19 Nov

Interim Charges Released for 84th Texas Legislature

This month, interim charges were released for the 84th Texas Legislature by Lieutenant Governor Dan Patrick and House Speaker Joe Straus. As the Texas Retired Teachers Association (TRTA) mentioned in an Inside Line article last week, Texas public education retirees are on the minds of our state legislators right now, and much will be accomplished by committees during the interim that impacts your livelihood.

  • You may read the interim charges for all Senate committees in full here at this link. To view the Senate State Affairs charges, please click here.
  • You may read the interim charges for the House committees in full here at this link. To view the House Appropriations Committee, see pages 2-5. To view the House Pensions Committee, see page 47.

The purview of the TRS pension fund falls under the State Affairs Committee in the Senate. Though the charges were not as detailed regarding pensions as they are for the Texas House, Lieutenant Governor Dan Patrick included the following under the Monitoring Charge: “Changes made to the Employment Retirement System regarding member contributions and proposed reforms to the Teacher Retirement System of Texas.”

At this time, TRTA is not aware of any proposed changes to TRS and we do not know what this charge may entail. However, in past sessions, we have faced bills that attempt to turn the pension fund from a defined benefit to a defined contribution (401(k)-style) plan.

It is always important for our members to be aware of the potential for bills such as these to be filed each session. Beginning in 2017, the interim before session will be very telling as legislative committees meet to discuss the current status of the TRS pension fund, which TRTA reported last week has become actuarially unsound in the wake of a dramatic market downturn.

TRTA will continue to advocate during the interim to keep the pension fund a defined benefit, as it is the only real form of retirement security available to our hard-working public school personnel.

In the House, charges pertaining to the TRS pension fund, as well as TRS-Care, are under the scope of the House Appropriations and House Pensions committees.

The interim charges assigned by Speaker Straus to the House Appropriations Committee that are of particular interest to our members are:

5. Monitor the accumulation of available funds within the Texas Economic Stabilization Fund (ESF), particularly in light of the passage of HB 903 (84R). Determine the accuracy of prior ESF revenue predictions, the feasibility of long-term projections for the fund, and the effectiveness of proposed investments strategies utilized by the Comptroller of Public Accounts. Study the impact, if any, on the state’s credit rating when the ESF is utilized at various thresholds including usage for one-time expenses versus recurring costs. Examine potential limits in utilizing the ESF for specific uses, such as addressing unfunded liabilities or retiring state debt.

6. Monitor the implementation of HB 9 (84R) and study updated projections towards actuarial soundness of the Employees Retirement System. Examine issues and costs associated with granting cost-of-living adjustments or “13th Checks” to retired state employees and teachers.

7. Monitor the implementation of HB 2 (84R) as it pertains to the short-term funding provided to TRS-Care. Evaluate additional methods to address the health care needs of retired teachers in light of the current health insurance market, including the feasibility and costs associated with retired teachers not eligible for Medicare remaining on a school district’s health care plan until Medicare eligible.

Straus’ fifth charge addresses the possibility of utilizing the Economic Stabilization Fund (ESF), more commonly known as the Rainy Day Fund, to pay for unfunded liabilities or other state debts. The unfunded liabilities of the Teacher Retirement System of Texas (TRS) are now at $33 billion. While there are other funds in the state that will fall into this category, the TRS pension fund will surely be a part of the conversation legislators have when discussing this issue.

Straus’ sixth charge primarily pertains to the Employees Retirement System (ERS), but also includes an overarching reference to providing permanent raises or supplemental payments (13th checks) to annuitants of state-managed pension funds.

As TRTA reported last week, the TRS pension fund‘s funding period is greater than 31 years. TRS annuitants cannot receive a cost-of-living adjustment unless the fund has a funding period of 31 years or less. In 2007, TRS annuitants received a one-time 13thcheck. While an attempt was made to provide TRS retirees with another 13th check in 2009, ultimately, the payment was not approved.

While the status of the pension fund’s solvency cannot be predicted at this time, this discussion opens the door for conversations with legislators about the possibility of a supplemental check for retirees in 2017.

