09 Mar

TRS Testifies Before House PIFS Committee About Building Lease

On Monday, March 9, the Teacher Retirement System of Texas (TRS) testified before the House Pensions, Investments, and Financial Services (PIFS) Committee. The testimony provided by TRS primarily focused on long-term facility planning for the TRS headquarters and the process leading to the recent decision not to move the investments division to the Indeed Tower.

TRS Executive Director Brian Guthrie began his testimony with a statement, and he expressed that TRS is working to become more transparent in its future decision-making. He also expressed concern about TRS’s image of being “tone deaf.”

“It’s a privilege to serve our retirees around the state,” said Guthrie. “We are trying to be sound fiduciaries of the fund.”

TRS has come under fire from both members and legislators for its decision to lease space at Indeed Tower at the cost of $326,000 per month. However, TRS reversed that decision at its February board meeting. Instead, TRS is renewing its lease at 816 Congress, where its investment team currently resides. The move, paired with subleasing the Indeed Tower space, is expected to save the TRS pension fund more than $9 million.

Rep. Roland Gutierrez criticized TRS’s communication to the community about the lease. In particular, Gutierrez criticized TRS’s lack of transparency. Gutierrez pushed to know which law prohibits TRS from disclosing the details of the lease to the public.

According to Guthrie, section 552.143 of the Public Information Act limits the information that can be shared about any private investment deal. The Attorney General concurred with this reading of this newly passed section of law.

Gutierrez asked Guthrie about what other spaces were considered outside of the Indeed Tower. Guthrie said that the Indeed Tower was the only space considered. Guthrie said that it was the only downtown space was available. Gutierrez also encouraged TRS to work with the Attorney General to remove itself from the Indeed Tower lease.

Gutierrez added, “We (the legislators) deal in billions. We get it, but folks back home . . . they don’t deal in billions. They don’t deal in hundreds of thousands. They don’t even deal in thousands anymore.”

Rep. Gene Wu asked Guthrie if the decision to lease the Indeed Tower space was an aesthetic choice. Wu said that TRS wanted to “look like one of the big boys.”

While Guthrie didn’t agree with Wu’s sentiment, he said that the board felt that the Indeed Tower represented a good opportunity to attract talent.

Rep. Barbara Gervin-Hawkins asked if there is any way to include the membership when the TRS Board makes big decisions.

“We need to do a better job of educating our members about what we’re doing and how we’re managing their fund,” replied Guthrie. “We’re looking at ways to reach them better.”

In addition to the legislators on the committee, Rep. Giovanni Capriglione, who serves as the House Appropriations Chair, and Rep. Tony Tinderholt were in attendance.

The Texas Retired Teachers Association’s (TRTA) Executive Director Tim Lee provided testimony. “When our members think about this issue, they put it in context of what is their reality, and the idea of spending $326,000 per month is very eye-opening,” Lee said. Lee emphasized that TRTA thinks TRS made the right decision by not moving into the Indeed Tower, but that the agency needs to focus on opening up its transparency on these types of decisions.

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06 Mar

TRS to Testify at House PIFS Hearing on Monday, March 9

The Teacher Retirement System of Texas (TRS) is set to testify this coming Monday, March 9 during a hearing of the House Pensions, Investments, and Financial Services (PIFS) Committee. As members of the Texas Retired Teachers Association (TRTA) know, TRS has been scrutinized for its involvement in leasing space in a downtown Austin high rise building known as the Indeed Tower.

The meeting will begin at 10:00 a.m. and will take place in room E2.026 of the Texas Capitol. A link to the live webcast of the meeting will be made available from this website on Monday morning. A meeting agenda can be found by clicking here.

TRS recently testified before the Senate Finance Committee regarding its facilities planning and the building lease and received harsh criticism from some legislators regarding the decision. You may read more about the meeting, which was held on February 25, here.

As TRTA reported a two weeks ago, the space TRS reserved at the Indeed Tower, which is still under construction, will be sub-leased per a decision made by the TRS Board of Trustees on February 20.

After the Senate Finance Committee hearing, Senator John Whitmire called for an inquiry into TRS business practices.

“We owe it to our dedicated active and retired teachers to ensure the investments of their hard-earned pension funds are sound and transparent,” Whitmire said on February 27 in a prepared statement.

TRS responded to news of the audit by saying the agency would cooperate fully and work directly with the Attorney General and State Auditor’s Office. The TRS statement added that the agency “has a diversified asset allocation that includes a portion of holdings in private real estate” and that “TRS is specifically authorized to diversify the portfolio in this manner under Texas Government Code Sections 825.301 and 4001.068.”

TRS’s private real estate holdings are “a significant driver of excess investment return for our educators and are an important part of our Strategic Asset Allocation, making up about 13.7% of the total Trust value, or about $21.7 billion.”

TRS responded to claims that the agency has ownership in the Indeed Tower by responding “TRS is legally restricted from divulging specifics on the underlying investment holdings of any private investment fund in which TRS invests.”

Stay tuned to the Inside Line as TRTA reports on the PIFS meeting on Monday.


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03 Mar

Houston Methodist Hospital Will Continue to See Patients Under New Medicare Advantage Provider

The Teacher Retirement System of Texas (TRS) decided to switch health care providers for both TRS-Care and TRS-Care Medicare Advantage during its recent Board of Trustees meeting. The new Medicare Advantage provider is United Healthcare, which serves retirees over the age of 65. The new TRS-Care Standard provider is BlueCross BlueShield, which serves retirees under the age of 65.

Many retirees have had questions regarding the change. Specifically, retirees want to know what effect the change will have on the provider network. Retirees in the Houston area have inquired about the status of the Houston Methodist hospital.

TRS announced today that Houston Methodist will continue to service Medicare Advantage participants.

TRS has also released FAQ pages on the transition for both Medicare Advantage and TRS-Care Standard.The change to the new health care providers will take place on Jan. 1, 2021. TRS is reporting this switch to the new providers is expected to save the health care fund more than $754 million over the next three to five years. The Texas Retired Teachers Association (TRTA) is very interested to learn more about how these provider changes will “save” money and what the expectations for those “savings” may be.

TRTA is fielding questions from its membership and funneling them through TRS. There are still many unanswered questions, and we will be trying to get answers to our membership as soon as possible. When TRS announced its decision to transition to the new providers, it was announced that there would be a robust communications campaign. The campaign will include in-person meetings across the state beginning in Sept. 2020.


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