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The Teacher Retirement System of Texas (TRS) Board of Trustees continued its meeting in Richardson today, focusing much of their conversation and reporting on the TRS-Care retiree health insurance program.

TRS Chief Health Care Officer Katrina Daniel made a presentation about internal efforts to provide efficient administration of the TRS-Care plan, as well as financial oversight and cost-containing measures.

Some of those cost-containment measures include continued negotiations with the Medicare Advantage and Medicare Part D vendors to receive favorable terms. This helped save the program $44 million in FY 2015. TRS also reviewed the costs and potentially wasteful or fraudulent activities that may be associated with certain compound drugs.

For 2016, the department’s major objectives include having a successful working relationship with the joint interim legislative committee established by Senate Bill 1940 in 2015, strengthening the agency’s data analytics, contact oversight and governance, use data to improve data-driven decision making in health care, enhance consumerism by improving communications with the TRS membership, and developing an internal strategic plan to help the department maintain its focus on priorities.

Ms. Daniel reported on some of the continuing challenges facing TRS-Care that drive up the cost of the program.

Medical and pharmacy costs continue to rise, and there are even dramatic increases in prices for generic drugs now. TRS-Care continues to have more participants and more usage. As the TRS-Care population continues to age, utilization also increases. As we have heard in the past, the greater costs to the program stem from non-Medicare eligible participants, as TRS-Care is the first payer until participants are 65 and Medicare becomes first payer.

TRS-Care continues to try and balance program accessibility with cost. More access creates more cost, but limiting the system is not good for the participants.

Ms. Daniel reiterated a statement made in yesterday’s meeting by TRS Executive Director Brian Guthrie, stating that “funding streams for TRS-Care are in no way related to the increasing costs of health care.” As our members may know, funding for the program is based on a percentage of active educator payroll, which has tended to decline in recent years. As contributions to the program are not based on health care industry trends, this funding mechanism continues to be a problem. Right now, the state contribution to TRS-Care is 1 percent of active teacher payroll.

As TRS internally looks at ways to contain costs, such as creating integrated health care across disciplines to achieve an expected high value outcomes and looking at alternatives such as telemedicine, the funding mechanism for TRS-Care will still have to be a primary focus of consideration for the joint interim legislative committee. A wide array of options will be needed to wrangle the cost of health care for Texas’ public education retirees.

Legislative Interim Charges Will Impact TRS-Care, Pension Fund

Ray Spivey, Director of Governmental Relations and Merita Zoga, Assistant Director of Governmental Relations reviewed legislative interim charges for various committees and how they will impact TRS and its members.

As we mentioned yesterday, the joint interim committee consists of the following legislative members: Senators Joan Huffman (R-Houston) – Co-Chair, Jane Nelson (R-Flower Mound), and Craig Estes (R-Wichita Falls); and Representatives Dan Flynn (R-Canton) – Co-Chair, Trent Ashby (R-Lufkin), and Justin Rodriguez (D-San Antonio).

The findings from this committee are due to the Texas Legislature on January 15, 2017. The first meeting of the joint committee is planned for 2:30 p.m. on Wednesday, March 30, 2016 in Room E1.028 (Hearing Room) of the Texas Capitol. TRTA will report additional details as they become available.
The focus of the committee is to examine and assess: the financial soundness of the TRS-Care and TRS-ActiveCare plans; the cost and affordability of plan coverage; and the sufficiency of access to physicians and health care providers under the plan.

Spivey and Zoga reviewed interim charges for various other legislative committees, including many that TRTA reviewed at the end of 2015 in this Inside Line article.

Of particular interest to our members is House Appropriations Committee charge 6, which will “examine issues and costs associated with granting cost-of-living adjustments or ‘13th Checks’ to retired state employees and teachers.”

In 2007, TRS annuitants received a one-time 13^th check. While an attempt was made to provide TRS retirees with another 13^th check in 2009, ultimately, the payment was not approved.

