The Teacher Retirement System of Texas (TRS) conducts annual actuarial valuations through an independent consulting group. These valuations offer important insights into the health and long-term outlook of the pension fund. The most recent results, presented at the TRS Board of Trustees meeting on December 5, delivered disappointing news for retirees hoping for a cost-of-living increase.
Over the past year, TRS’s unfunded liability grew by nearly $5 billion, reaching a total of $64.9 billion. This unfunded liability is a key benchmark for determining “actuarial soundness,” which is defined as the point at which TRS is projected to pay off its unfunded liabilities within 31 years. That projection has now increased to 35 years. Achieving actuarial soundness is essential, as it is the threshold required for TRS to approve a cost-of-living increase for retired educators.
Actuaries emphasized that long funding periods introduce substantial risk. The longer it takes to pay the unfunded liability, the greater the chance that market downturns or demographic changes can make the problem worse. With liabilities projected to grow for another 13 years before they begin to decline, the window for something to go wrong widens dramatically.
TRS has long been making progress toward reducing its unfunded liabilities, buoyed by strong investment returns. In fiscal year 2025, TRS posted a positive 9.8% return on its investments. However, the Texas Legislature’s passage of House Bill 2 in 2025—which increases public school funding and salaries—has negatively affected the pension fund’s actuarial status. No additional contributions were made to TRS to offset the cost of these higher salaries.
One of the clearest messages from the valuation was this: TRS will require additional funding to get back on track when the 2027 legislative session comes around.
The Texas Retired Teachers Association (TRTA) will be pushing for more funding as well as help for retirees who are suffering from years of inflationary pressure and from the affordability crisis.
To learn more about what this valuation means for you and the prospect of future cost-of-living increases, look out for our full analysis in our fourth quarter news bulletin, The VOICE, which is available to our members.
If you are not a member, please join today! It may be the best $35 you spend every year to protect and improve your livelihood and income as we continue to fight for your retirement security!
