Author Archives: Monty Exter

TRS to vote on changes to retiree healthcare plan next week

Drugs and MoneyIf you are a retired educator or someone planning to retire soon from the profession, you’ll be interested in next week’s meeting of the Teacher Retirement System (TRS) Board of Trustees. The board will meet Friday, Aug. 25, to discuss and adopt modifications to the TRS-Care healthcare program for retirees.

As we reported on Teach the Vote back in June, TRS recently announced several changes to the design of its healthcare plans after the legislature failed to completely fill a funding shortfall during the regular session. But in response to outcries from educators, legislators convinced Gov. Greg Abbott to add retiree healthcare costs to his call for the special session that ended Tuesday. The legislature passed House Bill 21 by Rep. Dan Huberty during special session that will funnel $212 million in additional money to TRS for healthcare.

TRS logoThe attached document from TRS staff provides details on plan changes that TRS board members are expected to adopt next week. Changes to TRS-Care will go into effect on Jan 1, 2018.

House Public Education Committee winds down in busy special session

The House Public Education Committee met Tuesday and Wednesday of this week. Over the two days, they considered a dozen bills and voted three out of committee. Many of the bills considered were outside the scope of the Governor’s call outlining the subjects to be considered during the special session. But as Chairman Dan Huberty relayed to one testifier, the committee had heard bills addressing everything on the call that was assigned to the House Public Education Committee, and any additional bills they heard were those filed that addressed real issues public schools in our state are facing. Huberty expressed that his committee was a serious one and would take any opportunity given to them to further the important policy discussions facing Texas students and schools.

In addition to other issues, the committee discussed bills dealing with aspects of school finance, including the Additional State Aid for Tax Reduction (ASATR) being phased out soon, and teacher merit pay programs. ATPE Lobbyist Monty Exter testified on one such merit pay plan, House Bill (HB) 354 by Rep. Jason Villalba. Exter commented that, while underfunded, the underlying formula the bill proposed to fund districts whose teachers agreed to participate in a local merit pay plan was a potentially promising way to fund a future merit pay system should stakeholders be able to agree on the parameters of the merit pay proposal itself.

The committee voted out three bills Wednesday morning. Committee members moved HB 198 by Rep. Travis Clardy after Chairman Huberty offered a complete committee substitute for the bill that as originally filed has the backing of the governor’s office. The committee’s new substitute version took the bill from being a TEA commissioner-developed merit pay plan to a commission that will study teacher compensation. The commission would include six legislators, six stakeholders; including two classroom teachers, and the commissioner of education or his designee. The Committee also moved HB 378, a final attempt by Representative Ken King to negotiate a deal that extends ASATR funding to districts that will be hit hardest by the scheduled conclusion of this 2006 “hold harmless” provision. Finally, the committee moved SB 16 by Sen. Larry Taylor, which calls for a commission to study school finance. Before moving Chairman Taylor’s bill, the committee substituted it with the language from HB 191 by Rep. Phil King, which also calls for a Commission on School finance but proposes a slightly different composition of committee members.

These hearings likely mark the last regular hearings for the House Public Education Committee during the current special session.

New tools help educators calculate Social Security benefits after WEP or GPO reductions

Retirement planning written on a notepad.One of the most common questions I get from members calling in to the ATPE state office for guidance is about how their TRS pension will affect their ability to draw either their own or their spouse’s Social Security benefits. When I get these questions I always find myself walking the member through the intricacies of one or both of the provisions in federal law that can reduce the Social Security benefits they would otherwise receive. Additional information about these offsets, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), can be found here on ATPE’s website.

Up until now, I have been able to explain to ATPE members how the WEP and GPO may affect them, but I haven’t been able to provide them with any direct resources that would show them what their personal Social Security benefits are likely to look like after being reduced by one of these offsets, until now. I recently learned of a new suite of online calculators that have been made available by the federal Social Security Administration on its website that allow the public to get a better understanding of what their Social Security benefit will look like. Two of these calculators are specifically designed to help educators and people subject to either GPO or WEP reductions to determine their remaining Social Security benefit.

The calculators are fairly simple and straightforward to use, but you will need some information about your personal Social Security savings that you can find on your Social Security statement. You’ll also need to have information about your TRS pension that you can get from TRS either by calling the agency, using the MyTRS member portal, or looking on your TRS statement.

