Blog

11 Jan
0

First Day of the 82nd Legislative Session

Start of 82nd Legislative Session is Like the First Day of School

Now that we are in session, it’s time to get down to business

Education Process is the Core of TRTA Action

Just as the 82nd Legislative Session begins in Austin, the education process that is vital to TRTA’s success must continue. The reality of a deep budget shortfall is putting considerable pressure on ALL programs and interests. Organizations are expected to prepare for sweeping cuts. Compounding these concerns in Texas is the bleaker budget position of numerous other states and the ever-growing focus on public pension funds as a drain on those states’ economies. While these challenges are great and the task ahead is not going to be easy, Texas public education retirees have never backed down before and we will not back down now.

Insight on What to Expect Early this Session

Committee Announcements

In the next few days, the Lieutenant Governor and the Speaker of the House will name committees and begin working on a budget. TRTA works with numerous legislative committees, but many of the issues that pertain to TRTA go to the Senate State Affairs Committee, the Senate Finance Committee, the House Pensions, Investments, and Financial Services Committee, and the House Appropriations Committee. TRTA will send you the names of committee members as soon as they are announced. TRTA members should keep track of committee assignments and find out if your legislators sit on the committees that we follow. Direct communication from constituents on issues in committee is a vital part of our legislative efforts.

 

Budget Cuts

 

TRTA is ready to defend the current TRS pension fund contribution levels, as well as the state funding for the TRS-Care health insurance program. While there is only speculation that these contribution levels may be reduced, TRTA members should be ready to make early phone calls and send emails encouraging all legislators to preserve and expand funding for the TRS pension trust fund and for TRS-Care (TRTA will again use an email generation system that will help you send these emails to your legislators). Even though Texas statute provides for minimum funding levels for the pension fund and the health insurance program, we are hearing that all options for cuts are on the table. TRTA will be following this issue very closely.

 

Introduced Legislation

 

TRTA is working with many legislators on various legislative initiatives. As these items are finalized, we will send notice of the bill numbers and what the legislative intent is for each bill. TRTA will also develop a bill tracker of all TRS-related legislation and provide information on these initiatives and TRTA’s position on the bills.

 

Attempts to Cut Defined Benefit Plan

 

Public pension funds are under attack all over the country. This is due in large part to various state legislatures around the country not adequately funding pension liabilities over the past 20 years. Today, there is a growing movement to rid state governments of providing traditional retirement plans for public workers, including educators.

 

In Texas, the Teacher Retirement System is in a strong financial position. While the system is not actuarially sound, it is recovering from the economic recession. The overall value has increased, and progress is being made to manage the system in a very professional manner. TRTA continues to work to improve funding for the system so that it can provide a real cost of living increase for pensioners.

 

The good news about TRS is not stopping interest groups from attacking public pension funds and demanding that the system be transitioned from a defined benefit plan to a defined contribution plan. Doing so would not reduce a current retiree’s benefit, but it would lower the funding levels for TRS at a time when we cannot afford this action. There is no evidence that transitioning this fund would save the state any money. It would, in fact, create a greater financial burden on the state.

 

TRTA members must be ready to educate their legislators on the benefits of preserving the retirement system as it is. We will produce more information on the value TRS offers to all Texans as the legislative session progresses.

 

Constant Education and Communication

 

Legislators have some very big challenges they must deal with this session. While it is dire that retirees have not had an increase in 10 years, many brand new legislators may not know much about our predicament. We must educate ALL members of the legislature on the facts: retirees have not had a true cost of living raise in 10 years; 95% of school districts do not pay into Social Security, and if a retiree does qualify for any Social Security at all, it is likely to be reduced because of federal provisions known as the Government Pension Offset and the Windfall Elimination Provision; retirees participating in the TRS-Care health insurance program pay monthly premiums for this benefit (some state retirees have a no-cost health insurance benefit); and something must be done to help retirees who have been forced to tighten their belts and cut expenses long before it became the national and state trend.

 

Legislators need to hear from TRTA members often during session. As we already mentioned, TRTA will utilize the email generation service for member contact this session as we have in the past. We also provide a toll-free hotline for you to call your legislators directly (1.888.674.3788). TRTA is also planning a Day at the Capitol on March 23, 2011. All members willing to visit Austin are welcome to attend.

