Author Archives: Monty Exter

TRS Annual Review

Each year the Teacher Retirement System of Texas (TRS) puts out an annual review of both the TRS Pension Fund and the TRS health care systems / trust funds which they present to the TRS Board members.

The TRS health care update this year is focused on an in-depth analysis of the changes from the 2017 Care and ActiveCare plans to those going into effect during the 2018 plan year, as a result of legislative action during 85th regular and special sessions. ATPE has reported a number of times on the TRS-Care and ActiveCare changes as they have unfolded. The changes to TRS are set to take effect Jan 1, 2018.

TRS has produced two helpful videos to help explain the new insurance program, one for participants who are Medicare eligible and another for participants who are non-Medicare.

You can click the link here to view the full TRS health care document produced by TRS.

The Board also received its annual review on the health of the TRS pension trust fund, including a preview of some major actions the staff intends to undertake in the coming year. The review of the pension fund was a much rosier conversation in the recent past than the health care discussion, but the board is planning to undergo an experience study in early 2018 that could present some new long term challenges if it results in lowering the assumed return of the fund.

The headline from the pension report is the TRS Trust Fund earned a return of 12.9% and ended the 2017 fiscal year at a market value of $147 billion compared to a market value of $134 billion for the fiscal year ending 8/31/16.

Results of the 8/31/17 valuation and comparisons to the 8/31/16 valuation are summarized below:

The strength of the previous year raises the fund’s 10-year return to over 8%, and the fund’s returns since inception (approximately thirty years) continue to exceed 8% as well.

Despite TRS’s exceeding the assumed rate of return during both of these time frames, there is a strong expectation that external consultants who will perform the experience study in early 2018 will come back with a strong recommendation to lower the assumed rate of return for the fund from 8% to somewhere in the neighborhood of 7.5%. The result of such a move, in isolation, is to dramatically increase the unfunded liability of the fund on paper, which also increases the number of years required to fully fund the pension. Under the state’s definition of actuarial soundness, the funding window must be less than 30 years to consider the fund actuarially sound for purposes of increasing retiree benefits, such as by providing retirees with a cost of living adjustment (COLA).

Should TRS ultimately lower the assumed rate of return, it will be incumbent upon the agency, active and retired teachers, and those groups that represent them to impress upon the legislature the absolute necessity of increasing TRS funding to make up for the assumed loss of investment income. The amount of new funding needed to offset a decrease in the assumed rate from 8% to 7.5% will be approximately $800 million per biennium.

You can click the link here to view the full TRS Pensions document produced by TRS.

Election Update: Analyzing Nov. 2017 results around the state

Yesterday, Nov. 7, 2017, Texans went to the polls, wrapping up a little more than two weeks of voting by passing all seven of the state constitutional amendments on the ballot.

In addition to yesterday’s constitutional election, Texans from 58 districts scattered all across the state also voted on ISD bond proposals totaling approximately $7.7 billion. Of those 58 districts, 19 of them asked their voters to approve bond packages greater than $100 million, accounting for roughly $7 billion of the $7.7 billion total. Seventeen of those 19 bond proposals, totaling $6.6 billion, passed, most by a significant margin, while only two, Ector County ISD and Victoria ISD, failed.

While it is only one metric, the overwhelming passage rate of ISD bond proposals is a good indicator that Texans overwhelming support their local public schools and are willing to voluntarily dedicate their tax dollars to see them prosper to the benefit of local students. Texans by and large are a fiscally conservative bunch and are not prone to approving what they view to be wasteful or excessive spending. We at ATPE hope that state lawmakers will take this strong show of support by local taxpaying voters that the state’s citizenry supports public schools and public school funding as encouragement to make similar decisions on school funding at the state level.

You can view all ISD bonds on the November 2017 ballot at the Texas Comptroller’s website.

Dallas County and City of Houston voters weighed in on a couple of significant measures not related to ISD bonds.

Dallas County voted to close down a countywide taxing entity known as Dallas County Schools, which was separate from the traditional ISDs that educate area students. Over the years Dallas County Schools, an intermediate educational agency, had largely become the provider of school bus services to local districts including Dallas ISD. Once Dallas County Schools fully closes down, area districts will need to either pull those services, including bus transportation, in-house or contract them out to private providers.

The City of Houston passed a $1 billion pension revenue bond package by a wide margin. While these bonds will NOT impact educators or the Teacher Retirement System of Texas (TRS), it is a good sign that the state’s largest city is overwhelmingly supportive of maintaining a healthy defined-benefit pension system for its local public employees who are not covered under state plans.