Straus’ seventh charge directly addresses funding for the TRS-Care retiree health insurance program. As we have discussed numerous times over the past year, the long-term solvency of the program is in trouble. The current funding mechanism for TRS-Care is not sustainable, and drastic changes must be made in order for the program to continue.

This year, Senate Bill 1940 established a legislative study group that will meet during the interim to discuss solutions to the TRS-Care crisis. As of late last week, all members of this group have now been named: Senators Joan Huffman (R-Houston) – Co-Chair, Jane Nelson (R-Flower Mound), and Craig Estes (R-Wichita Falls); and Representatives Dan Flynn (R-Canton) – Co-Chair, Trent Ashby (R-Lufkin), and Justin Rodriguez (D-San Antonio).

Progress on TRS-Care will happen in 2016 and it will happen quickly. TRTA needs your participation in every step of this process! Please stay tuned to the Inside Line for updated information about when the TRS-Care study group will meet and how you can participate.

The interim charges assigned by Speaker Straus to the House Pensions Committee that are of particular interest to our members are:

1. Study the impact that fluctuations in global financial markets have had on public pension funds. Analyze assumed rates of return on investments, structures among asset classes, long-term and shorter-term investment goals, and make appropriate recommendations to ensure the investment structure of public pension funds are meeting fiduciary responsibilities.

2. Examine Texas pension funds’ compliance with Governmental Accounting Standards Board (GASB) Financial Reporting Statements 67 and 68, and identify the effect the reporting requirements are having on the state’s pension systems.

4. Examine the fiscal and policy impacts of structural reforms that would increase state public pension plans’ ability to achieve and maintain actuarial soundness. Evaluate the feasibility, costs, and benefits of utilizing one-time funding increases to reduce or eliminate unfunded liabilities.

5. Evaluate the investment performance benchmarks utilized by the state’s pension funds and the impact portfolio diversification and short- and long-term market assumptions have had on achieving expected investment returns. Analyze the fee structure and investment strategy for various investment classes to ensure the costs are reasonable and competitive versus other large public and private pension trust funds.

Charges one and five refer to the fiscal management and investment oversight of the pension fund. Charge two references how state pension funds match up with the requirements issued by the Governmental Accounting Standards Board (GASB). At this time, TRS has a funded ratio of 80.2 percent, which is considered healthy by GASB standards.

Charge four will address the unfunded liabilities of state pension systems, and like charge five for the Appropriations Committee, TRS will be an important topic of discussion for the Pensions Committee.

TRTA will continue to advocate that the TRS pension fund is following a distinct pathway to solvency, which will lead to 100 percent full funding and actuarial soundness. The Legislature’s support is vital to this plan. In 2013, Senate Bill 1458 established the means that will lead to the success of this goal. TRTA will continue to ask the state to maintain its contribution rate of 6.8 percent of active educator payroll.

TRTA members can stay tuned for additional updates about these charges and what they mean for your retirement benefits and the future of TRS.

Thank You

Protecting your retirement benefits is one of TRTA’s top priorities, and your participation makes all of difference! Be sure to stay tuned to our other digital mediums to stay informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

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17 Nov

TRTF’s Student Scholarships Paving the Way for Future Educators

The first scholarship Kelsey Faykus ever received was from the Texas Retired Teachers Foundation (TRTF). A first-year student at Southwestern University in Georgetown, Faykus is studying to become a high school biology teacher.

Last spring, TRTF provided Faykus with a $500 student scholarship to help her pursue her dreams. Faykus enters Southwestern University having been recruited by the school to play basketball.

Faykus was a team captain for her high school basketball team, the Thrall Tigers, and she used the opportunity to not only excel on the court, but also provide leadership to her teammates.

As a senior, Faykus mentored incoming freshmen basketball players, and when she started to see them grow it left her feeling “very, very accomplished.”

“I’ve had many girls come up and say how much of a difference I made just by being inclusive and being that leader,” Faykus said.

Faykus hopes to incorporate the skills she learned while playing basketball to her teaching style. Faykus describes her ideal teaching style as “vocal” and “interactive.”

When asked how she felt when she received the scholarship, Faykus replied that it was “amazing.”

