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19 Apr
0

TRTA Inside Line April 19, 2011

Supplemental Payment Bill Heard in House Committee

Legislation would use fund’s investment earnings to make payment

Legislation authored by Representative Larry Gonzales (R-Round Rock) would provide Texas public education retirees with a supplemental payment similar to the one provided in 2008. The legislation intends to set some temporary benchmarks on when and how the payment could be made if various conditions are met. The innovative piece of this legislation utilizes a portion of the TRS pension trust fund investment earnings to cover the cost of the supplemental payment.

HB 3542 has several key components:

  • The legislation designates TRS investment earnings as the funding mechanism for the supplemental payment;
  • It mandates that the system must first meet its actuarial expected return on investments of 8 percent, and that investment earnings above the 8 percent could then be used to fund the supplemental payment;
  • The legislation models the supplemental payment authorization from 2007 and allows the TRS Board of Trustees to make a payment if the bill’s statutory provisions are met;
  • Provides for a payment to be equal to a retiree’s one-month annuity amount up to $2,400;
  • Requires the TRS pension trust fund be at least 80 percent funded for the payment to be made, and that the payment cannot lower the fund to be less than 80 percent funded if issued;
  • The legislation provides for a temporary suspension of the statutory provision that prohibits retirees from receiving a supplemental payment if the system cannot amortize its unfunded liabilities over a 31-year period;
  • Legislation sunsets in 2014.

TRTA supports HB 3542 as a method to fund a TRS supplemental payment. The benefit of this legislation is that it offers a way to fund a supplemental payment to public education retirees without requiring additional state general revenue (or budget dollars), allows retirees to receive the payment even though the fund does not meet the statutory definition of actuarial soundness, it protects the system by requiring an 80 percent funding level for the payment to be authorized, and it utilizes the a small portion of the investment earnings to help retirees today without sacrificing the future of the fund.

Representative Gonzales made a great comment about his bill during today’s hearing, “…these are extraordinary times and we are just trying to find ways to help extraordinary people.” TRTA appreciates Representative Gonzales for authoring this innovative approach to help public education retirees who have not seen a permanent increase in their pension benefits for a decade. We also express our sincere appreciation to Representative Truitt, Chairwoman of the House Pensions, Investments, and Financial Services Committee for allowing the bill to receive a hearing.

Over 20 TRTA members from Representative Gonzales’ district and the surrounding area attended today’s hearing and filed witness affirmation slips in favor of the legislation. Several constituents provided critical and succinct testimony for the legislation.

The bill has been left pending in committee for future action. TRTA will continue to work with committee members to have the bill voted out of committee and sent to the House floor. In addition, HB 3542 has a companion bill in the Senate authored by Senator Robert Deuell (R-Greenville). That bill, SB 1333, is in the Senate State Affairs Committee and has not yet been posted for a hearing.

TRTA members should know that even if the legislation is adopted, it in no way gurantees a supplemental payment will be made.  Testimony provided by the Teacher Retirement System of Texas (TRS) suggested the fund investment earnings may need to be as high as 21 percent just to keep the system above the 80 percent funded status as required by HB 3542. While this is not unheard of, it is a significant challenge. Still, HB 3542 provides one of the only supplemental payment options for retirees this session and its unique approach is one that could provide immediate financial relief to hundreds of thousands of public education retirees. TRTA will keep you informed as these bills move through the legislative process.

Thank you for your support and for your membership in the Texas Retired Teachers Association. If you are not a member and would like to join, please contact us at 1.800.880.1650 and we will answer any questions you may have.

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13 Apr
0

Senate Adjusts Budget Recommendations for TRS

Senate Recommendation Protects TRS-Care

 

Senator Finance Committee Restores Funds for TRS-Care and TRS Pension Fund

A proposal designed by Senator Robert Duncan (R-Lubbock) to protect TRS-Care participants from seeing a premium increase in the coming biennium, as well as restore over $100 million in funding for the TRS pension trust fund was adopted in the Texas Senate Finance Committee.

