10 Mar

House Budget Work Moves Forward

House Appropriations Committee Discusses TRS Budget

Full Committee Hears Testimony on Proposed Cuts

TRTA Action Alert—Click Here to Send Email Now Asking Legislators to Restore TRS Funding. TRS-Care participants could see premium increases of 30 to 80 percent in the coming biennium! TRS pension funding is being cut by nearly $500 million. Action is needed now. See complete update below.

The House Appropriations Committee listened to testimony by representatives of the Legislative Budget Board (LBB) and the Teacher Retirement System of Texas (TRS) on the current House budget recommendations. TRTA was at the hearing and the news is troubling.

Pension Trust Fund Contribution

The proposed budget recommendation offered by the House Subcommittee on Education and the LBB is to cut funding for the TRS pension trust fund from 6.644 percent to 6 percent. This will cost the fund nearly $500 million for the biennium from all funds. The current plan does not lower active member contributions; but a law passed in 2007 that requires that the state never pay less in contribution than the active members. This is an issue. Still, the House budget writers suggest the active members will make the same contribution of 6.4 percent that they have been making since 1984.

TRTA Comments: This reduction will do nothing to make the system actuarially sound and is in conflict with current Texas statute that prevents lowering state contributions when the fund is not sound. The TRS pension fund can sustain this reduction for the biennium with little change to the system’s actuarial condition, but it does NOT create a plan to provide retirees with a real cost of living increase.

TRTA Recommendations: The legislature should restore a level of contribution to the TRS pension trust fund of no less than 6.4 percent. Further, TRTA recommends that the state adopt a funding plan that raises the contribution to 7.2 percent for the first year of the biennium and 7.7 percent for the second year.

TRS-Care Funding

The House budget proposal cuts TRS-Care funding in half, from 1 percent of the aggregate active teacher payroll to 0.5 percent. This will cost the health care plan $300 million in state funding for the biennium. The state risks leaving $135 million in federal dollars on the table by not demonstrating maintenance of funding effort for the plan. While the state legislature may save money in general revenue outlay, it is costing the health plan nearly $600 million in funding from all sources.

TRTA Comments: TRTA members who participate in TRS-Care need to know that the legislature’s inadequate funding of this program will lead to premium increases. There is much speculation about how much those increases may be. With a flood of new retirees entering the program due to state budget cuts to public education, the projected premium increases are in the double digits. TRTA has heard that they may be as much as 30 to 80 percent, depending on legislative action this session.

Special Note: State Representative Craig Eiland made a special effort in this afternoon’s hearing to draw his fellow members’ attention to the FACT that an increase in TRS-Care premiums is a drain on TRS retirees’ fixed incomes. Representative Eiland stated the following: retirees have not had a permanent increase in their annuities in 10 years; as TRS-Care premiums go up, the drain on pensions is immediate; TRS retirees are already paying substantial premiums for access to their health care.

TRTA can once again credit Representative Eiland for speaking plainly about how these cuts will impact TRS retirees.

TRTA Recommendation: TRTA is calling on the Texas Legislature to restore full funding for the TRS-Care program.

TRTA members can act now by clicking here to contact your legislators about this important funding priority. We need all the attention we can generate on these important funding issues.

Budgeting Process Continues

Today’s hearing is significant, as this was one of the last times the House Appropriations Committee could make significant changes to the budget plan they will take to the House floor. While the budgeting process is far from over, more progress on restoring the proposed budget cuts to TRS-Care and the pension trust fund is needed.

This meeting was just another step in a very long process. TRTA is meeting daily with members on making TRS funding a priority for our members. Legislators need to know that retiree “fixed incomes” are more aptly described as “diminishing incomes,” thanks to federal tax increases and a true loss of buying power. We must continue to work together and contact legislators throughout this legislative session.

Thank you for your tireless effort and your steadfast support for the Texas Retired Teachers Association. Please take a few minutes to email your legislators and ask them to restore funding to TRS-Care and the pension trust fund. Retired public education employees deserve better.

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04 Mar

TRTA Inside Line Update on Defined Contribution

TRS Employees Should NOT have Been in Bill, says Representative Sheets

House Bill 1974, filed by State Representative Kenneth Sheets (R, HD-107), calls for all new public employees (including active school employees) hired after September 1, 2012 to participate in a defined contribution plan rather than the current defined benefit plan. 
TRTA has spoken with Representative Sheets about this legislation and he has confirmed that it was not his intention to include public school employees in the bill. While the current bill language does include public school employees, Representative Sheets said if the bill receives a committee hearing he will file a committee substitute for the bill removing any reference to public school employees (active or retired).
Representative Sheets said this legislation was intended to create a defined contribution plan for newly hired state employees. TRTA has not confirmed if it was Representative Sheets’ intention to exclude legislators and judges from the bill, but we will speak with him next week to gain clarity.
TRTA opposes HB 1974. Eliminating participation in defined benefit plans will not save money for the state of Texas. In fact, this legislation as drafted may have a considerable cost attached to it. While some hope that the elimination of traditional retirement plans will provide significant savings for the state, this is simply not true. TRTA is grateful to Representative Sheets for clarifying his intent; however, we still oppose any measure that undermines defined benefit pension plans in Texas. We will continue to work with Representative Sheets on this issue to ensure that all Texans recognize the value of our state’s defined benefit plans.
TRTA will report more on this bill in the coming weeks. Please know that we will put all of our effort this session into defeating any measure that undermines the TRS defined benefit plan.
Additional Bills Introduced for Public Education Retirees
HB 2120, filed by Representative Doug Miller (R, HD-73), adds another TRS annuitant to the TRS Board of Trustees.
HB 2150, filed by Representative Craig Eiland (D, HD-23), provides retirees with a supplemental payment paid for out of the TRS pension trust fund (this bill is similar to HB 1699 as filed by Representative Menendez).
TRTA will post its complete “bill tracker” on our web site next week.
Many of you have asked about the state’s use of the “Rainy Day” fund as a way to help retirees and our public schools. This week, Representative Jim Pitts (R, HD-10), Chairman of the House Appropriations Committee, filed HB 275. If passed, this bill would allow the state to use over $4 billion from the “Rainy Day” fund to reduce funding shortfalls for the current biennium. If this plan is embraced by the legislature, it still leaves over $5 billion in the fund to be used for the coming biennium. State Comptroller Susan Combs testified this week that the use of ALL of the “Rainy Day” fund will NOT affect the state’s bond rating. TRTA is asking legislators to restore funding to the TRS pension trust fund and the TRS-Care program. Now, legislators know they have a potential funding source.
We will continue to work for your interests this session. Please tell your friends and fellow TRS retirees there is still hope for this legislative session, but much work must be done. We need every TRS retiree working to restore funding to our pension and health care funds. We will launch new advocacy campaigns next week. Thank you for your willingness to participate and for your continued membership in the Texas Retired Teachers Association. If you are not a member, please contact us at 1.800.880.1650 or visit for membership information.
Thank you and have a great weekend!

