Category Archives: TRS

Teach the Vote’s Week in Review: June 2, 2017

Texas state legislators have gone home, at least temporarily. When might they return? Here is the latest advocacy news from ATPE:

 


ThinkstockPhotos-144283240On Monday, May 29, the 85th Legislature adjourned sine die, following a 140-day regular session marked by considerable conflict over important and not-so-important issues. The Legislature did reach an agreement on the state’s budget, which was the only bill constitutionally required to pass. However, the House and Senate took decidedly different approaches to their other priorities this session, as ATPE Governmental Relations Director Jennifer Canaday wrote in this blog post on Monday. School finance reforms sought by the House fell victim to a push for private school vouchers by the Senate. Gov. Greg Abbott and Lt. Gov. Dan Patrick both made late-session declarations that lawmakers needed to pass a bill regulating public bathroom use by transgender Texans and a bill changing requirements for elections before property tax increases, but neither measure made it beyond the finish line.

Another bill that did not pass was a sunset “safety net” bill designed to keep certain state agencies, including the Texas Medical Board, from ceasing to operate during the next two years. The failure of that bill to pass could alone force Gov. Abbott to call a special session, leading to speculation about which other topics might be added to the types of bills that could be considered during a special session. Lt. Gov. Patrick warned during the last week of the regular session that he would be urging the governor to include on any special session call various other “priorities” that the Senate passed but the House did not approve; those could include not only state-mandated bathroom restrictions to which many school districts and business leaders objected, but also private school vouchers and the anti-educator bill that would eliminate payroll deduction for educators’ professional membership dues. All of these were ATPE-opposed bills that were shut down during the regular session, largely thanks to the more moderate, common sense approach of the Texas House under the leadership of Speaker Joe Straus.

After hinting that he would make an announcement by the end of this week, Gov. Abbott told reporters today not to expect any announcement either today or during the weekend about his calling a special session. Be sure to tune in to Teach the Vote next week and follow us on Twitter for updates.

 


ThinkstockPhotos-177774022-docThe Legislature managed to pass important bills to keep the TRS-Care healthcare program for retired educators afloat for a few more years, and the TRS board of trustees now has responsibility for implementing the changes directed by lawmakers. ATPE Lobbyist Mark Wiggins attended today’s meeting of the TRS board and penned a blog post outlining the many changes that will take effect in 2018.

While the legislature passed no major bills pertaining to TRS-ActiveCare this session, the board is taking steps now to mitigate an anticipated shortfall for that program, too. Fortunately, no bills that would negatively affect the TRS pension plan, such as converting the defined-benefit plan to a defined-contribution or hybrid design, gained traction this session. Check out Mark’s blog post for more on the legislative changes that will affect TRS and educators’ healthcare.

 


One of the most significant bills approved by the 85th Legislature this year was House Bill 22, aimed at reworking the A-F accountability system for school districts and campuses. On our blog this week, ATPE Lobbyist Monty Exter answers a number of questions about what the bill does and areas in which Commissioner of Education Mike Morath will be tasked with rulemaking and additional interpretation of HB 22. Read Monty’s blog post for more information about changes coming soon to the A-F system.

 


Male lecturer looking at students writing in a classroomYet another topic that garnered significant discussion by the 85th Legislature this year was educator quality. The results were mixed, as ATPE Lobbyist Kate Kuhlmann analyzed this week for our blog. A high-profile bill to stem educator misconduct and the problem often called “passing the trash” got the approval of lawmakers and has already been signed into law by Gov. Abbott. For more on that bill and several others relating to educator preparation and certification, check out Kate’s latest blog post here.

 


Next week, the State Board for Educator Certification (SBEC) will be meeting on Friday, June 9. We’ll have a report for you on that meeting, plus ongoing analysis of the legislative session that ended this week. ATPE will also bring you up-to-the-minute reporting on any announcements of a special session. As always, you can follow @TeachtheVote and individual members of the ATPE lobby team on Twitter for the most timely news from our team.

