Blog

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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16 Nov
0

Senate State Affairs Committee Gets Update on TRS

TRTA Testifies on Issues that Matter to You

The Senate State Affairs Committee is charged with oversight of the Teacher Retirement System of Texas (TRS).  Yesterday the committee held a hearing on the status of the pension and health insurance trust funds.

Senator Robert Duncan, Chairman of the Senate State Affairs Committee, was unable to attend the hearing (due to a professional obligation with his law practice).  Senator Bob Deuell, committee Vice-Chair, led the meeting and a good discussion about helping public education retirees that have not had a pension increase in 10 years.  Senator Deuell asked many questions about ways the Legislature and TRS may be able to structure an increase for retirees even in this difficult budget session. Even as some legislators may run away from the idea of helping retirees in these difficult budget times, Senator Deuell is to be commended for making this a major topic of discussion in yesterday’s hearing.

Tim Lee, TRTA Executive Director, testified before the committee on numerous issues impacting public education retirees and TRS funds.  Here are just a few of the points made during the testimony:

  • Texas public education retirees have not had an increase in 10 years and have lost approximately 30 percent of their buying power;
  • Retirees have been told that their pensions cannot be increased because of a state law that prohibits benefit increases when the pension fund is not actuarially sound;
  • That same law also suggests that the state may not be able to take other action during a legislative session that may “worsen” the condition of the fund;
  • An example of such action may include reducing the state contribution to the pension trust fund, as such action would further worsen the actuarial condition of the fund;
  • Many TRTA members believe the Legislature is not acting in good faith when denying a benefit increase to retirees because of how it may worsen the condition of the fund, while the Legislature is quick to think of lowering the state’s contribution even though it also will worsen the condition of the fund;
  • Lowering state funding to the pension fund further delays providing retirees with a real cost of living raise;
  • The Legislature must act quickly to shore up funding for TRS and provide retirees with a real cost of living increase;
  • TRTA requested the Senate State Affairs Committee and all the members of the Texas Senate fully fund the TRS appropriations request (Ronnie Jung, TRS Director, suggested that not funding the TRS-Care budget request may increase health care premiums this coming biennium);
  • TRTA asked that the Legislature keep TRS whole for its appropriations for the current biennium;
  • This refers to the budget suggestions made by some elected officials to not fully fund the 6.644 percent state contribution to TRS;
  • As you recall, the Legislature authorized a $500 supplemental payment that was denied by the Attorney General.  That money was supposed to be deposited into the pension fund, but some state officials do not want to pay the higher TRS contribution for the first four months of fiscal year 2011 (September through December 2010); and
  • TRTA requested that the Teacher Retirement System not be ordered to return over $20 million to the state due to this appropriations dispute.

After the meeting, TRTA took time to talk to the committee attendees about other critical components of the TRTA legislative agenda.  Items such as the TRS Executive Director search, TRS investment policy and procedure, adding another annuitant to the TRS Board, and more were all discussed.

TRTA is your voice in the Texas Legislature!  This will be a hard session, and TRTA is preparing for a strong defense of the pension and health care trust funds.  We are also ready to fight for you to get a much needed pension increase and for preventing your health care costs from increasing.  We must be vigilant; we must be active and make our issues known.  TRTA is not giving up on any idea to help retirees this session and we know that you will be ready to stand with us during these challenging times.

One former legislator has called TRTA the most active and organized lobby in Texas.  Let’s be ready to make sure everyone remembers why!  Thank you for your membership and continued support.

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