23 Apr

Primary Runoff Elections: Last Day to Register to Vote is TODAY!

The Texas Retired Teachers Association (TRTA) and its members know the tremendous value their vote has in every election, especially the Primary Election. Now, we are nearing a critical voting time as runoff elections for the Primary Election are set to begin soon.

There are several key races that TRTA knows will be critical, and TRTA will begin sharing detailed information about those races starting tomorrow.

Most importantly, many elections for a seat in the Texas Legislature will be decided by just a handful of votes! Your vote has more power now than ever! Why? Because many registered voters do not participate during the Primary Election cycle. Even fewer participate when that cycle goes into runoff elections! Some races have been decided by as few as 40 votes!

Please, members of TRTA, be sure to schedule voting into your schedule during the Primary Election Runoff cycle. Better yet, schedule a time to go early and avoid long lines!

Here are some important things to know about the Primary Election Runoff Elections:

  • The PRIMARY RUNOFF election is when YOUR VOTE has exponential POWER!
  • Even if you did not vote in the first round of Primary Elections, you can still vote in the Runoff Election – and it is IMPORTANT that you DO!
  • Today is the deadline to REGISTER to vote: Monday, April 23rd. Click here to register now!
  • You can vote in the Republican Runoff as long as you did not vote in the Democrat Primary.
  • You can vote in the Democrat Runoff as long as you did not vote in the Republican Primary.
  • If you did not vote in the first round of Primary Elections, you may vote in either Runoff Election.
  • VOTE-BY-MAIL deadline: County Clerk must receive application by Friday, May 11.
  • EARLY VOTING: Monday, May 14 through Friday, May 18 (five days only!)
  • ELECTION DAY for Primary Runoff: Tuesday, May 22 at the precinct where you are registered to vote.
  • The fall General Election is scheduled for Tuesday, November 6.

Stay tuned for more information about voting in the Primary Elections Runoffs! Be sure to share this Inside Line with fellow retirees, family members and any active educators you may know.

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20 Apr

TRS Board Meets, Votes on Rate of Return Assumption

The Teacher Retirement System of Texas (TRS) Board of Trustees met today to discuss changing the rate of return assumption for the pension fund.

The TRS Board of Trustees took two votes on changing the rate of return assumption. Neither vote passed. As a result, the board will postpone voting on the issue again until its July meeting.

The first vote to change the rate of return assumption was proposed by Trustee James Nance. Nance and three other members voted to change the rate of return assumption to 7.5 percent. However, the measure required five votes to pass. Subsequently, Trustee Christopher Moss proposed to change the rate of return assumption to 7.25 percent. His measure also didn’t receive the five-vote minimum to pass.

The board members are split on whether to make an incremental change to the rate of return assumption, which would slowly lower the rate of return assumption while monitoring the pension fund returns and making additional changes as necessary. The alternative is to lower the rate of return assumption immediately to 7.25 percent, which lowers the risk of the fund under-performing over the next several years, but requires a higher contribution increase by the Legislature.

The board’s decision was made all the more difficult by the litany of public testimony from retirees and association representatives. In addition, several board members noted the tremendous outcry and communication they have received from TRS members about the issue.

Several Texas Retired Teachers Association (TRTA) officers attended the meeting, including President Nancy Byler, First Vice-President Patricia Macias, Second Vice-President Leroy DeHaven, Treasurer Marcy Cann and Legislative Coordinator Bill Barnes.

Many active and retired educators provided public comment during the meeting, including TRTA member Dianne Hastings from Carrollton. Leroy DeHaven, TRTA Second Vice-President and member of the Corpus Christi RTA, also spoke.

“Most retirees know that our pension is guaranteed by the state constitution, but our health care is not,” said DeHaven, also pointing out that cost-of-living increases are rare, with many retirees never receiving one. “Many of us are living off the same dollars that we were allocated years ago,” he said.

Tom Rogers from the Austin RTA spoke about his concerns that changing the rate of return assumption would increase the unfunded liabilities for the pension fund, putting retirees further at risk for not receiving much needed cost-of-living increases.

Rogers urged the board to work on making the fund actuarially sound so that retirees could receive a cost-of-living increase.