The budget proposal adopted in Senate Finance for TRS-Care will:

  • Fund TRS-Care in FY 2012 at 1 percent allowing TRS and the State to show a “maintenance of effort” in qualifying for additional federal health care dollars available through the retiree reinsurance program;
  • Fund TRS-Care in FY 2013 at 0.5 percent (the federal dollars are expected to be exhausted by that time);
  • Provide budget language that prohibits an increase in TRS-Care premiums for the coming biennium;
  • Sweep any excess budget dollars available through the annual “settle-up” from/to TRS in the budget process back to TRS-Care;
  • Provide for a study to be conducted in the interim that analyzes the TRS-Care program and offer suggestions on how to maintain efficiencies and implement new cost savings measures designed to protect the TRS-Care program;
  • This proposal adds $134 million back to TRS-Care funding for the biennium and ensures retirees that there will be NO premium increase in FY 2012 or FY 2013!

The budget proposal adopted in Senate Finance for the TRS pension trust fund will:

  • Provide for a state contribution to the TRS pension trust fund in FY 2012 at 6.0 percent;
  • Provide for a state contribution to the TRS pension trust fund in FY 2013 at 6.4 percent;
  • Temporarily suspends the requirement that the state contribution must be at least equal to, or greater than the active member contribution (only in FY 2012);
  • Maintains the active member contribution to the TRS pension trust fund for FY 2012 and FY 2013 at 6.4 percent;
  • This proposal will NOT make the fund actuarially sound, and it will NOT provide an increase to retirees, BUT it WILL restore over $100 million in pension trust fund contributions helping the system get to actuarial soundness sooner than later.

TRTA supports the Senate Finance Committee proposal. The Senate Finance Committee budget recommendation must still go to the full Senate for a vote. That will occur in the near future, but they have still not finished their overall proposal.

While this budget recommendation does not provide everything that TRTA is asking for to protect its members and address the issue of retiree loss-of-buying power, it does protect retirees from a huge increase in health care premiums that have been said to be as high as 80 percent.

The Texas House Budget proposal does much less to help TRS retirees and their plan would leave retirees susceptible to those massive TRS-Care premium increases. As this proposal is finalized, TRTA will launch an advocacy campaign asking the full Texas Senate to support this budget proposal for the TRS-Care program and the TRS pension trust fund.

TRTA will continue to update you on these issues as they develop. YOUR SUPPORT AND UNWAIVERING COMMITMENT TO WORKING ON THESE VITAL ISSUES HAS MADE AN IMPACT!

Thank you for your hard work and support!!!

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12 Apr
0

Private Information Compromised on Comptroller’s Web Site

Security Failure

Comptroller’s Office Makes Statement

An alarming statement was issued by the Office of Texas Comptroller Susan Combs yesterday. For over a year, that agency has left sensitive personal information about people in the Teacher Retirement System of Texas (TRS), the Texas Workforce Commission (TWC), and the Employees Retirement System (ERS) on an unsecured public server. This major security breach has exposed millions of Texans to the malicious actions of identity thieves and other criminals who may want to use such information to take advantage of public servants and retirees.

The Comptroller’s office is saying this security breach has now been closed and that an investigation into this issue is now ongoing. In addition, the Comptroller is working with the Attorney General’s office as part of this investigation.

The full statement from the Comptroller’s office can be read by clicking this link.

TRTA is very concerned about this matter and we will not rest until we are assured that security protocols are in place now to protect your identity at this agency. We have been advised that TRS members will be receiving letters in the mail as early as this week explaining this situation.

A special website and phone number are available from the State to answer your questions. The Comptroller’s Office does not believe there are any indications that this information was downloaded and used by cyber-predators, but it is too early to know and the proper measures MUST be taken by the State to protect your personal information.

TRTA is continuing to investigate this issue and we will post updates as they are available.

Please click here to read the Comptroller’s statement about the steps you can take to protect your identity.

Again, TRTA is not going to let this matter go unresolved. We will keep you updated on who may have taken this information and the risks it may pose to your identity. We know this is unsettling news and we will work together to see that the Comptroller’s office and the state address these issues appropriately.

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