You can find the WEP calculator here and the GPO calculator here.

TRS to consider whether you are paying too much for your 403(b)

TRS logoAll state agencies adhere to a regular cycle of rule review. This requirement is intended to help ensure that state rules and regulations stay relatively up to date. Often times a required rule review will result in little more than the existing rule being published, without significant changes, in the Texas Register to satisfy public notice and then readopted essentially as is. Sometimes, however, an agency will take the opportunity of a rule coming up for standard review as a chance to evaluate the policy addressed by the rule and make substantive changes. Such is the case with a Teacher Retirement System (TRS) rule on certification of 403(b) vendors.

While Texas educators’ main source of retirement income will likely be their TRS pension, a TRS pension payment alone will not support more than a modest standard of living during retirement for most educators. That’s where supplemental retirement investment products, such as 403(b)s, come in. They encourage educators to put away additional dollars by providing a relatively simple vehicle, complete with tax advantages, for educators to use when saving for their retirement.

The legislature has tasked TRS with maintaining a list of 403(b) providers that are eligible to offer products to public school employees. In order to be eligible, a provider must meet certain requirements, including some set by state laws and others by agency rules. The agency is currently considering whether to tighten its eligibility rules, particularly with regard to fees that providers can charge educators both for investing and for early withdrawal penalties of certain investments.

ThinkstockPhotos-465016790_moneyThe agency’s proposed rule amendment, which can be found here, was the subject of an informal conference at TRS this week in which many members of the financial services community expressed concerns over the new rule proposal. Essentially all the discrete concerns expressed during the hearing boil down to the basic belief that the new rules create an environment for 403(b) providers in which many of them will not be able to do business profitably, and therefore the number of 403(b) providers offering products to Texas educators will drop dramatically under the proposed rule. The representatives of the financial sector believe this would be a disservice, of course, to Texas educators who benefit from a robust availability of 403(b) products in order to better meet their retirement goals.

TRS staff will now review and address the comments collected both from those who spoke at the conference this week and the many more who will submit written comments. The staff will then determine whether or not to make additional changes to the agency’s proposed rules before the recommending them for adoption by the TRS board. Stay tuned to Teach the Vote for updates as the rulemaking process continues.

Did lawmakers make the grade on updating the accountability system?

skd282694sdcDid lawmakers make the grade on updating the accountability system? You be the judge.

House Bill (HB) 22 by Representative Dan Huberty (R-Kingwood) is likely the most broadly impactful piece of education legislation passed this session. It represents a compromise that was crafted by a conference committee of 10 legislators after the House and Senate passed differing versions of the accountability bill. Over the next two years, HB 22 will affect every district, campus, and charter school. Below are questions and answers about how ATPE perceives this latest iteration of the accountability system will work.

Does HB 22 maintain an A-F accountability system?

Yes, despite parents, educators, administrators, board members, students, and a host of other advocacy groups expressing their concerns about moving forward with an A-F accountability system, the Senate, largely at the direction of the Lt Governor, made it clear that no bill eliminating A-F would be allowed to pass.

When does the new bill go into effect?

Having been passed by more than two thirds of each chamber, HB 22 will go into effect as soon as the governor signs it. However, not all portions of the bill are immediately applicable. Most of HB 22’s provisions will first begin to be implemented during the 2017-18 school year, including assignment of district-level A-F ratings.  Campus-level A-F ratings will not be assigned until the 2018-19 school year. However, the commissioner of education will produce a report that will include non-official campus level ratings using 2017-18 data to be turned into the legislature by Jan. 1, 2019.

Is the HB 22 accountability system based on STAAR test scores?

At least in part, yes. To what degree depends largely on how the commissioner writes the administrative rules to implement the new law. HB 22 certainly allows the commissioner to develop a system that is highly dependent on STAAR test data, particularly at the elementary and middle school levels.

What will the new domains be under the state accountability system?

