution rate in this bill would be equal to the state contribution, not to exceed 6.9%.
  • Independent School District Rate—This legislation creates a new revenue stream for the TRS pension benefit by requiring school districts whose employees are not covered by Social Security (about 95% of all school districts) to make a 1% contribution to the TRS fund based on a school district’s minimum salary scale wages.
  • This bill does not change the school district’s full contribution based on employees’ salaries above minimum salary scale (this has been in place for a number of years).

Benefit Structure

  • The benefit changes listed in the bill have a grandfather provision that covers an estimated 50% of all school district employees.
  • The grandfather provision protects anyone who meets the following criteria:
    • As of August 31, 2014 the member is 50 years old; or
    • meets the Rule of 70 (combination of years of service and age equal 70 or more); or
    • the active member has at least 25 years of service.
  • If the member does not meet one of these grandfathering provisions, the active member would be subject to the new minimum age 62 retirement age.
  • This new provision maintains the Rule of 80 for all school employees, but mandates a new minimum age 62 for full retirement.
  • Under this legislation, anyone qualifying for the Rule of 80 but who is not minimum age 62 will take a 5% reduction in their annuity for every year difference between their age at retirement and 62 (for example, Rule of 80 with age 60 results in a 10% reduction in retirement benefit).
  • AGAIN, this proposal has a grandfather provision that protects an estimated 50% of all existing school district employees. There would be no immediate impact on school employees who are close to retirement and have met the qualifiers listed above.
  • The bill modifies guaranteed interest earned on contributions made to TRS by members who terminate their participation in TRS and withdraw their contributions before retirement. Currently, the guaranteed rate of return is 5%. The legislation changes this rate of return to 2%. This is only for contributions withdrawn from TRS due to an employee’s choice to leave the teaching profession and take their contributions out of TRS.

Cost-of-Living Increase

  • Authorizes a 3% cost-of-living increase for those who have been retired for 20 years or more.
  • COLA is only authorized when the system is sound and cannot extend the system’s unfunded liability beyond 31 years.
  • The monthly COLA provides a cap that limits annuity increase to $100/month.


  • Requires a retiree to meet the Rule of 80 with minimum age 62 in order to participate in TRS-Care II or III.
  • This provision carries some of the same grandfather as mentioned above, excluding the age 50 provision . The grandfather provision protects anyone who meets the following criteria:
    • meets the Rule of 70 (combination of years of service and age equal 70 or more); or
    • the active member has at least 25 years of service.
  • In addition, existing TRS-Care participants are not affected by this change.

TRTA members and every interested person in these two bills need to know that:

  • Nothing has been yet decided or voted upon;
  • There are no guarantees that any of these changes will provide a COLA to any TRS retiree at this time;
  • Resistance to these possible changes is likely;
  • TRTA is working closely with our friends in the Legislature and with the active school employee and employer community;
  • No TRS retiree has had a real cost-of-living increase in over 12 years;
  • The legislation attempts to make the system actuarially sound and discusses a path to a raise for a group of more senior TRS retirees;
  • The proposal suggests a 3% increase for retirees who retired August 31, 1994 and before;
  • According to TRS testimony, IFthis raise were to occur it would impact about 60,000 TRS retirees (out of 330,000 current annuitants);
  • TRTA is neutral on these concepts until more is known about actuarial impact, active school employee and employer buy-in, and the long-term funding decisions made by the Texas Legislature.

With legislative session already more than half over, there is a great deal of work and discussion that must be done before any final decisions can be made.

TRTA testimony has stressed stakeholder group partnership in these discussions. We are grateful to be talking about making the system actuarially sound this session and providing a path to a pension increase for TRS retirees.

As we have communicated to both Chairman Duncan and Chairman Callegari, it is our belief that this benefit increase should be far more inclusive and benefit more TRS retirees. We understand and appreciate the desire to help the more senior and more needy TRS retirees first, but more can and should be done to reach higher goals.

The first thing that should be considered is increasing the state contribution to a much higher level. TRTA recommends a state contribution level of 6.9% in FY 2014 and 7.4% in FY 2015.

Now that these bills have been heard in committee, a fiscal impact statement will be determined. TRTA will keep you informed about when this information is made available. We will also continue to work through this process in the best interest of our TRTA members and in close partnership with legislators and our friends in the active educator community.

We also want to hear from you. Please let us know how you feel about these discussions!