 

The bottom line is that we have to work hard to make our voices heard. We will use email, phone calls, personal visits, testimony opportunities, media outlets, and all other resources available to us to protect your pension and get you a much needed benefit increase.

 

The first day of legislative session is already over, but we will use every opportunity over the remaining 139 days to advance our TRTA initiatives. Encourage your friends and fellow retirees to get involved and be active. Together, I know we will be successful. Your continued support is greatly appreciated.

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05 Jan
0

Letter from TRS Required by Federal Law

The recently passed Patient Protection and Portability Act, or the new federal health care initiative, is providing some reimbursement to the TRS-Care program. Approximately $47 million has been paid to the Teacher Retirement System of Texas (TRS) as the plan sponsor for the TRS-Care program.
 
When the federal health insurance plan was passed, a special fund was created to help cover claims costs for health care providers and plan sponsors of retiree health insurance programs. The fund, also known as the Early Retiree Reinsurance Program (http://www.errp.gov/index.shtml), was allocated $5 billion. Retiree plan sponsors were able to make an application to receive some portion of these funds.
 
The Teacher Retirement System of Texas (TRS) worked diligently to make the necessary application to receive a portion of this federal award. Again, the TRS-Care program was awarded $47 million to help reduce overall health care costs. 
 
In addition, TRS can continue to submit claims to qualify for more federal funding. The proceeds are being used to reduce health insurance costs for TRS-Care. While these federal dollars have not resulted in a reduction in TRS-Care premiums, deductibles, co-pays, or other general out-of-pocket costs, the reduced expense to the TRS-Care plan may help control future costs for plan participants. There is no guarantee that TRS will receive any additional funds, and many health plan sponsors across the country are trying to receive a portion of the $5 billion. Once the fund is exhausted, it will not be replenished.
 
TRS-Care plan participants have received, or will receive, a letter explaining TRS participation in the Early Retiree Reinsurance Program. The letter is a federally required announcement that reads in a somewhat confusing manner.
 
The bottom line for TRTA members and TRS-Care participants is that there is no change being made to your TRS-Care health insurance program. You do not need to take any action upon receipt of the letter; it is merely informing health plan participants about TRS participation in this process and that TRS has been awarded funding used to defray the overall costs of the TRS-Care health insurance program.
 
I hope this update clarifies the confusion with the letter. The fact is that any additional money we may receive to help reduce health insurance costs is a welcome benefit. As we will discuss in upcoming issues of the Inside Line, the Texas budget scenario is putting pressure on all TRTA legislative initiatives, including state funding for TRS-Care.
 
As always, your membership in TRTA is greatly appreciated. We know you are ready for a very eventful and challenging legislative session, and together we will work to improve the livelihood of all Texas public education retirees!

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09 Dec
0

TRS to Pay Employee Bonuses

$9.7 Million for Investment Staff

The Teacher Retirement System of Texas (TRS) announced today that its investment performance exceeded benchmark expectations to the extent necessary for investment staff to receive their contractual bonus pay. This includes bonus payouts for fiscal years 2009 and 2010.

The TRS pension fund earned 12.57 percent for the Plan Year 2010 (September 30). TRS reports that it placed first among all public pension funds with an asset value of $10 billion or more.

The report also states that for FY 2008-2010, the TRS investment team added $2.3 billion in value to the fund over the incentive index. The results are excellent, especially considering the market conditions. TRS is doing a very professional job with your pension trust fund investments.

This is good news for TRS members (retired and active) as continued growth in TRS investment earnings has the most significant impact on making the system actuarially sound. According to Texas statute, only when the system is actuarially sound can the Texas Legislature authorize a permanent increase in pension benefits for Texas public education retirees.

The pension system does not need to be actuarially sound, though, for TRS investment employees to receive their bonus pay. Bonus pay is based on TRS policy and employment contracts. These policies were modified a few years ago to increase bonus pay, while at the same time increasing the performance standards necessary to qualify for the payout.

TRS has not made a bonus payment to any of their investment staff for 2007 and 2008 as the Board of Trustees prolonged paying bonuses until the system’s performance improved.

