02 Mar

Special Update

Pension Funds Are Not in Crisis

QR Interview with Pensions Chairman Bill Callegari

TRTA Members,

Below is a story that appeared on the Quorum Report web site. The Quorum Report is an online political column and is operated by Harvey Kronberg. Their web site is

This particular story is a Q&A session with new House Pensions Committee Chairman Bill Callegari. The story is written by reporter John Reynolds and originally appeared on the Quorum Report web site on March 1, 2013.
TRTA has met with Chairman Callegari and we know that he is taking a good look at the state pension plans. In particular, we know he is very aware of the funding challenges that TRS has struggled with. TRTA knows that 15 out of the last 18 years, the Texas Legislature chose to underfund the TRS pension fund. If the state would have maintained its 7.31 percent contribution that it reduced to 6 percent in 1995, TRS would have approximately $7 billion more in pension trust fund. It would also be actuarially sound.
Now, TRTA continues to fight against the idea that there is a pensions crisis in Texas. We are also working to improve the actuarial soundness of our pension fund, get retirees an increase, and protect our health care.
It is clear from this interview with Pensions Chairman Bill Callegari that this is a person who respects facts over rhetoric. Thank you Chairman Callegari for your service in the Texas Legislature.



March 1, 2013      3:44 PM




The newly installed chairman tasked with one of the House’s more important legislative portfolios shares his thoughts on whether the state’s public pension systems are in crisis. Spoiler alert… he doesn’t think so.
House Pensions Chairman Bill Callegari (R-Katy) sat down this week with QR to talk about his steep learning curve as the new guy holding the gavel in one of the chamber’s most important standing committees.
In our talk, he said, for the most part, public pensions are in good shape and he discounts talk that they are in the type of crisis that has led towns in other states like California to declare bankruptcy.
The systems “I’ve seen thus far are in reasonably good shape,” Callegari said in our interview. “There’s some in not so good shape. None of them I would consider in crisis at this point. But my drive is going to be to try to get them to the point where they’re unquestionably not in crisis.”

And he pretty convincingly put the kibosh on speculation that lawmakers might look at moving the state’s employee and teacher retirement systems away from their current defined benefit plans this session.
We reprint below the entirety of our Q&A with Callegari:
Q: When Pensions was set up this session, there was a lot of reorganization because you split Pensions basically into two. And, of course, you’re new to Pensions. If you could just tell me a little about the learning curve from your perspective?

A: Well, it’s been very interesting because, you know, I didn’t know a whole lot about Pensions except kind of a nominal knowledge that most people have and having dealt with it to a small extent in my business in past years. I had a general feel for what it’s all about but a lot of the details about pensions, particularly state pensions, I just didn’t know. So it’s been a real steep learning curve. It’s been good on the other hand because it makes you dig into things … when you realize you don’t know anything, you dig a little deeper than you would otherwise. And I think it’s been very helpful. I find the same thing with the rest of the committee. The entire committee is new to Pensions and I think they’ve all tried to dig in and learn some things they didn’t have before and I think having a new group of people involved … anytime you look at anything with fresh eyes you see things that people before didn’t see or overlooked because they heard it so many times. So I think from that standpoint, it was probably … more positive than I would have thought if I had been asked before I was appointed.

Q: We’ve seen one of you bills now already in committee, HB 13, which you are basically carrying (Comptroller) Susan Combs’ transparency agenda for public pension systems. I was going to ask you aside from that, what you see as kind of the big components of your agenda for Pensions this session

A: Well, you know, one of the both problems and advantages of having been appointed to it more or less at the last minute is I don’t have any preconceived ideas of what I ought to do. It became apparent to me very early though that even though our pensions, most of our pensions, are in relatively good shape, there are some concerns. And it didn’t take long to pick up on some of the indicators. For instance, one of the main indicators that they use is fund ratio. And fund ratios, you know, the common thinking seems to be that if fund ratios is above 80 percent, it’s OK. Well, my observation after studying it a little while is that’s probably not the way it started. My observation is it probably started with the actuaries making a comment that if your fund ratio is below 80 percent, you may be in trouble. I think over the years that’s been kind of flipped around to say if you’re above 80 you’re OK. And it’s not the same thing. So I worry about pensions that, you know, think that if I’m at 80 percent, I’m OK. And particularly, one of the other great measures is amortization period. If my amortization period is 30 years or less, I’m OK. Well, you know that may be an OK position, but it’s not the desired position. So I have determined pretty early on that we want to drive to a couple of things. I want to get as many pensions as we can closer to or even above 100 percent and I want to get the amortization rates down to zero if possible but certainly well below 30 and, you know, again to ultimately get them to zero so that our pensions are healthy and they can do what they need to do. And then let the earnings give them the ability to get the cost of living adjustments or whatever they need to do.