Rest assured, TRTA will keep you informed every step of the way as these bills are discussed, reviewed, negotiated, and acted upon.

We appreciate your support and membership in the Texas Retired Teachers Association. If you are not a member and want to join, please contact our office at 1.800.880.1650 for more information. TRTA membership costs $25 per year.

Special note: TRTA is hosting its 60th annual convention in Corpus Christi this week. Staff will return phone calls during the week as our duties permit. The office is open to serve you, but response time on issues may be longer than normal due to the commitment we have with our convention. Thank you!

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05 Apr 2013

TRTA Issues Take Center Stage

Retiree Budget Issues Raise Awareness

Click Here to Send our Thank You Message to Your House member! Remember, thank you messages are as important, if not more so, than our Action Messages. Good things are happening, but other groups are attacking our progress. Let’s send a stronger message than any other group in Texas!!

Thank you TRTA members for your emails to House members yesterday supporting our budget initiatives. Please click here to send an email to your House member thanking them for their adoption of our amendments and passage of a budget more supportive of TRS benefits.

Now that the Texas House has adopted its version of the state budget, the next step is to take the bill to conference committee where Senate and House designees discuss and agree to final budget changes.

Yesterday’s TRTA email campaign encouraged House members to adopt two TRTA-developed amendments. They support the work being done by legislators to increase funding for our TRS pension trust fund and TRS-Care program!

Thanks to an outpouring of TRTA support, our primary issues continue to advance in the legislative process! Please take the time to thank your House member.

Last night’s debate was very supportive of TRS retirees. As you know, some members tried to redirect dollars from other parts of the budget to the TRS pension fund or TRS-Care program. As TRTA reported yesterday morning, these were not new dollars but dollars already allocated for other state services, programs, or agencies. While TRTA does not oppose the Texas House evaluating its budget priorities and determining how TRS can receive higher appropriations, TRTA already has been engaged in an ongoing discussion with House and Senate leaders to make improved appropriation levels possible for TRS programs.

TRTA remains concerned that outside organizations seem to be involved actively in pushing for the budget reallocation efforts. We know they will try to beat up members who voted for the originally planned budget allocations, stating that these votes were putting other spending priorities above retired teachers.

These groups, however, do not support TRTA positions and retirees’ interests in preserving the defined benefit pension plan and TRS-Care health insurance program. TRTA members need to send a clear message to all House members: “Thank you for seeing through the rhetoric being foisted into the budget decision process about TRS retirees.”

TRTA is the voice for all TRS retirees—an organization with a 60-year track record of protecting and improving TRS. The organizations that want to attack legislators for their votes last night are on record as wanting to do away with our defined benefit plan.

TRTA believes that every legislative member was acting on their commitment to TRS retirees. The level of support for retired educators in the Texas House came through loud and clear all day. Your influence on the Texas House floor diminished many attempts to politicize what truly was a good-natured debate on the funding of our state’s commitment to TRS retirees.

Your voice is being heard. We need you to make it loud and strong over the next week! Please thank these legislators for their hard work and commitment to finding new solutions to our core issues: protecting the defined benefit plan, making the pension fund actuarially sound, improving TRS-Care funding, and finding a way to provide a real retirement increase for TRS members!

As you send your thank you letter, keep in mind that many of these legislators will be attacked for their votes on these various amendments. TRTA commends every legislator who worked through the process to find ways to improve TRS. We do not support the attack rhetoric against legislators for their work on the budget. TRTA members, your voice is important and is needed to cut through the negativity and keep our legislators focused on helping advance ideas we know are helping our core legislative values.

Again, thank you for your support and action today. It has made a major difference. We continue to be encouraged by the work being done in the Texas Legislature. The budget debate will move forward, and bills are being heard to improve your TRS pension fund. More work is still needed; but you are helping advance a strong TRTA legislative agenda!

As a final thank you, TRTA is very appreciative of several key House members last night: House Appropriations Chairman Jim Pitts; House Appropriations Subcommittee Chairman John Otto; House Energy Resources Chairman Jim Keffer; House Pensions Chairman Bill Callegari; and Representative Bennett Ratliff (while so many others worked behind the scenes and soldiered support on the House floor!). These members are working hard for you. If one of these legislators is your State Representative, please be sure to thank them on behalf of ALL TRTA members.

Concluding Comments

TRTA is so appreciative for your support and help on these vital issues. We are making good progress this session. Remember that many other groups are working to counter your best interests. They are trying to quiet TRTA, minimize your issues, and ultimately defeat our legislative agenda and advance their own.