While the status of the pension fund’s solvency cannot be predicted at this time, this discussion opens the door for conversations with legislators about the possibility of a supplemental check for retirees in 2017.

In regards to TRS-Care, House Appropriations Committee charge 7 will “monitor the implementation of HB 2 (84R) as it pertains to the short-term funding provided to TRS-Care, evaluate additional methods to address the health care needs of retired teachers in light of the current health insurance market, including the feasibility and costs associated with retired teachers not eligible for Medicare remaining on a school district’s health care plan until Medicare eligible.”

The Pensions Committee has several charges pertaining to monitoring the financial markets and investment performance of the TRS pension fund that you may read more about here.

Of note for our members is the charge to the Senate State Affairs Committee to “examine the practice of using public funds and employees for the payment processing of union dues.” This is in reference to Senate Bill 1968, which did not pass during the 84^th Legislative Session. Senators will review whether or not active and retired public employees can pay dues voluntarily to state associations or organizations from their monthly paychecks.

TRS Continues Meeting Friday, TRTA Members Encouraged to Attend

The TRS Board of Trustees will continue to meet this Thursday and Friday in Richardson at the Region 10 Educational Service Center, 1st Floor, Collin, Dallas, and Ellis Rooms, 400 East Spring Valley Road, Richardson, TX 75081.

TRTA encourages members to attend this meeting in person if they live in the area. You may read the board’s agenda items here.

If you are unable to attend in person, you may view the meetings online via live webcast. Please note that the links below will not be live until the meetings begin for the day. For meeting start times, please view the agenda linked above.

Here is the link to Friday’s video stream.

Thank You

Protecting your retirement benefits is one of TRTA’s top priorities, and your participation makes all of difference! Be sure to stay tuned to our other digital mediums to stay informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

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The Teacher Retirement System of Texas (TRS) Board of Trustees met this week in Richardson, Texas at the Education Region 10 Service Center to discuss various issues including the status of the pension fund and the TRS-Care retiree health insurance program.

Prior to beginning a discussion about these vital issues, TRS Executive Director Brian Guthrie announced the new members of the TRS Retirees Advisory Committee:

• Dr. Celeste Cardenas as an active teacher, term expiring January 31, 2018
• Ms. Teresa Koehler as an active teacher, term expiring January 31, 2020
• Dr. Bruce Gearing as an active school administrator, term expiring January 31, 2018
• Ms. Grace Mueller as a retired teacher, term expiring January 31, 2020
• Dr. H. John Fuller as a retired school administrator, term expiring January 31, 2020, and
• Mr. Jesus H. Soto as a retired school auxiliary staff, term expiring January 31, 2018.

Four TRTA members serve on the committee, including newly appointed Chairman Grace Mueller. TRTA’s own Legislative Coordinator and Chairman of the State Legislative Committee Bill Barnes was named Vice-Chair of this vital committee. Jesus H. Soto is also a well-known member of TRTA who has previously served as the State Historian. Teresa Koehler, another member of TRTA, has also joined this important committee.

TRS Executive Director Brian Guthrie reported that the agency now is nearing 1.5 million members with 378,000 retiree members. 253,000 people participate in the TRS-Care program.

The TRS pension fund, which sits at $124 billion as of February 23, 2016, is “better off than anticipated,” said Guthrie. Despite recent market downturns, the funding period is at 33 years. Though not considered actuarially sound by state law, it was feared that the funding period would be closer to 37 or 38 years at this point in time.

Due to the passage of Senate Bill 1458 during the 83^rd Legislative Session in 2013, the pension fund continues to follow a path towards full funding. Certain stipulations passed with the bill included a grandfathering period that will pass within a few years and have a very positive impact the fund.

The figures provided today are based upon an average rate of return of 8 percent over the long-term. Guthrie reported that over the past five years, the fund has averaged a return of nearly 10 percent. However, he stressed that the first several months of 2016 have been very volatile, but the investment team at TRS has a system in place to mitigate volatility through their asset allocation.