SBOE long-range planning process to include regional meetings

SBOE logoThe Texas Education Agency (TEA) and State Board of Education (SBOE) released the following statement this week about upcoming regional meetings to gather input for the purpose of updating the SBOE’s Long-Range Plan for Education:

Oct. 31, 2017

Regional meetings to gather input for Long-Range Plan 

AUSTIN – Regional meetings begin this week to gather input for the new Long-Range Plan for Public Education now being developed by the State Board of Education.

The first of at least eight community meetings will be held from 6:30-8:30 p.m. Thursday, Nov. 2, at the El Paso Community College in El Paso. The meeting will occur in the Administration Building auditorium located at 9050 Viscount Blvd.

Register to attend this free event at https://www.eventbrite.com/e/community-conversation-el-paso-november-2nd-tickets-38839842013 .

Community meetings are also scheduled for 6:30 p.m.-8:30 p.m. on the following dates:

  • Nov. 14 – Region 7 Education Service Center, 1909 North Longview St., Kilgore
  • Dec. 5 – Region 11 Education Service Center, 1451 S. Cherry Lane, White Settlement
  • Dec. 6 – Dallas County Community College, El Centro West – Multi Purpose Room 3330 N. Hampton Rd., Dallas
  • Feb. 8 – Region 4 Education Service Center, 7145 West Tidwell, Houston

Additional community meetings will be scheduled in 2018.

“State Board of Education members are meeting with Texans around the state because we want to hear firsthand what their concerns and hopes for the Texas public schools are going forward. Our goal is to identify strengths, weaknesses, opportunities and challenges. Information gained through these community meetings, a statewide online survey, and the work of the Long-Range Plan for Public Schools Steering Committee will be used to craft a strategic plan for schools through the year 2030, corresponding with the Texas Higher Education 60×30 Strategic Plan,” said SBOE Chair Donna Bahorich.

The 18-member steering committee, made up of educators, parents, state and local board members, business officials, college professors, state agency representatives and a student, will meet at 9 a.m. Nov. 6 to discuss two topics: family empowerment and engagement and equity and access to both funding and advanced courses.

The public meeting will occur at 4700 Mueller Blvd. in Austin at the headquarters of the Texas Comprehensive Center at the American Institutes of Research, which is assisting the board with the development of the long-range plan.

Debbie Ratcliffe, Interim Director
SBOE Support Division, Texas Education Agency
debbie.ratcliffe@tea.texas.gov

Summary of third-quarter TRS board meeting

TRS logoThe Teacher Retirement System (TRS) of Texas held its quarterly board meeting this week in Austin on Thursday, Sept. 21, and Friday, Sept. 22, 2017. You can watch video of the board meeting here, as well as review the board agenda and board book.

The TRS board received its final update on the TEAM project prior to the upcoming go live date. As we have reported previously on our blog, TEAM is the agency’s ongoing project to update its computer infrastructure and data systems. TRS Executive Director Brian Guthrie reported that everything continues to be a go for the transition to the new system, which is scheduled to go live on Oct. 2. At the next meeting, the board will receive a report on the transition from the legacy system to the new system and the transition from working on phase one of the TEAM project to working on phase two.

In a subsequent agenda item, Guthrie laid out several of his policy goals for the upcoming year. Included in those Guthrie would like to look into significantly streamlining the retire/rehire rules for educators. There are always pros and cons to any changes made to the retire/rehire rules, and advocacy groups including ATPE will stay closely involved during the process to ensure that the rules produce the best results possible for individual educators while also ensuring the overall health of the retirement fund. Additionally, TRS is set to undertake the process of completing an updated experience study, a process utilizing a third-party vendor to analyze the assumptions TRS uses to determine its actuarial numbers. TRS staff expects to complete the study by February and present findings to the TRS board for discussion at the February board retreat.

ThinkstockPhotos-465016790_moneyConducting an experience study and reconsidering the TRS assumptions, including the assumed rate of return, is a significant action for the TRS board and agency. The assumptions combined with the actual assets on hand are what TRS uses to determine the funding window and overall actuarial soundness of the pension fund. Lowering the assumed rate of return without increasing the contribution rate will significantly increase the funding window, or number of years required to fully cover pension liabilities. Under law the fund cannot be considered actuarially sound if the window is greater than 30 years. Currently the fund is just over the 30 year mark but is trending in the right direction. Lowering the assumed rate of return even slightly will add years, as many as five to 10, to the funding window. TRS’s current assumed rate of return is 8 percent. Despite the fact that TRS has a one-year rate of return at 12.9 percent, a five-year rate of return at 8.9 percent, and a 26-year rate of return at 8.7 percent, there is significant pressure, including political and peer pressure, to lower the investment return assumption. ERS recently underwent a similar process that resulted in that fund’s rate of return being lowered from 8 percent down to 7.5 percent.