Q: What would be the legislative tools available to the committee to do that?

A: Well, it varies with every type of pension quite frankly whether it be the employees pension or the teachers pension or whether it be firemen or, you know, the county system or the city’s TMRS (Texas Municipal Retirement System) … each one has its own characteristics, if you will. But for the most part, I think everybody needs to look more closely at the vesting period. Make sure that they’re broad enough to where the people who deserve the pensions get them but there was one, for instance, that allowed vesting in it at a certain age and with just five years’ experience at one time. Well, that’s too limited. So I think they need to look at that. But you look at vesting periods. You look at such things as, you know, who’s making contributions or are the contributions being made on a regular basis? And what can we do to level those out and make sure that the contributions match where they have to be in the future? And I think there’s some that are very healthy from that standpoint, particularly a lot of the municipal systems where there’s pretty good contributions from both the employees and the cities. I think in some of the areas like in teacher retirement, I think there is probably a need for us to increase our contributions from the state side for teachers. I think at the same time, though, and there’s been some discussion about that, I think, among the teacher groups. And they’ve talked about, you know, if we can get an increase … on the state side, maybe we would ask the teachers to contribute a little more, too, everybody contributing a little bit to the long range viability of those pensions.

Q: Well, that’s rather important and I guess I would ask, are you going to be carrying legislation on that?

A:  I am working very closely with, and understand that this has been just barely over three weeks. So we’re still getting our feet under us. But, yeah, I’m talking to those pensions, the employee pension, the state, you know, the teacher pension … talking to them about recommendations that they might want to make regarding those issues. There is some legislation that has been introduced by others that will increase state contributions. So we’re starting in that direction.

Q: One of the things that we constantly hear during the interim and we heard it as well in the hearing on Monday, the talk of pensions systems in crisis. Invariably you hear mention of out of state systems. Is it your perception that Texas pension systems are in crisis?

A: No, my perception is that for the most part those that I’ve seen thus far are in reasonably good shape. There’s some in not so good shape. None of them I would consider in crisis at this point. But my drive is going to be to try to get them to the point where they’re unquestionably not in crisis. And that means driving towards those key indicators – a 100 percent funding … 10 or less years amortization rate – to really make sure that we’re in a very healthy position so that if we have a market crash, we’re at a point where if we fall off, we don’t fall off very far. What you have to realize is that it only takes one day to lose 20 or 30 percent of any kind of fund, whether it is pension or anything else. It takes years to build it back. And that’s what we have to be prepared for. I would say that I don’t think we’re in crisis but I think we have to make sure that we start right now to be sure that we’re not in crisis. And there are two ways to do this. One is by legislation. We’ll do some legislation. But also just providing the leadership to tell them this is where you need to be. If you don’t get there, we’ll make you get there. We’ll give you a chance to get there first. That’s the way I tend to do things and what I want to strive for is give them the opportunity to do what they have to do. And if they don’t, I think we have to look at legislation.

Q: One final question keying off again on the crisis question. Outside groups have leveraged this idea of pensions systems in crisis to advocate some very fundamental changes to the way pensions are dealt with. Moving from, again, defined benefits to defined contributions. From your perspective, do those types of reform efforts have any legs this session?

A: Well, I don’t think they will this session. Some of the pensions, like the TCDRS (Texas County & District Retirement System) and TMRS, have already gone to a cash balance plan. That has some elements of both, you know, the 401(k) approach and permanent, I’m trying to think of the right word, amortized pensions. They’ve got kind of a two-tier system. In terms of the state ERS and TRS, I don’t think we’re ready to even think about doing that. You know, I think there’s a real desire to try to keep those pensions as they are now, which are defined benefit processes. We just need to make sure that we beef up on the other side, the contribution side, to make sure we get there. And that they continue to be and maybe even get more conservative on the discount rates that they’re using to be sure that we’re tracking what’s happened today. You know, you look at these things over a long term period. So you look over 30 years and the history may be good. But I’m going to encourage them to start looking more specifically at more recent years and be aware that things can change much more rapidly in today’s world than it may have, you know, 30 to 40 years ago. And we just have to be very cognizant of that. And watch it both, I mean you still have to look at long term because that’s the way you invest. But you’ve got to know what’s happening in the short term so that you’re using the right percentages and amortization rates.

Q: I think that should about cover it. Do you have anything else that you would like to add?