The unfunded actuarial accrued liability (UAAL) is at $33 billion as of August 2015.

Under the current plan, which includes an increase in the active teacher contribution to 7.7 percent by 2017, TRS is expected to pay off this unfunded liability by 2047. The UAAL will begin to decline more rapidly after 2025. This assumes the continued state contribution to the fund of 6.8 percent.

These figures also assume a lowered inflation rate of 2.5 percent, and adjusting the mortality rate to reflect the retiree population living for a longer period of time. Assumptions for payroll growth were also lowered from 3.5 percent to 2.5 percent. These assumptions result in the funding period and UAAL growing for a short period of time and then declining as the system moves toward full funding.

Guthrie also reported on TRS operations for 2015, noting that members made $2.6 billion in deposits, while the state made $3 billion in deposits to the pension fund. Almost two-thirds of TRS’ revenue for the pension fund is generated by investments.

TRS made $8.9 billion in pension payments to retirees in 2015. 21,000 new retirements were processed. TRS also gave 173 group presentations to members all across the state of Texas.

Guthrie also reported on the TRS-Care health insurance program, which faced a shortfall of $768 million during the 84^th Legislative Session in 2015. Thanks to TRTA members and legislative leaders working together, House Bill 2 included supplemental funding to cover the shortfall.

As Brian Guthrie stated during today’s meeting, “it is unlikely that those sources of revenue will be available again” during the 2017 session.

TRS-Care’s fund balance will be negative by the end of the current biennium, facing an even greater shortfall of $1.5 billion as the next legislative session begins.

A select joint committee has been formed by the Texas Legislature to investigate this issue. Senate Bill 1940 established a legislative study group that will meet during the interim to discuss solutions to the TRS-Care crisis.

The legislative members named to this group are: Senators Joan Huffman (R-Houston) – Co-Chair, Jane Nelson (R-Flower Mound), and Craig Estes (R-Wichita Falls); and Representatives Dan Flynn (R-Canton) – Co-Chair, Trent Ashby (R-Lufkin), and Justin Rodriguez (D-San Antonio).

“Programmatic changes are needed to make TRS-Care sustainable,” said Guthrie. The first meeting of the joint committee is planned for 2:30 p.m. on Wednesday, March 30, 2016 in Room E1.028 (Hearing Room) of the Texas Capitol. TRTA will report additional details as they become available.

Progress on TRS-Care will happen in 2016 and it will happen quickly. TRTA needs your participation in every step of this process! Please stay tuned to the Inside Line for updated information about how you can participate in this upcoming meeting.

The reality of systemic changes to TRS-Care must be faced head on. It is possible that your premiums may increase or your benefits may change, or both! TRS-Care is a top priority for TRTA as we head full steam into 2016.

Please continue to stay vigilant and alert. One way to ensure that TRS-Care will receive the attention it deserves is to get out and VOTE! Early voting for the Primary Election continues through Friday, February 26. Primary Election day is Tuesday, March 1. To learn more about candidates and issues impacting public education retirees in Texas, be sure to read our ”Good Voter Health” Inside Line series.

TRS Continues Meeting Tomorrow and Friday, TRTA Members Encouraged to Attend

The TRS Board of Trustees will continue to meet this Thursday and Friday in Richardson at the Region 10 Educational Service Center, 1st Floor, Collin, Dallas, and Ellis Rooms, 400 East Spring Valley Road, Richardson, TX 75081.

TRTA encourages members to attend this meeting in person if they live in the area, especially on Thursday when topics pertaining to TRS-Care are discussed. You may read the board’s agenda items here.

If you are unable to attend in person, you may view the meetings online via live webcast. Please note that the links below will not be live until the meetings begin for the day. For meeting start times, please view the agenda linked above.

Here is the link to Thursday’s video stream.

Here is the link to Friday’s video stream.

Thank You

Protecting your retirement benefits is one of TRTA’s top priorities, and your participation makes all of difference! Be sure to stay tuned to our other digital mediums to stay informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

Read More