Any degradation of TRS’s actuarial soundness will undoubtedly result in new calls from some advocates and state lawmakers who oppose government-funded pensions for TRS to be converted from a defined-benefit pension system into a defined-contribution 401(k)-style plan.

In addition to the meeting of the full TRS board, various sub-committees also met this week. Of particular note, the TRS policy committee made changes to a number of TRS rules, many in response to legislative changes from the 85th legislative session that just went into effect on Sept. 1, 2017. You can review the list of rules affected on the Policy Committee Agenda or take a closer look at the rules in the Policy Committee Book.

Other committees that met this week included the following with links to their materials:

  • TRS Investment Management Committee – Agenda and Book;
  • TRS Risk Management Committee – Agenda and Book;
  • TRS Compensation Committee – Agenda and Book; and
  • TRS Audit Committee – Agenda and Book

The next TRS board meeting will be a one-day meeting on October 27, 2017. Stay tuned to Teach the Vote for updates.

TRS-Care info tour coming to a city near you

ThinkstockPhotos-162674067-pillsWith TRS-Care set to undergo significant changes in 2018, TRS staff have designed a comprehensive communications plan to ensure that all  plan participants have access to the information they will need to make decisions about their healthcare coverage. TRS has designed the communications plan to “touch” the 270,000 TRS-Care participants nearly two million times between now and January.

In addition to reaching out to participants through print and electronic communications, TRS staff will be going on the road to conduct in-person seminars. The seminar schedule includes 31 locations all across the state between October 9 and November 2, 2017.

The seminars will be presented in four parts and are divide into two segments of approximately 90 minutes each. The first hour and a half focuses on participants covered by Medicare; the second hour and a half covers plan changes for the pre-Medicare population. In many of the stops, the three hour seminar will be offered once in the morning from 9 am to noon, and once in the afternoon from 1:30 to 4:30 pm. Here is a list of the scheduled meetings released by TRS. To attend an in person event will require an RSVP by phone. Seating is limited. ​Please call 1-800-850-1992 Monday-Friday, 8:00 a.m. – 5:00 p.m., Central time to reserve your seat.

For those who wish to participate in the TRS-Care seminar but are not able to attend one in person, TRS will also hold a minimum of eight webinars. TRS is adding additional webinars during the week of Nov. 6 to help offset its inability to hold more onsite seminars in the Houston area due to Hurricane Harvey.

For additional questions, please visit the TRS website or call TRS at 1-888-237-6762.

Those interested in the recent changes adopted for TRS-Care may also view video of the last TRS board meeting. The board’s discussion on TRS-Care begins around the 3 hour and 46 minute mark on the video and lasts approximately 45 minutes.

TRS adopts retiree healthcare changes, considers 403(b) provider rules

TRS logoATPE lobbyist Monty Exter attended a TRS Board meeting in Austin today. Today’s meeting was rescheduled from last week when it had to be delayed due to Hurricane Harvey. The agenda and board materials for the meeting can be found on the TRS website.

After preliminary housekeeping issues, the board took public comments. TRTA Executive Director Tim Lee engaged the board on the implementation and issus needing to be addressed due to recent legislation which made significant changes to TRS-Care.

After Mr. Lee, multiple industry professionals came to give their comments on TRS’s proposed rule change regarding 403(b) programs. All but one of those offering comments had strong concerns about the effect of the rules on the future availability of a robust cohort of providers for educators to choose. One witness thought the number of companies and products currently in the space was excessive and presented Texas educators with an overly complex and excessively expensive set of options. The board will further consider these rules during an agenda item later today on which we will report afterward for Teach the Vote.

After public comments, the board recognized Howard Goldman for his 24 years of service as TRS Communications Director.

Next the board received an update on the TEAM program. TEAM is the name given to TRS’s work toward updating the agency’s considerable computer infrastructures and data systems. Go live on phase one of the TEAM upgrades is set for October 2, 2017. There are some contingencies based on delays caused by Hurricane Harvey, as the storm may affect as many as 321,705 TRS members.

After the TEAM discussion, Brian Guthrie, TRS Executive Director, gave the board a special session update, including reporting on the passage of House Bill (HB) 21, which included an appropriation of $212 million for TRS-Care. The money appropriated will be used to soften the blow of the increased premiums and deductibles. The board returned to the issue of TRS-Care when it reviewed and adopted the premiums and plan design for TRS-Care, the retiree health benefits program, including the standard plan, the fully insured Medicare Advantage Plans, and the Medicare Part D Plans.