17_web_Spotlight_SummitATPE members are also encouraged to register to attend the ATPE Summit, July 10-12 in Austin, where our lobbyists will be presenting an in-person legislative update wrapping up the 85th legislative session and what it means for Texas public education.

 


 

TRS board approves major healthcare changes

TRS logoThe board of trustees for the Teacher Retirement System (TRS) of Texas met Friday to make changes to healthcare and retirement following the actions of the 85th Texas Legislature, which adjourned sine die on Monday.

Before delving into plan information, the board approved new contracts with CVS Caremark as the pharmacy benefit management (PBM) administrator for TRS-Care Standard, TRS-Care Part D, and TRS-ActiveCare. Staff then reviewed the two major pieces of legislation that will define healthcare and retirement benefits under TRS moving forward:

Senate Bill (SB) 1

The state budget covered roughly $480 million of the estimated $1 billion shortfall facing TRS-Care by increasing contributions by both the state and school districts, including one-time state supplemental funding of $182.6 million. While this prevented a worst-case scenario for retirees, the balance will unfortunately have to come from higher premiums and benefit reductions.

House Bill (HB) 3976

This bill represents a major structural overhaul of TRS-Care. It establishes two separate plans: A single High Deductible Plan for non-Medicare participants and a Medicare Advantage and Medicare Part D Plan for Medicare participants.

Under HB 3976, TRS cannot charge a premium during the 2018-2021 plan years to disability retirees who retired as a disability retiree effective on or before January 1, 2017, who are currently receiving disability retirement benefits, and who are not eligible to enroll in Medicare. The bill eliminates the statutory requirement to provide a free healthcare plan for retiree-only coverage, but will provide free generic preventative maintenance medications for enrollees in the high deductible plan. The new program provides an opt-in window for retirees under the age of 65 who choose coverage elsewhere to opt-in to the Medicare Advantage Plan at age 65.

What’s next

On Friday, the board approved the new TRS-Care plans created under HB 3976. From September 1, 2017, to December 31, 2017, the agency will maintain the current TRS-Care 1, TRS-Care 2, and TRS-Care 3 Plans, such that FY 2017 will be an extended 16-month plan year. Deductibles and out-of-pocket accumulators will not restart on September 1, 2017. The agency plans to maintain current retiree premium contributions by plan, Medicare status, family size, and years of service.

New TRS-Care plans

Non-Medicare participants on the TRS-Care 1, TRS-Care 2, and TRS-Care 3 plans will be absorbed into the new TRS-Care Standard Plan. In-network coverage will include a $3,000/$6,000 deductible, $7,150/$14,300 maximum out-of-pocket limits, and 80/20% coinsurance. Out of network coverage will include a $6,000/$12,000 deductible, $14,300/$28,600 maximum out-of-pocket limits, and 60/40% coinsurance.

Medicare participants will be absorbed into the TRS-Care Medicare Advantage/Medicare Part D Plan, which includes a $500 deductible, $3,500 maximum out-of-pocket limit, 95/5% coinsurance, $500 IP hospital copay per stay, $250 OP hospital copay per visit, $65 ER copay, $35 urgent care copay, $5 PCP office visit copay, $10 specialist office visit copay, $0 preventive services copay, $5/$25/$50 retail pharmacy copay, and $15/$70/$125 mail order pharmacy copay.

TRS will make an alternative plan available for certain participants who are Medicare eligible but not enrolled in either Medicare Part A or Medicare Part B, or cannot access a provider through the TRS-Care Medicare Advantage Plan.

New premiums are scheduled to take effect January 1, 2018. A non-Medicare retiree only will see a monthly premium of $200, and a Medicare retiree only will see a monthly premium of $146. Premiums for retiree and spouse are $739/$590, retiree and children $433/$504, and retiree and family $1,074/$1,106.

The TRS-Care Medicare Advantage network is a PPO plan network with an out-of-network benefit equivalent to the in-network benefit. Providers do not need to be in network as long as a provider accepts Medicare and agrees to bill Humana, the TRS-Care vendor.