A: No, just that I think there’s a lot of interest in that subject. I think Texas has done a really good job. The pensions in Texas have done a pretty good job of trying to stay viable. I know a lot of them have made changes in the past few years that have helped their situation and we just want to make sure they keep looking and never forget that the long term viability of the pension is the most important thing.


By John Reynolds


Copyright March 01, 2013, Harvey Kronberg,, All rights are reserved

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01 Mar

Update on House Actions–TRS Budget Scenario looking better!

Click here to send an email on TRS funding and supporting TRTA legislative initiatives.
Momentum Building Around Supportive Subcommittee

Chairman John Otto Adds Emphasis to Helping TRS
The 83rd Legislative Session is unfolding quickly, and many elements of the TRTA legislative agenda are moving forward. We are pushing for legislative action on several fronts, including increased appropriations for the TRS pension fund and TRS-Care, and finding a way to help our members who are in great need of a benefit increase.


Thousands of TRTA members have drawn attention to this agenda by asking their State Representatives to support HB 1383—a bill authored by Representative Jim Keffer.


This push has made more legislators aware of our emphasis on making the TRS pension fund actuarially sound. While this is a multistep process, TRTA received some good news from the House Appropriations subcommittee working on TRS issues. Their deliberations have added about $136 million more into the TRS pension fund! This would increase the TRS appropriation to 6.6% in each year of the biennium. This recommendation is the highest level of funding support that TRS has seen in nearly 20 years!


While the suggested appropriation would not make the fund actuarially sound, it does signal a move in the right direction. We still have time this session to try to find additional funds necessary to achieve our goals. Make no mistake, the TRTA legislative team will do everything we can to protect your pension fund and improve your retirement security and benefits.


Increased appropriations discussions are very difficult, especially in an environment where so many programs experienced cuts last session. Considering the efforts that other groups have made to give the TRS pension benefit program a bad name, we clearly still have many supporters in the Texas Legislature. TRTA is grateful to Chairman Otto and the entire House Appropriations Subcommittee on Education for their focus on TRS. Now, let’s build this momentum and continue to push for making TRS actuarially sound!


An Effort Revived!

As many of you know, TRTA has many friends in the Texas Legislature. Two of those members are State Senator Robert Deuell and Representative Larry Gonzales.
These two members have refilled bills they championed last session. SB 643 and HB 103 are supplemental payment bills that would authorize TRS to make an extra benefit payment to TRS annuitants under certain conditions. We want these bills to gain traction and momentum in the legislative process.

We need your help. Please click the e-advocacy link at the top of this update to send an email on these important issues.
It has been 12 years since our TRS retirees have received a real cost-of-living raise. It has been 5 years since a supplemental payment was issued in 2008. Our retirees are paying almost 300% more for gasoline and over 250% more for ground beef than they did in 2001, the time the last increase went into effect.
These bills would use excess pension fund earnings to support a supplemental payment for TRS annuitants. They would not have an adverse impact on the fund, as they maintain minimum levels of funding for the TRS pension fund. The bills would not guarantee anything more than a one-time additional payment (keeping the overall cost very low for the system).
Again, we need your help. Please use the e-advocacy link above to send an email about these important bills.
Thank You

There has never been any doubt in my mind that the best advocates in Texas are retired public school employees! You are all doing an amazing job of communicating with your legislators. Our members have sent over 10,000 emails to legislators this session, and it’s only the beginning of March!

Our legislative teams have made hundreds of visits and we have learned a great deal. Perhaps one of the most significant lessons we have learned is that nearly every legislator we have talked with supports the TRS defined benefit pension plan! You are doing a great job educating our elected officials about how the fund works. They know that the fund is in good fiscal health (though we are working to make it even better), and that the best bang-for-the-buck for existing and future public school retirees is the defined benefit traditional retirement plan.
Thank you for what you have done to help this session. We still have a long way to go, and TRTA is in no way slowing down its efforts to help you. We are encouraged that many long-time legislative members and even recently elected members are realizing the real value that TRS offers to Texas.
Keep up the good work, and thank you for your strong support. TRTA members are making a big impact!

If you are not a member and want more information about joining our efforts to protect and improve TRS, please contact us at 1.800.880.1650.

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22 Feb

TRTA Legislative Update and Action Alert!

Bill Filed to Address TRS Funding

TRTA Champions Retiree Issues (Action Email Alert Provided)

Quick Access Links for Email Campaign (Complete Update Provided Below):
Click here to send an email to your legislator asking for their support on HB 1383!

Please click here to send an email to your legislator asking them to support TRTA efforts to improve funding for TRS retirement programs and help retirees receive a much needed pension increase.