HB 22 calls for a system with three state-level domains, down from five.  The domains include the following:

Student Achievement This domain includes students’ absolute performance on the STAAR test. For high schools, it also includes the following other factors: TSI, AP, and IB tests; completion of dual credit courses; military enlistment; earning an industry certification; being accepted into certain post-secondary industry certification programs; successful completion of a college prep course under TEC 28.014; “successfully [meeting] standards on a composite of indicators that through research indicates the student ’s preparation to enroll and succeed, without remediation, in an entry-level general education course for a baccalaureate degree or associate degree;” graduation rates; successful completion of an OnRamps™ dual enrollment course; and award of an associate’s degree.
School Progress This domain includes student growth as measured by the percentage of students who met the standard for improvement on the STAAR test and an evaluation of performance as compared to similar districts or campuses. It is unclear whether the “performance” being compared is exclusively STAAR performance or if it will be broader.
Closing the Gaps This domain measures the differences for various categories of sub-populations such as racial, socioeconomic, special education, low mobility, and high mobility students. The bill does not specify which differentiated data is too be used for this purpose. Will it be only STAAR data, or will other data be used as well? The statute is also silent on how the sub-populations will be compared. For example, will gaps be compared to similar districts, or will they be compared within individual districts over time to determine if the gaps are closing, widening, or staying about the same?

Note: there is nothing in the statute as changed by HB 22 that would preclude the commissioner from creating a state-level accountability system that evaluates elementary and middle school campuses entirely on different manipulations of STAAR data.

What is a local accountability system?

Under HB 22, a district may create locally developed accountability domains and may use those domains in addition to the domains required by TEA to award district and campus accountability ratings, including overall ratings. Local domains must be assigned an A-F rating, must be valid and reliable, and must be capable of being audited by a third party. The commissioner of education will write administrative rules on the use of local accountability plans, and TEA will have authority to review and approve those plans.

Districts choosing to use a local accountability system are responsible for producing district and campus report cards locally.

How will the summative or overall grade be calculated under the new accountability system?

Each of the three state-level domains will receive a letter grade. At least 30 percent of the summative grade must be based on domain three (Closing the Gaps). The better of the two grades for domain one (Student Achievement) and domain two (School Performance, a/k/a student growth) will make up the remaining calculation for the summative grade, up to 70%. There is an exception, however, if a district or campus receives an F grade on either domain one or domain two; in that case, the highest grade it can receive for that part of the calculation is a B.

In case it’s not immediately clear, much will depend on the commissioner’s rules to implement HB 22. If the commissioner goes with a breakdown of 30% and 70% as contemplated above, the effect will be that a higher grade in domain three can never bring a district’s or campus’ summative grade up a letter; by contrast, a lower grade in domain three would always bring a district’s or campus’ summative grade down a letter. #AintMathFun

If that’s not already complex enough, here is where it gets really tricky. If one or more districts choose to develop one or more local domains to add to their accountability system, the commissioner can, but does not have to, write rules that would allow for up to half of the overall performance rating for that district or campus to be based on the ratings of the local domain(s). That is unless the campus or district would receive a D or an F on the overall performance rating using only the state level domains. The statute is not really clear what overall performance rating the district or campus would receive under that scenario.

How do A-F ratings relate to acceptable and unacceptable performance?

There are several laws in the Texas Education Code that continue to reference either “acceptable” or “unacceptable” performance as triggers for various actions to occur. As opposed to changing all of those references throughout state law, legislators simply benchmarked the new A-F labels to the existing terms.

When A-F was first rolled out, the cut point between acceptable and unacceptable was between grades C and D. In the current accountability system as it exists prior to HB 22, improvement required (IR) constitutes unacceptable performance. IR correlates to an F, not a D, under the A-F system. Because of this, setting unacceptable performance at a D under the new system would represent an expansion of what the state considers unacceptable performance. This would result in spreading state resources for turning around struggling schools among a larger group of campuses and districts, which would take the focus off those with the greatest need for intervention. HB 22 has resolved this issue by resetting the unacceptable cut point at the F rating.

The new A-F labels will coordinate with previous labels as follows:

Acceptable level of performance

A

Exemplary Met Standard
Acceptable level of performance

B

Recognized Met Standard
Acceptable level of performance

C

Acceptable Met Standard
Acceptable level of performance

D

Needs Improvement* Met Standard
Unacceptable level of performance

F

Unacceptable Improvement Required

* This is a new label created by HB 22 that does not correspond to an older system.

What is the difference between a D and F grade under HB 22?

Before HB 22, there was little to no differentiation between getting a D or an F in terms of consequences. Under HB 22, getting a D will no longer trigger the immediate accountability sanctions associated with an unacceptable level of performance. However, there are some requirements attached to this next to lowest ranking.