The agency has already begun the first phase of implementation, which involves communicating to participants the changes that will take effect January 1, 2018. These communications will include a monthly e-newsletter, direct mail correspondence, and online information. While these changes will increase the burdens on plan participants, they are estimated to keep TRS-Care positively funded until 2021.

TRS-ActiveCare Changes

The legislature did not pass any legislation affecting TRS-ActiveCare, which is a self-funded program, but the board did make significant plan changes on Friday.

The sole source of funding for TRS-ActiveCare is premiums. The state contributes $75 per month per employee through the school finance formulas, and districts contribute a minimum of $150 per month per employee, with some districts contributing more. Employees contribute the remainder of the projected gross premiums. Funding requirements for the state and districts have not changed since the program’s inception in 2002.

While in much better shape than TRS-Care, TRS-ActiveCare is facing a shortfall of just under $100 million in 2018, which has placed pressure on premiums. The agency’s goal is to balance premium increases against the need to build the fund balance to protect the plan. The target fund balance at the end of FY 2018 is one month of claims, or $158 million. Without plan design changes, staff suggested an average rate increase of 9.9 percent would be required to achieve the target ending fund balance.

With that in mind, the board approved a number of changes based on agency recommendations. Those on the TRS-ActiveCare-Select and TRS-ActiveCare-2 plans will see increased costs associated with out-of-network providers, and will see ER copays increase to $200 from $150. There are no changes planned regarding prescription drug benefits.

These changes will allow for a slightly smaller 8.1 percent average rate increase. TRS-ActiveCare-1HD rates will increase 2.9 percent for employee only, 8.4 percent for employee and spouse, 9.1 percent for employee and children, and 6.9 percent for employee and family. TRS-ActiveCare Select rates will increase 6.2 percent for employee only, 10.2 percent for employee and spouse, 7.1 percent for employee and children, and 16.8 percent for employee and family. TRS-ActiveCare-2 rates will increase 10.7 percent for employee only, 9.1 percent for employee and spouse, 1.9 percent for employee and children, and 25.5 percent for employee and family.

Other legislative changes

At Thursday’s meeting, executive director Brian Guthrie told board members “we are very pleased” with how the legislative session turned out for TRS. Three key bills related to the system passed within minutes of a crucial deadline late in the session. Debriefing the board, TRS governmental relations director Merita Zoga identified several additional items passed by the legislature related to TRS:

  • HB 89 prohibits governmental entities from contracting with or investing in a company that boycotts Israel.
  • SB 253 adds to the existing divestment statute, prohibiting TRS from investing in companies designated as terrorist organizations.
  • SB 252 prohibits government entities from contracting with companies doing business with Iran, Sudan, or a foreign terrorist organization.
  • SB 7, the teacher misconduct bill, includes language related to TRS. The bill strips the service retirement annuity from a TRS member who is convicted of felony sexual abuse, sexual assault, or improper relationship between educator and student. All or part of the annuity may be awarded instead to an innocent spouse.
  • SB 500 would strip the service retirement annuity of a member of a public retirement system, such as TRS or ERS, if the member is an elected official and is convicted of certain qualifying felonies, including bribery, corruption, perjury, and other offenses related to their official capacity.
  • HB 1428 would allow TRS to act as a mediator in balance billing disputes.

Staff pointed out that the legislature did not pass any bills related to a cost of living adjustment (COLA), TRS-ActiveCare, or pension studies. Other major bills affecting TRS include the following:

SB 1954

This bill allows Optional Retirement Program (ORP)-eligible employees who are not notified properly additional time to elect ORP participation. The proposed bill creates an error correction process for reporting an ORP employee to TRS when the employee is not eligible for TRS. The person would be restored to ORP participation and member, state, and employer contributions related to the incorrect reporting, plus interest, would be paid to the employee’s ORP account. Amounts contributed to TRS that are in excess of participant contributions due to ORP would be refunded to the individual.

