Legislative committees continue to talk about TRS and educator healthcare costs

ThinkstockPhotos-462761867On Wednesday, April 13, a number of hearings took place across the Texas state capitol involving the Teacher Retirement System (TRS) and the programs they manage.

First, the House Pensions Committee heard an update on the status of the pension trust fund (which is healthy), and an explanation regarding various actuarial assumptions that affect the fund, such as the assumed rate of return. There are some who believe that the assumed rate of 8% is too high and should be reduced to what is ultimately a completely arbitrary number. The reduced number is arbitrary because the assumed rate of return is based on actuarial experience, as well as internal and external evaluations of investment strategies, risk assessments, and market evaluations. Further, TRS data shows that over the long term investment return results have exceeded the 8% assumed rate. Any suggestion that this number should be reduced is often politically motivated, since the reduction would harm the fund and would appear to give credence to the notion that a 401(k)-like plan is more advantageous to the state. Thankfully, the investment professionals at TRS have done an excellent job of maintaining your pension benefits, growing the TRS pension trust fund to approximately $128 billion, making it the sixth largest pension trust fund in North America.

The second hearing of the day came in the Senate State Affairs Committee, where TRS faced a long line of questions yesterday regarding how investment decisions were made. Some senators suggested that TRS should be more highly regulated, and that state senators and representatives should have more influence into how funds are invested.

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Finally, the Joint Interim Committee on TRS Health Benefit Plans also met yesterday, and ATPE was invited to testify, providing information on what should be done to address the growing problem of active employee health insurance through TRS ActiveCare becoming unaffordable. ATPE suggested that the committee simply compare employer contributions to employees’ health insurance in other professions with that of what the state contributes on behalf of public education employees. The Texas legislature has contributed $75 per month per employee since ActiveCare was created in 2001, while school districts are required to contribute a minimum of $150 per month. Premiums and the cost of care in other employment sectors are similar to that through ActiveCare, but employer contributions differ greatly, with contributions on behalf of Texas public school employees lagging far behind. This static funding from the state has resulted in employees shouldering the burden of increasing premiums, deductibles, and co-pays almost entirely on their own. This is not the case in other professions, and it is long past time that Texas catch up and provide some relief to the hundreds of thousands of employees working in our schools.

Much like the school finance situation in Texas that has resulted in yet another lawsuit alleging that the state is unconstitutionally under-funding schools, the longer a problem is ignored and shortchanged for political reasons, the more expensive and difficult it is to address it once a solution becomes absolutely necessary.

Stay tuned to Teachthevote.org for updates.

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4 thoughts on “Legislative committees continue to talk about TRS and educator healthcare costs

  1. Pingback: Teach the Vote’s Week in Review: April 15, 2016 | Teach the Vote

  2. Janet Sue Slack

    I’d like to know what ATPE is doing regarding the TRS for current retirees and future retirees.
    Since Gov. Abbott has appointed Josh McGee to be the Chairman of the State Pension Review Board, I am very nervous that McGee will discontinue our Defined Benefit Program. I am writing to all state Senators encouraging them to VETO this appointmnet. I am voicing my objection directly to Governor Abbott as well.
    What are we doing as an organization?

    Reply
    1. Josh Sanderson

      Janet:

      Thankfully, the Pension Review Board does not have the authority to discontinue the defined benefit plan provided through the Teacher Retirement System. In fact, the PRB is merely an oversight body and cannot enforce any policy changes on TRS. As such, while Governor Abbott’s appointment of Mr. McGee is disappointing, it is not a direct threat to your benefits. What it is, is an indication of Gov. Abbott’s views towards educator benefits, and future appointments to the Teacher Retirement System Board of Trustees will be more relevant to the preservation of your benefits. We stay very closely involved in all TRS-related business, and will vehemently oppose any attempt to weaken, reduce, or eliminate your healthcare or pension.

      Thank you for being involved.

      Josh Sanderson
      Lobbyist
      Association of Texas Professional Educators

      Reply
  3. Pingback: Interim TRS health care study offers grim prognosis | Teach the Vote

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