The attached document from TRS staff provides details of the now adopted TRS-Care plan design, how the new plan compares to the current TRS-Care plans, and what the plan would have looked like had HB 21 not passed during the special session. Changes to TRS-Care will not go into effect until Jan 1, 2018.

Following Guthrie’s comments, the board took up the certification of the contributions TRS will receive to fund TRS-ActiveCare. The board voted to certify to the State Comptroller the estimated amount of state contributions to be received by TRS-Active Care for fiscal year 2018. The certification amount totals $795,729,797 which includes $401,129,797 to meet the state contribution rate; $182,600,000 in supplemental funding passed during the regular session; and $212 million passed during the special session via HB 21. The state contribution rate has increased from 1.0% to 1.25% due to the passage of HB 3976 relating to changes for TRS-Care during the regular legislative session earlier this year.

TRS had initially scheduled a Policy Committee meeting to happen concurrently with today’s full board meeting, but that meeting had to be canceled as a result of a lack of quorum of those committee members due to Hurricane Harvey.

Proposed TRS meeting dates for 2018 are Feb. 14-16, April 19-20, June 14-15, July 27, Sept. 20-21, Oct 19, and Dec 13-14

The Board’s next regularly scheduled meeting will be September 21-22.

From Texas Educators Vote: Creating a culture of voting

ThinkstockPhotos-485333274_VoteThe following post is an update from the Texas Educators Vote coalition that was emailed to superintendents in districts who are members of the Texas Association of Community Schools (TACS). ATPE is a member of the Texas Educators Vote coalition.  

Texas Educators Vote Update for August 31, 2017

We know that many of you are focused on recovering from the wrath of Hurricane Harvey, and we stand ready to support you. For those of you who have been fortunate enough to escape the destruction, we are hopeful that you have started the process of getting staff and students registered to vote.

You may know that one of our partners is the Texas Association of School Boards (TASB). Last year, their attorneys worked with us to create a “Culture of Voting Resolution” that can be adopted by school boards to support their district’s efforts to create a culture of voting and increase civic engagement.

One of my favorite lines in the short document reads:
“WHEREAS, public education and the educated citizenry created by public education are the greatest safeguards to the State of Texas and the continuation of a free society; and the institution of public education is best protected by a robust and informed electorate;”

This resolution, once adopted, shields you as superintendents from potential pushback from citizens who may not be interested in encouraging all eligible Texans to vote. It is an important message of support from the school board and it demonstrates a commitment to the basic principles of our democracy.

It is possible that your district has already adopted this resolution, which was included in the August 2016 Regulations Resource Manual – Update 52. If you aren’t sure if your district has done so, why don’t you recommend the board adopt the resolution now to show their strong support for creating a culture of voting in your school district?

We encourage you to present the TASB Culture of Voting Resolution at your September board meeting, so get it on the agenda now! You can find the resolution here: https://texaseducatorsvote.com/wp-content/uploads/2015/09/TASB-Culture-of-Voting.pdf

Please let us know when your board has signed the resolution by emailing
Laura Yeager and/or Barry Haenisch. We will compile a list of districts that have signed the resolution.

We are currently updating the Texas Educators Vote website to make it as simple, useful, and interactive as possible. The updated site will enable people to sign the “Educator’s Oath to Vote” online so you won’t have to make copies or collect them this year during your kickoff event (that we will explain in more detail in an upcoming email). You may want to share the “Oath” with board members when you present the resolution.

Here is a link to the updated Oath. It simply states:
I am a Texas educator and I commit to vote in
the March primary and the November general elections.

I will vote in support of public education in the
interest of the more than 5 million Texas school children.

Step by step, we will create a robust and informed electorate, which is perhaps the most important goal of public education. Many thanks for your continued hard work to educate all children and by so doing, strengthen the great state of Texas.

Sincerely,

Laura Yeager
TACS Governmental Affairs
Director, Texas Educators Vote

 

Important update for retirees: TRS-Care list of no cost medications

Drugs and MoneyThe Teacher Retirement System of Texas (TRS) has released a list of medications which will be available at no cost to members on the TRS-Care Standard Plan, which will be the plan available to any pre-65 TRS retirees who are not yet Medicare eligible. The list does not apply to TRS retirees who are eligible for the TRS-Care Medicare Advantage plan (primarily retirees over the age of 65). Medicare Advantage participants will continue to have a co-pay plan that applies to their prescription purchases generally.

Note that none of the changes taking place to TRS-Care, including the introduction of this no cost prescription list, will take effect until January 1, 2018.

If you have additional questions about changes anticipated for TRS-Care, check out this blog post or contact ATPE Governmental Relations.

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.