TRTA Executive Director Tim Lee also spoke, asking the Board of Trustees to focus on “ensuring that the pension system is going to be solvent for years, decades, forever.” Sixty-four percent of all revenue coming into the fund comes from investment earnings. “A small change has a tremendous impact,” said Lee.

Tim Lee stated that he understood the pressure the trustees are under in making a decision about the rate of return assumption and emphasized that “whatever change you make must be followed up with aggressive, purposeful, meaningful action to impress upon the Legislature that they must come to the table… with higher contributions to the fund.”

Lee said that TRS “must present factual data and talk about how the state of Texas has a tremendous bargain” in the pension fund.

“If we don’t support additional revenue for the fund, we are supporting cut benefits for future retirees,” Lee said. There is no current plan in place to increase benefits for retirees. Many of these retirees have recently absorbed huge health care cost increases. Since 2001, there has been only one cost-of-living increase for TRS retirees. That benefit adjustment was not paid to all retirees. The annuity for many TRTA members, even those who received the increase, is not sufficient to meet day-to-day expenses.

Without a guarantee of new money from the Texas Legislature, it would be almost impossible for retirees to receive another cost-of-living increase if TRS lowers the rate of return assumption. “If you’re in a deep hole, a short ladder does not get you out,” Lee said. “There is a lot of climbing that needs to be done.”

Ninety-five percent of Texas school districts don’t contribute to Social Security. As compared to other state pensions that don’t contribute to Social Security, Texas is receiving a bargain. The average contribution into those pension systems is 19 percent. The contribution from Texas to TRS is 6.8 percent. The employer contribution to TRS is comprised of two parts, a 2.8 percent contribution from school districts and a 4 percent contribution provided by the Texas Legislature out of the general revenue fund. If TRS went to a 7.5 percent rate of return assumption, the state would need to increase its contribution to TRS by 1.38 percent to ensure that the fund would be actuarially sound.

Lee stated that TRTA is a willing partner who will work with TRS and the Legislature to ensure the future of the fund.

After the conclusion of public comment, the TRS Board of Trustees began its discussion about the TRS of Texas Experience Study findings and recommendations, including considering the return assumption.

TRS Executive Brian Guthrie said having an overly optimistic assumption can harm the system as much as an overly pessimistic assumption. “We as fiduciaries have to assume some set of assumptions that are reasonable,” said Guthrie.

TRS has been told by experts that its rate of return assumption is not in-line with market assumptions. Guthrie encouraged trustees to act in the best interest of the fund. He presented several slides, including the one below, to explain the range of possible options for the trustees to consider when changing the rate of return assumption.

Chairman Jarvis Hollingsworth inquired about the impact on the fund if the assumption is lowered but the fund earns more than projected. Actuary Joe Newton of Gabriel, Roeder, Smith & Co., said it would have a positive impact on the fund and make the system more actuarially sound, provided contributions are increased accordingly.

Guthrie said this discussion is about “increasing long-term certainty about the fund,” a strategy he recommends over hoping that market returns are better than expected. Joe Newton said reducing the return assumption is a more conservative approach that where the return assumption is now at 8 percent.

However, Newton also stressed that there is another entity TRS has no control over, which is the Legislature. Newton said that TRS would have to eventually look at reducing the rate to 7.25 percent in the future if they lower it to 7.5 percent now.

Guthrie stated “the next step (after making this decision) is for us (TRS) to translate that into an ask for increased contributions” from the state. “Whatever we decide to do is what I will go and educate the Legislature about, and I will be very transparent.”

“Predicting what the Legislature will do is the unknown in this discussion, and at the end of the day, that is not your responsibility as a board,” Guthrie said.

Trustee James Nance, the retiree representative on the board, said “my fiduciary responsibility is to all members, including the trust.” He said to many retirees, this decision is not just a number. Nance said his moral responsibility is to act in the best interest of the members by supporting a reduction to 7.5 percent. Nance continued “our members are tapped out” and “the Legislature needs to own this.”

Chairman Hollingsworth stated he felt making the decision was a struggle and expressed concern about using incrementalism. “There could be damaging effects of having a more optimistic rate and then underperforming in the early years, because the damage can be so significant we can’t overcome it in the later years.”

Hollingsworth continued “part of me wants to be more conservative in the hopes that we overperform…rather than assuming a more optimistic rate and then underperforming.”