SB 1663

SB 1663 provides a number of member friendly benefit and administrative changes. It allows the TRS board to go into executive session to discuss particular investment transactions, strategies, portfolios, and other potential transactions related to private investments if the board determines that deliberating or conferring in an open meeting would have detrimental effect on TRS’s negotiations with third parties or place TRS at a competitive disadvantage in the market. The bill provides TRS with the authority to charge late fees on late reports by reporting entities.

It further allows TRS to add an additional five years of service credit when determining whether an early age reduction is applicable and the amount of the reduction, for a 100 percent joint and survivor annuity payable at the death of an active member. The bill amends current law to provide that disability retirees with less than 10 years of service credit who choose a $150 per month annuity for the number of months of membership to allow their beneficiaries to receive any remaining member contributions as an additional death benefit if the disability retiree dies before the period ends. The bill also moves the TRS sunset review to 2025.

SB 1664

SB 1664 bill provides IRS code compliance, statutory corrections, and member friendly benefit changes. It provides additional time for TRS members to purchase sick and personal leave service credit at retirement and corrects an error referencing the TRS board rather than the Texas Higher Education Coordinating Board to certify state contributions to the ORP.

SB 1665

This bill continues the use of derivatives and external managers capped at 30 percent of total assets and repeals the sunset dates on the authorities.

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.

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.

Teach the Vote’s Week in Review: Dec. 2, 2016

With the 85th legislative session just around the corner, things are busy in Austin. Catch up on this week’s education news:


capitol building, austin, texas, usaAs the Texas Legislature prepares to convene for the 85th legislative session in January, the Capitol is bustling with final preparations. Among the excitement, new members of the House of Representatives were in Austin this week for orientation, offices are being shuffled, and final meetings are underway. Adding to the preparations, the Texas Tribune Symposium Previewing the 85th Legislative Session took place on Tuesday. The event featured many high-profile legislators, including Speaker Joe Straus (R-San Antonio), and offered discussions on plenty of public education issues that are expected to be addressed in the first half of next year. ATPE Lobbyist Mark Wiggins provides more in his post on the symposium and other public education issues facing the upcoming session.

Mark highlights in the same post that Lt. Gov. Dan Patrick expanded his list of legislative priorities. Particularly, he added a priority that aims to selectively prohibit certain employees from deducting their professional association dues through payroll deduction. Texas teachers were among the employees targeted by this bill during the most recent legislative session, although this session’s version of the bill has yet to be filed.

Two budget-related meetings also took place this week. The Texas Legislative Budget Board (LBB) met Thursday to set the spending limit for the 2018-19 biennium, for which legislators will establish appropriations during the upcoming legislative session. The board is a permanent joint committee of the Texas Legislature made up of five Texas House members and five senators, and develops recommended legislative appropriations for all agencies of state government, among other budget-related tasks. In its brief meeting, the board voted to unanimously adopt the constitutional spending limit at just over $99 billion dollars for the upcoming biennium. Earlier in the week, the Joint Select Committee on Economic Stabilization Fund, a fund more commonly referred to as the “Rainy Day Fund,” set the fund’s floor at $7.5 billion. The floor establishes the amount of money that must be in the fund before automatic transfers to transportation funding are made. It does not affect the legislature’s ability to tap the fund to cover emergencies, short falls, or legislative priories.

 


TRS logoThe Teacher Retirement System (TRS) Board of Trustees met in Austin yesterday and today for the board’s final meeting of the calendar year. ATPE Lobbyist Monty Exter covered the meeting and provided the following report:

The board received a presentation on an external review of the TRS pension trust fund’s actuarial valuation as of Aug. 31, 2016. The review covered a range of economic and membership scenarios and how those scenarios would affect the overall health of the fund on a future-looking basis. Two big takeaways from that presentation: 1) the decision by past legislatures to dial down state and employee contributions to the constitutional minimum during the boom of the mid-nineties needlessly and irresponsibly left the fund vulnerable to becoming underfunded during periods of economic recession, and 2) the very vulnerability created by that legislative decision has created a scenario where TRS has to overcome a persistent lag created by the economic downturns in 2000 and 2007-08. Despite a period of average returns in excess of eight percent over the last five years, that lag continues to weigh down the fund.

