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.