Their agenda is not designed to protect your pension. It is designed to eliminate the defined benefit plan completely, and remove the access TRS retirees have to a quality health care plan and true retirement security.

The most important defense we have against that agenda is the work we do in the legislative process. Please, take the time to be active and click here to send a thank you note to your Texas House member.

We still have a long way to go this session and we can win many more victories as long as legislators know we are active, we are not going to be minimized or dismissed, and that high-dollar political organizations cannot defeat motivated, educated, active, vocal, smart retired public school employees!

Help us push on this session. If you are not a member of the Texas Retired Teacher Association, please consider joining in our efforts. Membership is $25 per year. Feel free to contact our office at 1.800.880.1650 for membership enrollment information.

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04 Apr 2013

TRTA Action Alert–Budget Debate Today; Email Campaign Underway

TRTA Action Alert: Email Campaign Underway… Please Click here to send your legislator an email asking them to support the Ratliff and Keffer amendments!

Texas House Ready to Debate Budget

TRTA Members Focus on Our Needs

The Texas House of Representatives will debate their version of the Texas budget this week. The Senate voted out their version of the budget the same day that TRTA hosted its Day at the Capitol two weeks ago. The House has their chance to make TRS a higher priority, and we must get all our members active in this process!

TRTA members have been working very hard for more than a year in preparation for this session.  Now, we need to continue to make legislators aware of our needs. The good news is that your work is paying off! So far, we have seen our supporters in the Texas Legislature restore all the cuts that were made to the TRS fund and TRS-Care last session! This is a direct response to your involvement and our collective efforts through TRTA! Thank you.

In addition to the restoration of the cuts, both the House and Senate are putting more money towards the pension trust fund.

As you may know, Representative Jim Keffer filed HB 1383 to increase funding for the TRS pension fund to 6.9% in FY 2014 and 7.4% in FY 2015. While neither the Senate nor the House version of the budget supports this level of funding, Chairman Keffer is pushing an amendment to do so in tomorrow’s budget debate. His amendment directs funding for his legislation to Article 11. This section of the budget is often referred to as the “wish list” article, but it keeps the funding discussion alive and is a very important procedural component in the Texas legislative process.

TRTA is also supporting an amendment by Representative Bennett Ratliff. This amendment requires that any TRS pension fund “settle up” dollars that may be owed back to the state instead go to the TRS-Care fund. This method of “settle up” was used in the previous biennium, placing $98 million into the TRS-Care fund.

TRTA members can support Chairman Keffer and Representative Ratliff by clicking here to send an email asking your legislators for their votes on these two important amendments.
TRS-Care in the News

TRTA members should know about a discussion taking place in the Texas House over several amendments that have been filed to redirect state budget dollars from numerous programs or agencies to the TRS-Care plan.

While TRTA believes that this is a genuine attempt to help find additional funding for the TRS-Care program, or at least increase awareness of TRS-Care funding challenges, there are a few issues that cause concern.

It is important to note that these amendments are budget redirections, not the allocation of new resources to TRS-Care. This means that one agency or program will be reduced or completely eliminated, and their funding would be used for something else.

TRTA participated in every opportunity of the Texas House budgeting process. We know that every program has a constituency, and any change in the proposed budget results in a new or different policy decision by the Legislature.

TRTA also knows that we have worked hard to get accomplished our part of the budget for TRS-Care, and that these efforts are projected to keep the plan, its benefit structure, and the premiums completely intact for the rest of this year and the next two years.

Further, TRS projects the plan will still have a $100 million surplus at the end of the coming fiscal year. These are very positive results for the hard work being done by TRTA members.

We support the efforts of our long-time friends House Appropriations Chairman Jim Pitts and House Appropriations Subcommittee on Education Chairman John Otto, who have been instrumental in working with all the House Appropriations committee members to protect your TRS-Care program. They know the issues we face in the future, which are substantial. We know that all House members will be ready to work with us in the future to deal with the TRS-Care challenges coming in the nextbiennium.

Outside Groups

It is strange that some other outside organizations have taken special note of this amendment discussion.

One organization, that does not have a track record of supporting your TRS defined benefit plan, expressed on their web site that “several GOP freshmen have pre-filed amendments seeking to cut wasteful government spending in favor of addressing the state’s major unfunded teacher pension liability. How the rest of the GOP caucus votes will be telling.”