The board also received an update on the report from the Joint Select Committee on TRS Health Benefit Plans from TRS Executive Director Brian Guthrie. Read more about that report here and view the full board meeting here.

 


Election resultsIn the race for House District (HD) 105, the results of a recount concluded this week that incumbent Rep. Rodney Anderson (R-Grand Prairie) won reelection. His Democratic opponent, Terry Meza, requested the recount following Election Day, where results showed she trailed by only 64 votes. HD 105 was among a handful of districts in the Dallas-Fort Worth area considered to be swing districts leading up to the election. Two other incumbents lost reelection in the area. Rep. Anderson has held the seat since 2010.

 


News broke last week that President-Elect Donald Trump has chosen billionaire education reformer Betsy DeVos as his pick for U.S. Secretary of Education. The pick is a controversial one as DeVos has been heavily involved in efforts to pass vouchers and related alt-school-choice options in states throughout the country. Days after the announcement, the U.S. Department of Education (ED) released its final accountability rule, which needed a rewrite following the passage of the Every Student Succeeds Act (ESSA). Notably, Trump’s pick for education secretary will have the power to do as he or she wishes when it comes to ESSA rules and regulations written by ED. Read more about DeVos and the final accountability rule in ATPE Lobbyist Kate Kuhlmann’s post here.

 


Janna_TCASE_Nov16_croppedLast week, we published a guest post from Jana Lilly, the Director of Governmental Relations for the Texas Council of Administrators of Special Education (TCASE). She shared a preview of some of the special education issues likely to be addressed during the 85th Legislature. In her post, she highlights three major issues: the particularly harmful nature of vouchers for students with disabilities, cameras in special education classrooms, and the much discussed topic of capping the number of students districts identify as in need of special education. If you missed this guest post over the Thanksgiving break, you can read more here.

 


Teach the Vote’s Week in Review: Nov. 18, 2016

Here’s a look at education news highlights from this busy first week of bill filing in Texas:


SBOE logoThe State Board of Education (SBOE) has been meeting this week in Austin. ATPE Lobbyist Mark Wiggins has compiled an update on the board’s actions this week, which covered topics from textbooks to school finance to educator preparation. This was also the last meeting for two members of the board who are stepping down at the end of their terms this year: Martha Dominguez (D) and Thomas Ratliff (R). Read the full SBOE wrap-up here.

 


The Joint Interim Committee to Study TRS Health Benefit Plans released its report to the 85th Legislature yesterday with recommendations for changes to TRS-Care and TRS-ActiveCare to address affordability and long-term viability of the programs. The state’s underfunded health care programs have faced ongoing shortfalls, curtailed in the past by a series of supplemental two-year appropriations and short-term measures. Noting the continuing rise in health care costs and the number of annual new retirees, the committee made up of three state senators and three state representatives is recommending major plan changes by the 85th legislature. The proposed changes are not likely to sit well with affected stakeholders. Citing ambiguous “budgetary constraints the state is facing,” the report offers little hope for increased state funding to alleviate the financial burdens that have been placed on active and retired educators, as well as school districts seeking to offer affordable health care benefits to their staffs and their families. But ATPE reminds members that the report is merely a recommendation and that many legislators will be eager to hear from a broad swath of education stakeholders before taking action in the upcoming session. Read more in today’s blog post by ATPE Governmental Relations Director Jennifer Canaday.

 


The Texas Education Agency (TEA) has been conducting a survey regarding state implementation of the Every Student Succeeds Act (ESSA). The online survey is meant to gather public feedback about the new federal law. Today was the last chance to share input with TEA, as the survey is set to close at 5 pm today, Nov. 18. Read more in this blog post from ATPE Lobbyist Kate Kuhlmann.