“I cannot thank this Foundation enough, because it has made such a difference,” Faykus said.

Help support TRTF’s Student Scholarships by donating today. Last year, TRTF delivered 16 $500 student scholarships. Since the program’s inception in 2008, TRTF has given $45,000 to future educators!

Applications are now available for the 2016-2017 school year and may be downloaded from this link. Applicants must be a graduating senior or current college student and must be related to a member of the Texas Retired Teachers Association (TRTA). Applicants must be majoring in or plan to major in education and must attend a Texas college or university during the 2016-2017 school year.

Members, now is a great time to share this scholarship opportunity with your family members who are studying to become educators! Send an email to for more information.

Foundation Month is a time designated by the TRTA Board of Directors to raise awareness of the Foundation’s numerous charitable endeavors and raise funds to support them for the upcoming year.

TRTF has raised $35,000 thus far, but we know we can reach our $100,000 goal with your help! If just 2600 members donate $25, we will raise the funds needed to provide assistance the educators of the past, present and future!

Please help us accomplish this goal by donating today and spreading the word to your fellow retirees, friends and members of the community. You can also donate over the phone using a credit card by calling 1.800.880.1650, or mail your check to TRTF, 313 E. 12th Street Suite 220, Austin, TX 78701. All donations to TRTF are tax deductible.

Please also share this Inside Line and the Foundation’s videos, featuring recipients of our programs: “A Helping Hand,” Classroom Assistance Grants and Student Scholarships. You can view all videos on the TRTF website here.

If you would like to download a video and share it with the members of your local unit, please contact us!

Thank You!

Thank you for all that you do to support the Texas Retired Teachers Foundation and the many teachers, students and retirees whose lives are changed every day by your generosity!

TRTF has provided more than $207,000 to educators of the past, present, and future since 2008, and we plan to do so much more. We appreciate your generosity and support of the public education legacy.

Be sure to stay tuned to our other digital mediums to keep informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

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13 Nov

TRS Releases Pension Fund Valuation, Reports on Status of TRS-Care

The Teacher Retirement System of Texas (TRS) released its annual valuation of the pension trust fund yesterday. The nation’s sixth largest pension fund presently has $128.5 billion held in trust for over 350,000 Texas public education retirees and 1,000,000 pre-retirees. This figure is down from $132.7 billion August 2014. Additionally, TRS reported that the fund earned a return of -0.3% for FY 2015.

The period of time to amortize the fund’s unfunded liabilities has grown from 29.8 years in 2013 to 33.3 years. This means that at this moment in time, the pension fund is not actuarially sound by state law. In order to meet this threshold, the fund must be able to pay off all unfunded liabilities within a 31-year time period.

Many of our members may be wondering what happened. The pension fund was considered actuarially sound in 2013, allowing for a cost-of-living increase for 200,000 TRS retirees. Now, despite having a funded ratio of 80.2%, the fund is not capable of providing a COLA to retirees at this time.

As you may recall, in 2013 TRS predicted that the unfunded liabilities would continue to grow before starting to decrease again and move towards full funding. This present downturn is expected and following a stable path, although some factors are contributing to this growth in unfunded liabilities more quickly than originally anticipated.

This includes slower than expected investment returns for FY 2015, and the adoption of a new mortality assumption. This new assumption reflects the increased life expectancy of all TRS members, including current active school personnel. It is also important to note that the very volatile markets of 2015 have shifted investment returns wildly, from a 16% overall investment return in 2014 to a -0.3% this year.

TRS, in its actuarial assessment, must also take into account changing rates of inflation and the decrease in payroll growth for active personnel. Essentially, these factors, combined with the ones mentioned above, increased the funding period by five years. However, certain provisions established in SB 1458 will have a positive benefit on the fund in a few more years.

The figures provided yesterday assume that the state will continue to provide the level of funding to the system as established with the passage of Senate Bill 1458 in 2013 during the 83rd Legislative Session. That means TRS expects the state contribution rate to be 6.8% of active educator payroll, the school district rate to be 1.5%, and the active employee rate to be 7.7%. TRS also assumes an overall annual investment return of 8%.