Year 1 of a D rating in either a single domain or overall The Commissioner shall instruct the district’s board of trustees to develop a local district or campus improvement plan.
Years 2 and beyond with a D rating overall The Commissioner shall implement interventions and sanctions that apply to an unacceptable campus until the district or campus is ranked C or higher on the overall rating.
Years 2 and beyond with better than a D rating overall but a D rating in a single domain The Commissioner shall instruct the district’s board of trustees to develop a local district or campus improvement plan.


How will stakeholders be involved under the new law?

Through multiple, sometimes broad grants of rulemaking authority, the Commissioner has been given a massive amount of latitude in structuring how the new accountability system under HB 22 will actually work. Thanks to amendment language requested by ATPE, this authority will be balanced at least to some degree by a statutory requirement to involve a stakeholder group in those decisions. HB 22 requires that the group must include  school board members, administrators and teachers employed by school districts, parents of students enrolled in school districts, and other interested stakeholders.

 

Additional changes made by HB 22:

Public education grants and mandatory access to transfers

A student at a campus that receives an unacceptable rating in both the student achievement and school progress domains must be allowed to transfer to another campus in the district and will be eligible for public education grant (PEG) funding.

Extra- and co-curricular indicator study

The commissioner shall study the feasibility of including an indicator that accounts for extracurricular and co-curricular student activity. By the year 2022, the commissioner shall either incorporate the indicator into the accountability system or present a feasibility report to the legislature.

Adopting indicators and setting cut scores

The commissioner may adopt indicators for the accountability system or standards (cut scores) at any point during the school year prior to evaluation of the district or campus. In setting the cut score for all indicators yearly, the commissioner shall consult with educators, parents, and business and industry representatives. The standards are to be modified in a way that promotes continuous improvement in student achievement and closing education gaps.

Reporting

Each school year, the commissioner shall provide each school district a document in a simple, accessible format that explains the accountability performance measures, methods, and procedures.

Thanks to language requested by ATPE, the commissioner, in consultation with stakeholders, must also develop language for each domain that clearly describes the district and campus performance on the indicators used to determine those assigned performance ratings.

A-F reform: Will they or won’t they act?

House Bill (HB) 22 by Rep. Dan Huberty (R-Kingwood) has been filed to try to modify the state’s recently adopted “A through F” accountability system, which has been widely panned by parents, administrators, and teachers. It passed the House with broad support but underwent some fairly significant changes in the Senate. In its current form, the bill is eligible to cross the finish line in the legislature and head to the Governor’s desk this evening at 7:20 pm. However, there is some question as to whether or not Huberty, who chairs the House Public Education Committee, will accept the Senate’s version of his bill.

ThinkstockPhotos-478554066_F gradeAs the bill progressed this session, both chambers decreased the number of domains in the accountability system and increased what criteria can be considered within each domain. However, the House version of HB 22 was structured in a way to ensure more reliance on non-test-based measures than in the Senate’s version. Likewise, both versions of the bill created differentiation between a D and an F rating, but the Senate version places punitive measures on a D rating that the House version did not include; ostensibly, the House wanted the state, or the Texas Education Agency (TEA), to focus all of its limited resources on the most struggling schools. The Senate’s version of the bill would keep in place a largely unpopular requirement that schools and districts receive a summative or overall accountability grade, while the House version of HB 22 stopped at grading only the individual domains.

Chairman Huberty must decide if he will recommend that the House accept the Senate’s language through a motion to concur in Senate amendments to HB 22, or ask the House to reject the Senate’s version of his bill and appoint a conference committee to work on compromise language before time runs out. Under House rules, that decision must be made by midnight tonight. If no action is taken on the Senate amendments by midnight tonight, then the bill dies and the legislature loses its ability to make statutory changes to the current accountability system for two more years.

If Chairman Huberty chooses to send HB 22 to a conference committee to continue negotiating, that move will only buy the bill about 24 more hours of life at this late date in the session. A conference committee could allow Huberty and his House colleagues an opportunity to improve the bill, but a deal would have to be struck with the Senate conferees by midnight Saturday night; otherwise, further inaction would kill the bill. Should Chairman Huberty decide that HB 22 in its current form as passed by the Senate is better than no change at all, he can accept the Senate amendments and finally pass the bill tonight. Then, it would be up to Governor Abbott to either veto or sign the bill, or let it pass into law without a signature.

