The Teacher Retirement System of Texas (TRS) Board of Trustees will meet April 19-20. The Board is set to take a vote on changing the rate of return assumption, a critically important factor in determining future cost-of-living adjustments for retired educators.
You can watch the Board meeting here. The Board is expected to vote on the rate of return assumption sometime on Friday. The webcast to view the meeting will be live at approximately 8:30 a.m. on Friday. Be sure to stay tuned to the Inside Line, as it will have an update explaining any changes that are made.
The board met earlier this year in Edinburg, Texas, and decided to postpone the vote on changing the rate of return assumption. If the Board changes the rate of return assumptions, it could push back the timeline for future cost-of-living increases for retirees significantly.
The TRS Board is considering changing its rate of return assumption from 8 percent to either 7.25 percent or 7.5 percent. By changing the rate of return assumption to 7.25 percent, TRS would require approximately $1.6 billion from the Legislature to maintain its course for actuarial soundness. Actuarial soundness is a state requirement for providing cost-of-living increases.
Actuarial soundness is defined as the number of years required to pay off liabilities of the fund. The state law has set this standard as being less than 31 years. For retirees to receive a cost-of-living increase, the TRS fund can’t be more than the 31-year range of paying off its liabilities. At the current rate of return assumption, TRS will pay off its liabilities in 34 years.
If TRS changes its rate of return assumption to 7.25 percent and doesn’t receive additional funding, the funding period before reaching actuarial soundness would reach 86 years.
The Texas Retired Teachers Association (TRTA) is asking its members and supports to sign a petition encouraging the Texas Legislature to fully fund the TRS Pension Plan. Sign the petition here!