- TRTA and TRS testified to the state about teacher shortages
- TRTA wants to remove barriers to allowing teachers to return to work
- However, TRTA’s primary focus is keeping the pension fund in a position to provide a COLA
The House Public Education Committee along with the Higher Education Committee conducted a hearing on September 20 to discuss educator employment shortages in the aftermath of the pandemic.
The Texas Retired Teachers Association (TRTA) and the Teacher Retirement System of Texas (TRS) were invited to provide testimony addressing potential barriers to employment for retirees who want to assist schools with the shortage.
TRS Executive Director Brian Guthrie spoke about surcharges and how they were put in place to replace the contributions that would have been paid into the system if a non-TRS retiree had filled the position.
Pension surcharges were included among multiple reforms the Legislature passed in 2005 in response to the TRS system reaching a “never” actuarial funding period. At the time, negative returns from the 2001 economic downturn caused the system to lose billions of dollars. A revolving door retire-rehire policy allowed educators to retire and return directly to their job after a 30-day mandatory waiting period, which caused the average retirement age to drop rapidly and put excessive strain on the system.
In response to a question about eliminating the surcharge, Director Guthrie said that the TRS actuary predicts removing the revenue from surcharges (about $30 million per year) would be a one-time cost to the system and would increase the current 26-year funding period by one year.
The surcharge was modified during the last legislative session via Senate Bill 202, which requires school districts to pay the entire amount (16%) so that retirees are not charged for any portion. The prior policy allowed the surcharge to be passed on to retirees in whole or in part.
Guthrie said that TRS has heard from retirees (as have we at TRTA) who are pleased because their income increased due to SB 202; however, other retirees have lost their positions because the district could not afford the entire surcharge. Districts from small to large are now considering paying double payroll tax when hiring a retiree, which can inhibit their ability to employ them.
TRTA testified that a healthy, well-funded, and sound defined benefit pension system is an essential part of public educator recruitment and retention. We must ensure TRS remains actuarially sound. Our priority is to secure a meaningful cost-of-living adjustment (COLA) for retirees, which requires that the system be actuarially sound with a funding period of 31 years or less as a prerequisite for the Legislature to grant a benefit enhancement.
TRTA was successful last session pushing multiple initiatives to support schools by removing barriers to employment after retirement in ways that do not negatively affect the funding period. TRTA and its charitable partner organization, the Texas Retired Teachers Foundation (TRTF), stepped up to help schools last session by proposing successful legislation to allow TRTF to set up an online non-profit tutoring program.
The TRTF Tutor Program supports schools, students, teachers, and retirees who wish to continue serving students. Retirees who join the tutor program are exempt from any pension penalties for work over half-time if they are working in a tutor position as described in the Texas Education Code. The employer has a surcharge in this case.
Additionally, TRTA discussed successful legislative efforts championed last session to reduce barriers including:
- Retirees who retired before 1-1-2021 have no restrictions on the amount of time they may work, expanding the potential pool of applicants for full-time work
- Replacing the onerous penalty of losing an entire month’s pension if a retiree works over half-time (for those who retired after 1-1-2021 with a three-strikes system that uses only a warning on the first occurrence).
- The COVID-surge exception that eliminates surcharges and all annuity penalties for any position paid with federal COVID relief funds, which ends on 12-31-24 when funding is discontinued
TRTA specifically promoted these policies to remove barriers that will not affect the TRS valuation. SB 202 was intended to help retirees by removing the fee they had to pay to work in some districts. If there are unintended consequences that are preventing retiree employment, we want to be at the table and ensure that any new changes do not create the type of revolving door rehire policy the system faced in 2005, as they could result in reductions in benefits for current and future retirees.
TRTA’s wish is to help schools as much as possible with the shortages, but a meaningful COLA is our top priority. Any changes that inhibit that priority must be viewed through that lens.
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