As it currently stands, HB 22 contains two amendments specifically added at ATPE’s request. One adds a teacher quality measure into the accountability system that would be based on criteria other than value-added measures of student performance via test scores. The other ATPE-requested change would require TEA to add additional explanations beyond merely a letter grade to describe how each school or district has performed in each domain. HB 22 also contains language about inclusion of a stakeholder group that ATPE requested, but the Senate’s version of the bill limits the role of that stakeholder group considerably compared to the preferred House language.

Stay tuned to Teach the Vote this weekend for updates and follow @TeachtheVote on Twitter for the latest developments.

Update: The House voted Friday afternoon to appoint a conference committee for HB 22.

Update on TRS-Care legislation

Drugs and MoneyThe Texas Senate is expected to vote soon on House Bill (HB) 3976 by Rep. Trent Ashby (R-Lufkin), a bill to reform the state’s healthcare program for retired educators. The Texas House approved the bill unanimously earlier this month. Here’s a look at the background and history of the legislation, as well as its current status.

Part I: How did we get here?

For at least the past four years, the TRS retiree health insurance program known as TRS-Care, has been headed toward a financial disaster. During the 83rd legislative session in 2013, the legislature began supplementing formula funding for TRS-Care to cover a projected shortfall. In the 84th legislative session in 2015, lawmakers increased the amount of supplemental funds to $768 million again to cover the TRS-Care shortfall. Covering the projected shortfall this session would take more than $1 billion above and beyond what the current funding formulas call for. That amount, already considered unsustainable, is only projected to rise in future years.

The issues driving TRS-Care toward disaster are runaway health care inflation and a statutory requirement to offer a free health insurance option.

TRS-Care presently has three funding streams: premiums associated with TRS-Care 2 and TRS-Care 3, since TRS-Care 1 is free; formula funding generated from the state, school districts, and active TRS members; and Medicare reimbursements from those over 65 who are on Medicare. The formula funded part of the equation is based on active TRS member payroll. Specifically, the state pays 1 percent of payroll into the fund while school districts pay .55 percent and active members pay .25 percent. Active TRS members’ total payroll generally increases over time at about 2 percent each year. This in turn means the formula funding for TRS-Care similarly increases over time at about 2 percent.

ThinkstockPhotos-177774022-docUnfortunately, healthcare costs have increased at over 7 percent annually for many years. This has led to a situation where the costs for TRS to pay healthcare claims has dramatically exceeded the funding available to pay for those claims, and the gap between funding and costs is only growing.

Without the legislature writing a check to cover the funding gap described above, TRS-Care would go into what is known as a death spiral. TRS would be forced to dramatically raise the premiums on TRS-Care 2 and 3, which are the current paid options offered to retirees, in order to cover the cost of all TRS-Care claims. The dramatic increase in the cost of these optional plans would drive more retirees to choose TRS-Care 1, the free option. As more retirees migrated to TRS-Care 1, the funding stream from premiums would dry up, further increasing the gap between revenueand the cost of paying claims, and the whole system would collapse.

How has the state responded?  The short answer is – not well!

State lawmakers currently have, and have previously had, only three options for addressing the TRS-Care problem. One, they can work to legitimately bring down the costs of retiree health care. Two, they can pay the additionally costs. Three, they can shift the costs to someone other than the state, i.e. retirees, school districts, and active teachers.

Legitimately bringing down healthcare costs, while likely possible, is challenging at the state level and at best a long-term process. Much of what impacts healthcare costs involves federal law over which state legislators have little or no control. Effectively that leaves as the only viable options putting in more money, either from the state or from somewhere else.

Knowing that this problem was approaching, legislators could have taken action six or eight years ago and aggressively pushed TRS-Care participants toward healthier and therefore cheaper outcomes, eliminated the free option under TRS, and at the same time increased the TRS-care formulas. Had they made these changes back then, before TRS-Care was facing a giant funding deficit, the pain to the state and to retirees would have been very minimal. However, back when these issues weren’t yet urgent, it was easier to keep ongoing state costs at a minimum and keep the potent voting block of retired teachers happy by ignoring future realities. Even when deficits between TRS funding and the cost of paying claims began to appear over the last two sessions, while times were good and state coffers were flush, it was easier to simply write one-time checks to prop up the system and ignore the oncoming train wreck.