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02 Mar

Senate Finance Committee Addresses TRS Funding

TRTA Calls on Senate to Restore Funding Cuts

Senators Respond with Comments in Support of Higher TRS Funding

TRTA testified in Texas Senate Finance Committee about the proposed TRS budget cuts. As TRTA members know, both Senate and House versions of the Texas legislative budget proposal suggests cutting the state contribution to the TRS pension trust fund from 6.644 percent to 6.0 percent. In addition, the proposed budget cuts TRS-Care funding in half. This reduction will cost the TRS-Care plan $300 million in state funding in the coming biennium. It may also cost TRS as much as $135 million in federal dollars that would help fund TRS-Care.

TRTA’s testimony focused on restoring the state contribution for the TRS pension trust fund and to restore TRS-Care funding, a call many members of the Senate Finance Committee echo.

State Senator Robert Duncan (R, SD-28) provided background comments on how the Texas Legislature has worked in previous years to restore balanced actuarial practices in the TRS pension fund. He also provided vital information on why the legislature passed a law requiring the state contribution to be higher than or equal to the active member contribution. Senator Duncan asked his colleagues to consider recommendations to restore TRS pension trust fund contributions to a level that is at least equal to current active member contributions.

Senator Kevin Eltife (R, SD-1) added “it is critical…” to maintain the contributions of 6.4 percent for TRS trust fund and 1 percent for TRS-Care.

Senator Bob Deuell (R, SD-2) asked several questions pertaining to the preservation of the TRS-Care program. He suggested one cost saver may be “premium assistance” for new retirees that qualify for health insurance on their spouse’s employment. The goal would be to save TRS the liability cost while providing a financial advantage to new retirees.

Ronnie Jung, TRS Executive Director, commented that the potential for increased retirements in the coming biennium may have a profound impact on the TRS-Care program. In 2004, the closure of the GPO loophole caused a spike in retirements totaling around 24,000. Director Jung suggested that the current fiscal crisis experienced by all Texas school districts could cause the number of retirements to be as high as 30,000 this year.

TRTA is meeting daily with legislators asking them to restore the funding for the TRS trust fund and the TRS-Care health insurance program. Retirees hav endured tremendous financial hardship, and legislators need to know that increasing health care premiums on retirees is simply shifting the state’s fiscal burden on to the most vulnerable. Many times it is said that TRS retirees are on fixed incomes, but with the increased federal tax burden, the loss of buying power due to no cost of living increases, and now the threat of increased health care premiums, TRS retirees have DIMINISHING incomes. TRTA is challenging the legislature to restore funding and think of new and bold ways to help TRS retirees.

Something to Work For!

Representative Jose Menendez (D, HD-124) has filed House Bill 1699 as a way to provide TRS retirees with a supplemental payment this session. The bill requires TRS to provide retirees with a supplemental check similar to the one provided in 2007. Under the measure, a retiree would receive an additional annuity payment equal to one month’s payment, not to exceed $2,400.

The bill does not use general revenue funds, and puts a temporary exception on the requirement that the system be actuarially sound to make the payment. Presently, the TRS pension trust fund has $106 billion in assets. The legislature is not considering any plan that would make fund actuarially sound this coming biennium. Representative Menendez knows that many retirees are suffering from severe financial distress and some effort MUST be made to try to help them this session. While we would all prefer the system be actuarially sound when suggesting a supplemental payment, retirees are being provided little hope for an increase this session if budget writers maintain their cuts for the pension fund. Representative Menendez is doing what he can to advance an idea that would provide real financial assistance to thousands of retirees this session.

TRTA supports this measure and looks forward to helping it move through the legislative process.

TRTA Efforts are Making a Difference

TRTA member outreach efforts are resonating in the legislature. Continued communication from retirees is vital to our legislative success. Thank you for your effort.

Tomorrow, TRTA will update you on a bill that has just been filed that calls for newly hired public employees to no longer pay into the traditional defined benefit plan. Instead, public employees (including education employees) would be required to pay into a 401 (k) style retirement plan. The bill is HB 1974 filed by Representative Kenneth Sheets (R, HD-107). In the bill, though, legislators and judges will still pay into traditional defined benefit retirement plans. Again, we will provide a complete update tomorrow on this newly filed bill.

Thank you for your hard work and continued support of the Texas Retired Teachers Association.

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