 


Monday was the first day of bill pre-filing for the 85th Legislature. ATPE’s Governmental Relations Specialist Bria Moore has been tracking the new bills and shared some statistics for today’s blog. According to the Legislative Research Library, 525 bills were filed on the opening day of pre-filing. While the bills pertained to a number of issues, several focused on hot topics in the education realm such as vouchers and addressing educator misconduct.

ThinkstockPhotos-93490246School privatization has been in the spotlight heading into the 2017 legislative session with vouchers being lauded by both Lt. Gov. Dan Patrick (R) and President-Elect Donald Trump (R) as a reform priority. HJR 24 by Rep. Richard Raymond (D) moves to tackle the controversial subject by proposing a constitutional amendment that would prohibit the authorization or funding of a school voucher program in Texas. ATPE opposes the privatization of public schools through such programs and has made fighting vouchers a top legislative priority for the 85th legislative session.

Meanwhile, a handful of legislators are filing bills to deal with educator misconduct cases, which were discussed during the interim. HB 218 by Rep. Tony Dale (R) prohibits educators dismissed from their positions in one school district due to sexual misconduct from being hired at another district. Legislation banning this type of action, sometimes called “Passing the Trash,” is another one of Lt. Gov. Patrick’s top priorities for the 2017 legislative session. HB 333 by Rep. Morgan Meyer (R) extends the criminal penalty for educators engaging in inappropriate relationships with students to those educators lacking certifications, which would cover teachers in charter schools who aren’t necessarily required to be state-certified. Meyer’s bill would amend a section of the Texas Education Code that previously only applied penalties to certified educators.

Other notable bills filed on Monday included HB 77 by Rep. Will Metcalf (R) which is an extension of SB 149 from the 2015 legislative session allowing for alternative paths to graduation. ATPE strongly supported Sen. Kel Seliger’s (R) SB 149 last year, which is set to expire without an extension. We’ll be watching Rep. Metcalf’s bill closely, along with any others that help to reduce the emphasis placed on high-stakes testing – another ATPE legislative priority.

Stay tuned to Teach the Vote and ATPE.org for more coverage of pre-filed bills in the weeks to come.

 


tea-logo-header-2In other TEA news this week, final accountability ratings have been released for the state’s 1,200+ school districts and charters 8,600+ campuses. Preliminary ratings were revealed back in August, as ATPE Lobbyist Monty Exter reported for Teach the Vote. After that announcement, 104 appeals were filed by districts and campuses. The agency granted appeals and changed ratings for nine school districts and 21 campuses. The overwhelming majority of schools received a “met standard” rating. Read more in this Nov. 17 press release from TEA.

Also from TEA, the agency issued correspondence to school administrators this week reminding them of school district responsibilities under the federal Individuals with Disabilities Education Act (IDEA). The letter from Penny Schwinn, TEA’s Deputy Commissioner of Academics, addresses “child find” obligations to identify students potentially in need of special education and consequences for districts that fail to comply. The letter also clarifies IDEA provisions aimed at preventing misidentification and disproportionate representation of students as children with disabilities. The state’s Performance-Based Monitoring Analysis System (PBMAS), under fire recently, is also mentioned in the correspondence along with a reminder that districts should avoid delaying or denying special education referrals in order to complete Response to Intervention (RTI) phases. The agency writes also that it is creating a new unit with the TEA Division of IDEA Support to provide additional support to districts and education service centers, with further details to be provided “at a later date.” Read the complete Nov. 17 letter from TEA here. Also, watch for a guest post with more on these issues next week on the Teach the Vote blog.

 


 

Interim TRS health care study offers grim prognosis

ThinkstockPhotos-162674067-pillsThe Joint Interim Committee to Study TRS Health Benefit Plans released its report to the 85th Legislature this week. The committee was formed in response to 2015 legislation calling for a review of the health insurance plans administered by TRS and recommendations for reforms that would address financial soundness of the plans, cost and affordability, and access to health care providers.