Now that state revenues are lean and the TRS-Care deficit has grown into a billion dollar hole, it’s too late to reap the slow savings associated with bringing down costs. Lawmakers are unwilling to take on billion dollar ongoing funding increases, and the pain that retirees will experience from the state’s shifting the cost of covering the funding gap to them will be substantial, and in some cases, possibly lethal.

Part II: Where are we now?

The Senate State Affairs committee has legislative oversight for TRS-related issues in the upper chamber, and it is chaired by Sen. Joan Huffman (R-Houston). Having no intention of asking her colleagues to fund the TRS-Care deficit for a third session, Sen. Huffman starting crafting a plan during last year’s interim that was designed primarily to shift the cost of paying for TRS-Care to retirees. Stakeholders, including active and retired teachers, were given an opportunity to provide their input at one perfunctory hearing. However, by the time of that hearing, the majority of the plan that was to become Senate Bill (SB) 788 was already in place.

In early February 2017, SB 788 was filed. As originally filed the bill eliminated TRS-Care plans 1-3 and replaced them with two plans: one plan for retirees under the age of 65 and one plan for retirees age 65 and older.

  • The under 65 plan was a high deductible plan with a first deductible of $4,000. After the participant hit $4,000 in out-of-pocket costs, the plan would have transitioned to offering 80/20 coinsurance coverage up to a maximum out-of-pocket cost of $7,150. After hitting the max out-of-pocket cost in a given plan year, the plan would have covered additional in-network costs at 100 percent. Like all high deductible plans, there are no medical or drug co-payments; you simply pay 100 percent (or 20 percent after the first $4,000 deductible has been met) of the full contracted price for the drug or medical service. As filed, the SB 788 plan was projected to require premiums of $430 a month. Thus, the total annual cost for participants covered by the plan would have been between $5,160 and $12,310. (For perspective, the average TRS annuity is approximately $24,000 a year.)
  • The 65 and over plan in SB 788 would have replaced all current TRS plans with a Medicare Advantage plan. Under a Medicare Advantage plan, Medicare is the primary insurance and the advantage plan is supplemental insurance designed to cover what Medicare does not. The deducible for this plan was projected to be $500 with monthly premiums of $140.

ThinkstockPhotos-162674067-pillsEven with these changes delineated under SB 788, TRS projected that TRS-Care would still have a funding deficit of approximately $300 million during the upcoming biennium and increasing deficits in subsequent years. As filed, the Senate plan did not increase the TRS-Care funding formulas. Instead, the Senate envisioned writing another one-time supplemental check to cover the balance of this biennium’s deficit, leaving a continuing and growing problem for future legislators to address.

Thanks to the tireless efforts of active and retired teacher advocates and receptive House members, the plans for TRS-Care while far from perfect have continued to improve over the course of this legislative session. SB 788 has been left pending, as the House bill, HB 3976, continues to proceed.

As it stands today, the TRS-Care bill moving forward still eliminates the current structure and replaces it with two age-dependent options.

  • The under 65 plan is still a high deductible plan with an out-of-pocket first deductible of $3,000 and maximum out-of-pocket cost of $7,150. The monthly premium will start at $200 a month for the first year and will increase for the following three years to approximately $370 a month. The plan also includes language that lets a TRS retiree opt out of the pre-65 plan and opt back into TRS for the 65-and-over plan once the retiree becomes Medicare eligible. Additionally, members under 65 who have retired due to a disability before January 1, 2017, will not have to pay premiums for the first four years. The plan will also cover a list of generic maintenance drugs, such as blood pressure and cholesterol medications, free of charge.
  • The 65-and-over plan is essentially the same as filed, but TRS at the request of multiple legislators is committed to expanding access to medical providers willing to take the TRS-Care Medicare Advantage plan. Restricted access to doctors has been one of the primary concerns about the Medicare Advantage plan.

In addition to better plan design, HB 3976 as it currently stands increases the state’s share of the funding formulas from 1 percent to 1.25 percent and increases the district’s share from .55 percent to .75 percent. The active employee share is not being increased at this time. These increases in formula funding give some assurance of a continued increase in regular appropriated spending in future years. This is a very important step for the continued existence of the retired educators’ health insurance program.

