Sunset Advisory Commission Discusses TRS Recommendations

Executive Summary:

  • The Texas Sunset Advisory Commission reviewed four issues raised by its report about TRS.
  • TRS is addressing these issues through a variety of programs.
  • TRTA provided written testimony about the issues to the commission.

The Texas Sunset Advisory Commission met yesterday, December 7 to discuss its recommendations for the Teacher Retirement System of Texas (TRS). The Sunset staff performs extensive research and analysis to evaluate the need for, performance of, and improvements to the agency under review. The review includes an agency’s self-evaluation and input from stakeholders.

TRS is an agency established by the constitution and is not under review for potential dissolution. However, the way the agency functions—including business operations and relationships with members—was evaluated.

The Sunset Commission provides recommendations for legislation to the Texas Legislature to improve agency efficiency and effectiveness. Yesterday’s meeting will help Sunset determine what legislation should be filed and a Sunset bill will be created for the 87th Legislative Session that begins in January 2021.

TRS Agency Remarks

Tamara Aronstein works as a policy analyst for the Texas Sunset Commission. Her report highlighted issues that the Sunset Commission found with TRS’s operations. She said TRS needs to “be more transparent with its members.” She also said that it was too difficult for members to communicate with TRS. She said that these issues had been brought to TRS’s attention during the last review in 2006 but hadn’t been properly addressed during the intervening years.

During that time, Aronstein said TRS had “diminished the trust” its members had with the agency. Her presentation also highlighted the need for TRS to more closely manage its “significant” contracting expenses. She said it was important for TRS to “get what it pays for.”

TRS Executive Director Brian Guthrie addressed these issues in his conversation with commission. He said that TRS has already begun working on the issues raised by Sunset.

“The vast majority (of the recommendations) do not require any statutory changes to implement,” said Guthrie. He continued “our relationship with our members . . . and our communications and outreach plan is well underway.” The TRS Board will adopt the new communications plan later this week during its quarterly meeting.

Guthrie said the agency worked with stakeholders to get input on how to better serve member needs and communicate about issues they want to hear about. As a result, the agency has launched a plain language initiative. “The laws and rules relating to the system are very complex and legalistic,” Guthrie said. TRS is working to make them more accessible and understandable to its members.

He added that counseling sessions offered by phone, though available since 2016, have become predominant since March of this year due to the COVID-19 pandemic, and that they are going well. He said the online platform for counseling sessions is here to stay.

For first time ever, this fall, TRS attended the TRTA district conferences virtually, allowing more TRS staff to participate, including members of the TRS investment team. Guthrie indicated that the feedback was very positive and TRS plans to make this a permanent addition to future TRTA district visits.

Guthrie said that in reference to the Sunset staff’s recommendation to add satellite offices around the state that TRS has requested to add one in El Paso in their recent legislative appropriations request (LAR). TRS identified this area as the one with greatest need, as it is challenging for members from this area to get to Austin. Guthrie added that if the office becomes successful as a pilot, TRS will look into adding offices in other areas of the state.

Guthrie said TRS has a few areas of concern regarding the Sunset staff report. One is that the recommended benefit counseling policy, if mandated in statute, would limit TRS’s flexibility. Guthrie said the agency prefers to alter the policy internally as needed so they can be responsive with current times.

He also added that providing financial planning information for members can be difficult because statute prevents TRS from giving financial advice to members. Guthrie said that for TRS to give more detailed information to members will require a change in statute.

Senator Eddie Lucio, Jr. (D – Brownsville) said some retirees in his area are concerned about accessibility of their accounts. Director Guthrie said TRS’s technology infrastructure is undergoing a revamp and that both accessibility and functionality will improve once it is fully implemented, including the ability to complete forms and update member accounts online.

Senator Lucio asked about return-to-work laws being fairer to retirees. Guthrie said sometimes retirees receive conflicting information from employers. He said that these retirees “end up in the penalty box without realizing it… The law is very clear on what is and is not allowed, but there’s always nuances in terms of how time is counted.”

“The current law is discreet and unwavering,” said Guthrie, but he believes “there are opportunities to improve employment after retirement.”

This is one area that TRTA believes must be addressed by the Legislature in the coming session. TRTA worked with elected officials and advanced HB 2227 (filed by Representative Gene Wu) last session. The bill would have helped retirees impacted by the current TRS employment-after-retirement rules. TRTA is already working with elected officials to address this subject in the coming session.

Julie Lawrence-Harris, a public member of the Sunset Commission, said that the state of Texas made a compact with educators. “If you will dedicate your life to educating these children, we will take care of you,” she said. “These are folks who are deserving of explanations . . . of understanding how to retire with dignity.”

She said that educators are left with only one leg to stand on once they retire. “When you leave someone with one leg to stand on, it doesn’t take much to shake them,” she said.

Lawrence-Harris also pointed towards TRTA’s recommendation of an ombudsman as a way that TRS could improve the optics of its agency. “I believe an ombudsman would be a tremendous asset,” she said. “The optics of some of the decisions you guys have made… have caused a tremendous amount of stress.”

Additionally, she encouraged TRS to utilize regional education service centers for satellite office needs.

TRTA’s Written Testimony

The Texas Retired Teachers Association (TRTA) provided written testimony during yesterday’s meeting. Verbal public testimony was not allowed during the meeting. Below is a summary of TRTA’s testimony.
Issue 1: TRS should repair its relationship with members by focusing on their needs.

TRTA recommendations:

  • Require an ombudsman position at the agency to monitor agency response to member issues who reports directly to the TRS Board of Trustees.
  • Require TRS to simplify and clearly define reasonable rules for employment after retirement/return-to-work.
  • Require an appeals process for member TRS-Care healthcare claims at the agency level.
  • Improve the appeals process for cases involving the pension trust fund.
  • Require TRS to effectively utilize the Retirees Advisory Committee (RAC) as required by law or eliminate it.

Issue 2: TRS needs more effective contract management and oversight.

A cost-benefit analysis should be performed regarding these recommendations to ensure any
additional expenditures from the trust fund result in net savings to the system.

Issue 3: TRS needs additional oversight and greater transparency of its investment practices.

TRTA generally agrees with the accounting recommendations except in cases where they may
increase operating costs. The recommendation to provide easily understandable information about alternative investments in its Comprehensive Annual Financial Report (CAFR) is important but improving customer service and building better agency relationships with members is equally important.

Issue 4: TRS’ statutes must reflect some standard elements of Sunset reviews.

TRTA Recommendations:

  • Require TRS to prepare and make public quarterly reports on the financial condition (transactions and balances) of TRS-Care, including forward projections for at least three years.
  • Require TRS to prepare and make public an annual report of complete healthcare costs for TRS retirees.
  • Require TRS to disclose bonus payments to investment staff in its CAFR.

Thank You

Thank you for being a member of TRTA and supporting issues that affect retired Texas public school personnel. If you’re not a member already, join us today.

Stay tuned to the Inside Line for additional information as we get closer to legislative session. You can also download the TRTA app to receive all of the latest updates and communicate with your fellow retirees.

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