Ultimately, votes on changing the rate of return assumption to 7.25 percent and 7.5 percent both failed.

TRTA is focused on getting the pension fund actuarially sound so that retirees may receive a much-needed cost-of-living increase. Additionally, maintaining the actuarial soundness would help ensure a secure retirement for active educators.

TRTA supports a change to a 7.5 percent rate of return assumption. However, the Legislature must provide the necessary funds to make the TRS pension actuarially sound. TRTA looks forward to working with TRS in the coming months to find the best solution to this pressing issue. The TRS Board of Trustees will convene again in July.

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19 Apr

TRS Board Holds Committee Meetings, Committee Recommends Changes to TRS-ActiveCare

The TRS Board of Trustees held committee meetings today. The five TRS Board committees discussed issues relevant to the full meeting tomorrow. The most pressing issue concerning TRS retirees is a change to the rate of return assumption, which was not discussed today, but will be voted on during tomorrow’s meeting.

As previously reported, TRS is considering changing the pension fund’s rate of return assumption from 8 percent to 7.25 percent. If this change occurs, it will significantly push back the time line for a cost-of-living adjustment for retirees.

The Texas Retired Teachers Association (TRTA) will testify at tomorrow’s meeting. TRTA will recommend that a more reasonable change to the rate of return assumption. A smaller change to the rate of return assumption would increase the possibility of a 13th check or cost-of-living-adjustment for retirees during the next legislative session. A change to the rate of return assumption will not affect annuity amounts for current retirees but will make it more expensive to provide for any benefit enhancements next session.

The two committees with pressing issues of interest were the TRS benefits committee and the TRS budget committee.

Benefits Committee

**The following information concerns active educator insurance. NOT retired educator insurance.**

The benefits committee discussed the TRS-ActiveCare insurance plan for active educators. The committee adopted recommendations for the 2019 plan year. The active teacher insurance saw a 7.1 percent cost increase. The cost increase will take the form of increased premiums and out-of-pocket cost increases, which vary depending upon plan choice.

ActiveCare has more than 450,000 participants. More than 250,000 participants in ActiveCare are now in the High Deductible plan option, which offers lower premium costs. ActiveCare HD is increasing its deductible from $2,500 to $2,750 for individual coverage. The ActiveCare HD family plan deductibles are increasing from $5,000 to $5,500. Prescription prices of non-preferred brands for this plan are also increasing from 20 percent to 50 percent. Finally, the maximum-out-of-pocket costs are increasing across all active care plans.

Retirees should take note of the health insurance problems faced by all TRS members. It will be of the utmost importance that retirees and active educators work together during the next legislative session to convince lawmakers that the health care crisis must be addressed with adequate funding. Although the health plans, TRS-Care and ActiveCare, come from separate funds, funding for our schools, TRS retirement and insurance all come from the state budget.

The details of the changes made to ActiveCare can be found here under Tab 3 on pages 9-11.

Here are some highlights from these changes to remember as we advocate for health care funding for all Texas educators.

  • The sole source of funding for TRS-ActiveCare is premiums for the coverage selected.
  • The state currently contributes only $75 per employee through the school finance formulas and has never increased its contribution since the program was created in the 2001 Legislature.
  • School districts are mandated to contribute $150 per month, but more than 70 percent contribute more than that. The state funding for school finance formulas will decline to 39 percent over this biennium.
  • Employee premiums funded 29 percent of the program in 2001. Employee premiums now pay for 68 percent of the program’s cost.
  • Teachers pay between 35 to 70 percent of gross premiums depending on plan selection, but nationwide studies show that the employee pays on average only 18 percent of the cost of gross premiums.

All Texas educators, whether retired or not, are members of the TRS system. All Texas educators are impacted by the legislative funding decisions related to TRS. Communicate with your friends and family in the active educator community to help ensure that all parties have a successful campaign during the 86th Texas Legislature.

Budget Committee

The TRS budget committee discussed the process the agency will follow in adopting a legislative appropriations request for the 2020-21 state budget. This request must be submitted for consideration to the Governor’s office and the Legislative Budget Board in July. TRTA will be asking the Board tomorrow to include in this request any additional funds needed to make the pension fund actuarially sound.

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