For those educators who have retired, especially those under age 65, or for those considering retirement in the near future, the changes to TRS-Care contemplated in SB 788 and HB 3976 are a lot to consider. ATPE members may contact our Governmental Relations team if you have specific questions about the bill. We also highly encourage you to contact TRS directly for questions about your retirement or your specific coverage questions about TRS-Care. You can contact Senate author Sen. Huffman or House author Rep. Ashby if you want to express your support, opposition, or any commentary on the legislation. Please remember to be courteous and respectful if you choose to contact one or both of the legislators, and remember that while this bill is not by any stretch perfect, TRS-Care health insurance will cease to exist altogether if no bill passes at all.

Senate committee approves budget proposal

ThinkstockPhotos-185034697_gavelcashThe committee substitute to Senate Bill (SB) 1, the Senate’s budget bill, was voted favorably out of the Senate Finance Committee on a vote of 15 to 0 this morning. The SB 1 committee substitute, which appropriates $106.3 billion in general revenue, reflects all of the recommended modifications to individual articles of the budget made by the work groups and adopted by the full Finance Committee.

In her comments, committee chairwoman Sen. Jane Nelson (R-Flower Mound) stated that SB 1 fully funds the Foundation School Program (FSP), including $2.6 billion for enrollment growth. Nelson also touted $25 million in spending for broadband expansion through the e-Rate program; $65 million to a new public / private partnership for pre-K (the committee substitute cuts $180 million in pre-K grants from SB 1 as it was originally filed); and $316 million to fund SB 788 by Sen. Joan Huffman (R-Houston), which would reform TRS-Care.

Senator Royce West (D-Dallas) probed staff from the Legislative Budget Board (LBB) on how to reconcile claims that SB1 fully funds the FSP while spending nearly $1.4 billion less in general revenue on the program. In response, LBB staff confirmed that SB 1 does fund the amount that current law calls for in FSP entitlements, but the funding level is $1.4 billion lower this session because increases in local property values mean that less funding is required through state general revenue. Due to this continued supplanting of state funding with local property taxes, the proportion of the state’s share of FSP funding is projected to decline to 38% or less by the end of the biennium.

SB 1 as substituted is expected to be brought up for a vote on the floor of the full Senate on Tuesday, March 28.

House committee hears from ATPE, others on education funding challenges

Dollar fanThe House Appropriations committee began meetings this week for its subcommittees assigned to work on various parts of the Texas state budget. This includes the Article III Subcommittee, which covers education funding and began taking testimony on Monday, Feb. 20. The subcommittee’s first day agenda involved looking at funding for the Texas Education Agency (TEA), including the Foundation School Program; the Teacher Retirement System (TRS), including both pension and health insurance funds; the state schools for the visually impaired and the deaf, the Windham School District; and community and junior colleges.

After the Legislative Budget Board (LBB) laid out the budget documents on TEA and the Foundation School Program, the committee heard from Texas Commissioner of Education Mike Morath. Commissioner Morath began by thanking the committee and restating his dedication to the goal of improving student outcomes for all students. The commissioner then laid out his agency’s priorities beginning with ensuring and improving teacher quality as the “most important in-school factor” in a student’s education outcomes. Next, Morath addressed the agency’s second key priority to promote a strong foundation in reading and math, and spoke about the affect of achieving this goal on closing the achievement grant. To facilitate this goal, the commissioner talked about continuing to push for expanding high quality pre-K. He also promoted TEA’s goal to scale the math innovation zones program statewide. The agency’s third priority is to connect K-12 education to higher education and career opportunities. The next priority is to improve struggling schools, Morath explained. He reported that TEA is working to do this through systemic system-wide improvements. In addition to budget items tied to the agency’s larger priorities, Morath also addressed specific targeted budget requests like funding the E-rate match to complete the build-out of statewide broadband access.

Early Childhood EducationThe Commissioner was well received by the subcommittee. The majority of questions to the commissioner from committee members tended to focus on supporting pre-K. In responding to an offshoot of this questioning, the commissioner indicated that the State Board for Educator Certification will likely institute a new certificate for grades EC-3 that would be more focused on early childhood education.