The organization further states that “while unfunded pension liabilities are a serious problem for state and local governments that require systematic reforms – the state cannot ignore the growing liabilities of TRS – the fifth largest public pension in the U.S. as of last September. Cutting wasteful government in order to fulfill the state’s current obligation is responsible budgeting.”

We agree that the state should not ignore TRS! The fact is that for 13 out of the last 18 years the Texas Legislature has underfunded TRS. This underfunding has saved the state money, but has cost the pension fund over $8 billion in funding.

We are not sure why this particular organization has not helped TRTA champion adequate state funding for the TRS pension system. As we mentioned, they do not have a track record of supporting your TRS defined benefit or TRS-Care health insurance program.

We are also puzzled by what this organization means when they talk about “systematic” reforms. Without any additional information, we can only guess that they are suggesting the elimination of the defined benefit pension system and the implementation of a defined contribution system. As TRTA members already know, the defined contribution system brings with it numerous funding problems and reduces retirement security for all TRS retirees—many of whom do not participate in Social Security.

It is also important to point out that the filed amendments are redirecting state resources to TRS-Care, not the TRS pension plan. This outside organization is messaging that these amendments are going to offset the “growing liabilities of the TRS.”

The final issue is this: “a list of amendments, including ones redirecting funding to TRS obligations, subject to scoring on the Fiscal Responsibility Index will be posted by Wednesday morning.”

TRTA members, please see this statement and think about what your elected officials are being asked to do. Are they being asked by this organization to support budget strategies to improve your pension system that protect your defined benefit plan? Is their goal to help you get a much needed increase? Are they acting as champions for your interests in the same way that TRTA is trying to make a positive difference for you? Are they willing to stand up and tell us if they fully support a defined benefit plan for all current and future TRS retirees, and that they will do whatever it takes to get the system actuarially sound? Will they reject any organization that is promoting the passage of “systematic” changes to your retirement fund?

Yes, there are many other organizations that want to keep “score” on legislator votes, and that’s their prerogative; but TRTA is interested in an organization’s track record as much as their web site statements.

Another outside group, the Texas Public Policy Foundation, that is on record supporting legislation for the elimination of the TRS defined benefit pension plan, is now supporting this budget redirection for TRS-Care. Again, this strategy seems very dubious to TRTA. An organization with clearly different goals on the values our TRTA members hold most dear are now circulating a flier that states, among other things, “Fundamental reforms are needed to stabilize the program, but we should take steps today to rein in spending on less essential functions of government and prioritize the health care of our teachers who have done so much for the school children of Texas.”

Again, TRTA questions what the TPPF means by “fundamental reforms” for the TRS-Care health insurance program. If it is anything like their “fundamental reforms” of the TRS pension fund, current and future retirees would be much worse off.

TRTA maintains that the Legislature is now debating its budget priorities for the coming biennium. TRTA members can be assured that the issues important to you are a much higher priority this session. Again, this is the result of your hard work and dedication. Thank you.

What is important to know right now is that TRTA is in no way finished working with the Texas Legislature to improve your pension fund, protect your health care, and do our best to get you a much needed pension increase.

As TRTA members can attest, your organization has a 60-year track record of working in the legislative process to protect and improve TRS benefits for all public education retirees. No other organization in Texas has a mission that is exclusively focused on TRS benefit protection. Being your voice in the Texas Legislature is our daily priority; your retirement security, the future of the TRS defined benefit, and the preservation of TRS-Care are our core organizational values.

Can the same be said for these other organizations that are now taking a position on TRS-Care for these budget redirections?

TRTA Supported Amendments

TRTA was directly involved with the two amendments we are asking our members to support. That’s what our members need to know and ask their legislators to support. Click here to send your legislator an email asking them to support the Ratliff and Keffer amendments!

If the Texas Legislature finds additional ways to help TRS-Care or the TRS pension fund, we certainly appreciate their work.

Concluding Comments

TRTA members, we need your help! The budget discussion is always one of the biggest moments in the Texas Legislature. Please send your email today!

If you cannot email your legislator, please feel free to contact them by using our toll-free TRTA Legislator Hotline! That number is 1.888.674.3788.

As always, we thank you for your membership! We are making strong progress this session. Let’s remain united, active, and involved. If you are not a member and want to join, please contact our office at 1.800.880.1650. TRTA dues cost $25 per year.

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