TRS also discussed the probability of future COLAs for retirees. Although this will depend upon many factors, the bottom line is that there must be an increase in revenue to the fund to support a raise in benefits. The revenue could come from increased contributions or higher investment returns, for example. Overall, all it would take is a 1% increase in contributions to get the TRS pension fund back to being actuarially sound by state law.

While it is too early to predict what the Legislature might do to help retirees during the 85th Legislative Session in 2017, it is not too early for TRTA members to begin preparing! Today’s news was not what TRTA or its members had hoped for, but it is not the end of the line, nor is it a reflection of the fund’s overall performance or its future.

Our friends in the Texas Legislature are interested in finding ways to help retirees, as is evidenced by the attendance of Representative Phil Stephenson (R, District 85) at the valuation meeting, who asked many questions about the fund’s value and its impact on retirees. TRTA would like to thank all of the legislative staff members who attended yesterday’s meeting.

Your pension fund is still one of the strongest in the nation. The TRS pension fund has a pathway to solvency that is being followed, and will lead to 100% full funding and actuarial soundness. TRS works diligently every day to achieve this goal for all of its participants. The fund is being managed appropriately, with the utmost concern for the retirement security of all TRS retirees and pre-retirees.

Together, TRTA and its members have worked for years with legislators on both sides of the aisle to provide TRS retirees with a stable, reliable, lifetime retirement income. TRTA will continue advocating for the TRS pension fund and imploring the Legislature to support our hardworking school personnel.

Next week, TRTA will review the interim charges issued by Speaker of the Texas House, Joe Straus. These recently created charges include asking legislators to consider downturns in the market and how current retirees who may be in financial need may be able to have some relief.

TRS-Care Update

The news about TRS-Care that we received yesterday, as expected, is not good. As you know, this legislative session, TRTA members fought to receive $768 million in extra funding to help shore up the fund temporarily and prevent skyrocketing premium increases.

Essentially, we received a two-year reprieve that kept TRS-Care afloat and protected participants’ pocketbooks; but TRS-Care continues to deteriorate financially at an alarming rate. TRTA members will have to fight again in 2017 to protect the health insurance program.

TRS-Care’s projected 2018 funding shortfall is more than $700 million. This figure will grow to an astounding $1.7 billion by FY 2019 if nothing is done to protect the program and its participants! By 2020, this shortfall will rise to $2.9 billion!

We know that the $768 million provided by the Legislature was a tremendous boon to TRS-Care and a huge win for TRTA members, but we also know that it was not intended to be a permanent solution.

Now, we must protect the program for the long term, because it is vital to our retirees’ well-being and financial security! TRS-Care’s enrollment is expected to grow from its current 251,758 participants to 259,578 by 2016. We have more lives every day that need to be covered by TRS-Care!

This issue is important, and we need and value your participation in every step of this process! The next step is engaging with the TRS-Care Study Group that was established by the Legislature through Senate Bill 1940.

2016 is a non-legislative year, but this is when the TRS-Care study group will meet and make decisions about the future of the program. The study group, TRTA, our members and all stakeholders impacted by TRS-Care need to be involved and work together to save this program for all current and future public education retirees.

Earlier this fall, TRTA shared the names of the TRS-Care Study Group House members appointed by the Speaker. As you may recall, those Representatives assigned to study long-term solutions for the TRS-Care retiree health insurance program are: Representative Dan Flynn, Co-Chair; Representative Trent Ashby; and Representative Justin Rodriguez.

We are still awaiting the announcement of who will be appointed by Lieutenant Governor Dan Patrick from the Texas Senate to serve on this vital committee.

As we approach the holiday season, it is easy to become less involved in legislative activity and more focused on family and friends. TRTA will continue to monitor the progress of the TRS-Care study group and report any news to our members immediately.

Please continue reading and sharing the Inside Line throughout November and December!

Thank You

Protecting your retirement benefits is one of TRTA’s top priorities, and your participation makes all of difference! Be sure to stay tuned to our other digital mediums to stay informed on all the latest news and updates. Like us on Facebook, follow us on Twitter and subscribe to our YouTube channel.

Read More