This has been a busy week for TRTA! Last week, we made over 65 legislative visits promoting our legislative agenda. Our priorities include more support for the TRS pension trust fund and TRS-Care retiree health insurance program, as well as the preservation of the TRS defined benefit plan. This week, we have visited over 50 legislative offices. TRTA volunteers and staff are pushing YOUR interests every day that the Legislature is in session!

The great news is that long-time TRTA friend and public education retiree supporter Representative Jim Keffer has filed HB 1383. This bill calls on the Legislature to increase the state contribution to the TRS pension fund from 6.4% per biennium to percentages that support what TRS actuaries say is necessary to help the fund reach actuarial soundness.

HB 1383 requires the state to increase its funding by 0.5% in each year of the coming biennium. That means the current FY 2014 biennium contribution would increase to 6.9% (about a $125 million increase) and to 7.4% in FY 2015 (a $250 million increase).

As all TRTA members know, the TRS pension trust fund is not actuarially sound. The pension fund received more than a 6.0% minimum contribution from the Texas Legislature in only 5 of the last 18 years. This legislation is written with our TRS retirees and all TRS active members in mind. It is an important step that would help get the pension system actuarially sound as quickly as possible.

It also addresses the issues raised by the TRS independent actuaries who assert that the TRS pension trust fund is in relatively good financial condition, and that specific funding adjustments can enhance the TRS pension fund’s overall fiscal health.

Representative Keffer worked diligently with TRTA to develop this legislation. TRTA believes that the Legislature needs to move forward with a plan to make the pension fund actuarially sound to protect future retirees and get our members a much needed pension increase!


This plan begins with the recognition that minimum funding levels are not going to solve our challenges. Texas has the lowest contribution of any statewide teacher pension system that does not participate in Social Security, and it has one of the highest overall funding values. However, TRS has an unfunded liability that cannot be amortized in less than 31 years under current funding levels. Until we meet that standard, TRS will not be actuarially sound.

This legislation is a real plan to help make TRS actuarially sound. Representative Keffer is to be commended for working to make a difference NOW!

He cannot do this alone. TRTA must help Representative Keffer get this legislation passed this session. Please support TRTA’s funding initiative with HB 1383!

Click here to send an email to your legislator asking for their support on HB 1383!

House Budget Discussions Ongoing

This bill was introduced on the same day that the House Appropriations Subcommittee on Education met to talk about TRS funding. The House Appropriations Subcommittee is chaired by long-time TRTA friend Representative John Otto. Chairman Otto received testimony from TRS, TRTA, and other interest groups.


TRS testified that the pension fund’s overall value has improved over the last couple of years. The pension fund is much higher than it was during the lows that resulted from the worst moments of the 2008 and 2009 recession. The fund’s low value was around $67 billion just five years ago. TRS reported its fund value now exceeds $114 billion. An official report on the fund’s value will be made next month when TRS takes its actuarial snapshot for the legislative session.


While things are better, the fund still is not actuarially sound. TRTA public testimony urged the House budget writers to put more money into the TRS fund, take the steps necessary to make the pension fund actuarially sound, and provide retirees with a much needed pension increase. TRTA also urged them to provide adequate funding for the TRS-Care health insurance program. This vital health care program is facing serious financial shortfalls in the near future. TRTA asserts that the best course of action is to increase healthcare funding NOW.


Please click here to send an email to your legislator asking them to support TRTA efforts to improve funding for TRS retirement programs and help retirees receive a much needed pension increase.


TRTA Members Making a Difference

Thank you for your support and membership in TRTA. We are so grateful for your work at home to educate legislators about our key issues. TRTA members deserve to know that their efforts have made a tremendous difference on how the Legislature views your retirement fund. We have made hundreds of legislator visits this session, and are constantly told that TRTA members “in the district” have “already been in touch.” There is no other organization whose membership does more to advance their legislative agenda than TRTA!


Earlier this week, I was in a legislator’s office with our TRTA Legislative Chairman Bill Barnes. While we were there, two other groups of retirees were meeting with the legislator’s staff about TRTA goals and objectives. These members decided to come to Austin on their own and take the TRTA message directly to their legislator! This cooperative level of advocacy is making your voice heard!


Now, we need action. Please take the time to send an email to your legislator asking them to support HB 1383 and push their colleagues to appropriate more money for TRS retirement benefit programs.


Thanks again for your hard work. We appreciate your effort and your membership in TRTA. If you are not a member and would like to join, please contact the TRTA office at 1.800.880.1650 for more information.

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