TRTA members have had mixed reactions about bonus pay for TRS employees. The idea of using bonus pay as an incentive to hire and retain the best people possible to manage the pension fund’s $100-plus billion portfolio has been praised and criticized. TRS is not the only public pension fund in Texas or the nation to use incentive-based pay to recruit and retain investment staff. For example, the University of Texas Investment Management Company (UTIMCO) manages $12 billion in assets and paid incentive compensation to 29 employees totaling $5 million. Certainly in the private sector, incentive-based pay is widely used in the investment industry.

That being said, TRS retirees who have not had an increase in their pensions in nearly 10 years may not receive this news with much enthusiasm. While TRS correctly points out that bonuses are based on performance and the TRS investment team made the TRS pension fund one of the top performers in the country, this great performance is not by itself going to make a pension increase possible for retirees this coming session.

If retirees are to receive an increase in their pensions this coming session, legislators MUST take action. Pension fund earnings by themselves will not solve the “no cost of living increase” crisis, but TRS is doing what it can by making good investment decisions. These decisions have brought the fund back from a low of $67 billion in 2009 to today’s estimate of $103 billion.

More information on the TRS bonus pay is available by clicking here.

TRTA Legislative Handouts

TRTA has created a legislative packet for our members to use for the 82nd Legislative Session. Many of you will be scheduling visits with your legislator(s) prior to or during the legislative session. You have asked us for information that you can provide to your legislator or his or her staff members that explains TRTA’s priorities, positions on issues pertaining to retirees, and the TRS pension and healthcare funds. Available below are PDF documents that you may download and present during your scheduled visits.

Click here to download the first set of documents: State Priorities, Retirees in Need, Don’t Short-change the Future and Keeping it Healthy.
Click here to download the second set of documents: TRS Fact Sheet, Pensionomicsand Value to the Texas Economy.

These legislative handouts are provided to you in PDF format so that you can freely download and distribute them. These handouts can also be found on the TRTA web site under the “Legislation” tab.

As you have an opportunity to meet with your elected officials, please be sure to send an email or call TRTA with an update about your meeting. This is especially useful to us as we plan our follow-up meetings with legislators in the coming weeks.

“Thank You” TRTA Members

I hope you know how much your participation in TRTA is appreciated. I want to extend a personal “thank you” to all of those members who have already responded to the Texas Retired Teachers Foundation (TRTF) fundraiser mailing.

So far, the response has been amazing! $45,000 has been given through the TRTF direct-mail campaign. $9,000 was given through local unit and district donations during November for Foundation Month.

As you know, TRTF does not employ an outside fundraising agency to conduct this donation request. It is generated in-house, meaning your money is not paying for a third party to process the mailing. Your dollars are going directly to help retirees in need, to assist classroom teachers, and to provide scholarships for future educators.

Many of you have asked about the TRTF “A Helping Hand” program. This is a great outreach opportunity and TRTF has helped many of your fellow retirees dealing with difficult situations. Just recently, TRTF was able to help a TRTA member pay some overdue utility bills and provide space heaters to keep her warm this winter. This is just one example of how your dollars are being used to meet the needs of your fellow education retirees.

If you have not had a chance to send in a donation, we would really appreciate any amount that you can give. We are hoping that 1,000 TRTA members are able to send a $20 donation. Combined with the support of those who have already given, this outpouring of member generosity would push TRTF fundraising over the $70,000 threshold and would provide more funds for “A Helping Hand” assistance, as well as other Foundation outreach programs.

Keep in mind, all TRTF donations ARE TAX DEDUCTIBLE! We know times are tough and we are so grateful for what you do to help.

Perhaps you are curious about receiving some assistance through the TRTF “A Helping Hand” program for yourself or for someone you know. If so, please email us at help@trtf.org. Your email is confidential and you will be contacted quickly about receiving any assistance TRTF may be able to provide.

Concluding Comments

The TRS Board of Trustees is continuing its meeting today and tomorrow.  TRTA will provide an update on their actions.

If you need information to use when meeting with your elected officials, please visit the TRTA web site at www.trta.org and look under the “Legislation” tab.

A final thought…we do have a tough road ahead and we will need to remain strong as this coming session will test us all; but we will never give up on working to achieve our goals of improving your pension benefits and protecting all that you have earned through your public education career. Thank you for your hard work, support and dedication to TRTA.

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