Later in the hearing, the committee heard from TRS Executive Director Brian Guthrie. Guthrie gave brief remarks about the overall performance of the TRS trust fund before turning to the more pressing issue of the billion dollar shortfall in the TRS-Care fund. He impressed upon the committee that TRS has done everything it can do internally to control costs without legislative action. On TRS-Care the plan laid out to the House budget committee would include a “shared pain” approach where the state would cover half of the cost of the shortfall, retirees would cover 25 percent of the costs, and districts and active teachers would each cover 12.5 percent of the cost. While this plan is more generous than what has already been laid out in the Senate, it still puts additional pressure on active teachers, many of whom are drowning in the cost of their own health insurance premiums. Additionally, the strategy laid out did not contemplate changing the state paid formula for TRS-Care, which is currently set at 1 percent of payroll for all school districts statewide. The TRS board of directors is also meeting this week.

After hearing from LBB and invited witnesses, the Article III subcommittee took public testimony, including testimony from ATPE. Our testimony focused on the need to address active teacher health care costs through additional state funding, not just a denigration of benefits; the benefits of closing the education gap early in a student’s career thorough pre-K; and finally the need to address equity through more appropriately funding students based on their needs, individually and at the campus level.

TRS healthcare bill offers fewer options, no savings

Drugs and MoneyLast fall, ATPE reported on an interim legislative study of healthcare programs administered through the Teacher Retirement System (TRS). Now that the 85th legislative session is in full swing, we’ve had a chance to see actual legislation pursuing some of the dramatic proposals outlined in that interim report. The primary vehicle for these changes would be Senate Bill (SB) 789  by Sen. Joan Huffman (R-Houston), which seeks to reorganize TRS-ActiveCare, the current health insurance program for many of our state’s actively employed educators.

Under current law, all school districts that did not previously opt out of TRS-ActiveCare offer their employees access to two health insurance options through ActiveCare: one high-deductible plan and one traditional plan featuring co-insurance and co-payments. The state contributes $75 per employee toward the monthly premiums associated with either plan and requires school districts to cover an additional $150 per employee towards premiums; many districts cover more than the minimum $150 contribution that is required, however.

If passed, SB 789 would limit districts that may participate in TRS-ActiveCare to those with 1,000 or fewer employees or fewer. The bill would also eliminate the traditional co-payment insurance plan option, leaving only the high-deductible option for employees who remain covered through ActiveCare. The bill also would give those districts with fewer than 1,000 employees another one-time opportunity to voluntarily opt out of TRS-ActiveCare.

SB 789 does not increase the amount of money the state will be spending toward employee health care premiums, nor does it increase the requirement for the amount that districts must spend toward those premiums. This is significant because compared to the private sector, our state’s employer contribution (the combination of state and district payments) toward public education employees’ health care premium cost is dramatically underfunded. When the TRS healthcare program was started years ago, the ISD/state contribution was in line with average private sector employer contributions. However, as private business has worked to keep pace with healthcare inflation, the state has never increased its contribution on behalf of school employees.

Falling US MoneyIt is also worth noting that SB 789 does not save the state any money. TRS-ActiveCare is considered a pass-through program. That means the state puts in a fixed amount of money and any increases in premiums get passed directly down to educators for them to cover. Restructuring ActiveCare as proposed in Sen. Huffman’s bill will not change this dynamic. The state pays the same amount and any changes in overall premium costs will only impact educators.

Thus, SB 786 takes away choices without saving educators money. The cost for the new high-deductible plan is estimated to be more expensive than the cost of the high-deductible plan offered under the current system. While premiums for this new high-deductible plan may be slightly less than the cost for the traditional co-pay plan under the current system, the premium combined with out-of-pocket costs for educators could very likely be more. Additionally, educators who have currently selected the traditional co-pay plan have voluntarily chosen to pay a higher premium at no additional cost to the state and no required additional cost to the district. Taking away this option without any resulting savings to either the school district or the state makes little sense.

For the 82 school districts that will be required to exit ActiveCare if this bill passes, their administrative costs will increase. Those districts will now have to hire additional personnel to administer an employee healthcare plan at the district level. That additional cost will in turn reduce the amount of money these districts will have to spend in the classroom on other needs. The same will be true of any districts that voluntarily opt out of ActiveCare because they prefer to offer their employees the option of more than one health insurance plan.

SB 789 decreases benefit options for educators while increasing district expenses, and it does so without increasing state support to educators, lowering the healthcare cost for educators, or decreasing the cost to state taxpayers. Therefore, we can find no reason for ATPE to support this bill.