Sen. Joan Huffman (R) and Rep. Dan Flynn (R) co-chaired the committee, joined by four additional members: Sens. Craig Estes (R) and Jane Nelson (R) and Reps. Trent Ashby (R) and Justin Rodriguez (D). The committee held two public hearings earlier this year, and ATPE gave invited testimony in April urging lawmakers to boost state funding in order to catch up with the increased costs that have been shouldered by educators for many years.

TRS-Care

For TRS-Care, the state’s health care plan for retired educators, the committee observed predictions of “alarming” shortfalls over the next four years with about 20,000 educators retiring each year and the cost of health care steadily increasing. For the 2018-19 biennium, a funding shortfall is predicted between $1.3 and $1.5 billion, and the deficit for 2020-21 could be as much as $4 billion. The report states as follows:

“As there appears to be no end to the rising costs and financial woes of TRS-Care, long-term solutions must be pursued immediately. Providing supplemental funding each biennium to keep TRS-Care solvent is no longer feasible or fiscally responsible. Major plan design and/or funding changes must be sought in the 85th Legislative Session.”

The interim committee report outlines two options for retiree health care, both of which are likely to be controversial. The first is a Health Reimbursement Account (HRA) and Medicare Advantage Plan that would provide a defined contribution of $400 per month for non-Medicare eligible retirees into a reimbursement account in lieu of health insurance, forcing them to obtain their own coverage through the public exchange. For Medicare eligible retirees, the only state-sponsored option under this plan would be to enroll in a Medicare Advantage plan for medical benefits and a Medicare Part D plan for prescription drugs. The second proposal from the committee is a High Deductible (HD) and Medicare Advantage Plan. It features a high deductible ($4,000 in-network) health plan similar to TRS-Care 1 for non-Medicare eligible participants. As with the HRA option, Medicare Advantage and Part D would be the only benefits available to Medicare-eligible participants via TRS if the HD plan is implemented.

Even if such dramatic changes are adopted, the committee expressed lingering doubts in its report about long-term sustainability and a need for increased contributions going forward:

“With health care costs currently at an unsustainable level and continuing to rise, the state cannot continue to provide supplemental appropriations to keep TRS-Care solvent. Additionally, the financial contributions necessary to keep TRS-Care solvent in its current form will only increase infinitely. Therefore, the Committee finds that the HRA and HD Plans discussed previously are the most viable and realistic options to address the financial soundness and sustainability of TRS-Care. However, even if significant changes are implemented under the HRA or HD Plan, the TRS-Care fund would still face a shortfall moving forward, although dramatically less than the expected shortfall of $1.3 to $1.5 billion. Thus, to address long-term funding of the plan, the Legislature will have to review, and possibly modify, the current funding contributions from the state, school districts, and retirees, or continue to provide supplemental appropriations each biennium.”

TRS-ActiveCare

For TRS-ActiveCare, the committee report focuses largely on affordability for actively employed educators, especially in the context of a dramatic rise in premiums. In a state as large and diverse as Texas, there are significant disparities in health care costs depending on geographic location. The committee observed that “employees who reside in lower cost geographic areas are subsidizing those in higher cost areas,” but “attempting to establish premiums based on age and/or geographic location would not achieve plan affordability for all members.”

The interim report details a proposed High Deductible (HD) Health Plan (TRS-ActiveCare1-HD) for school districts with 1,000 or fewer employees, with all other districts being forced out of TRS-ActiveCare and left to find their own alternative health care plans for employees. The remaining eligible districts would have an initial opt-out period before locking in their decision to remain in or out of the state’s plan. TRS-ActiveCare 2, TRS-ActiveCare Select, and HMO options would be eliminated. As recommended by the committee, state and district funding for employees would remain static at $75 and $150 (minimum) respectively. ATPE and other groups have long advocated for lawmakers to increase the state’s $75 monthly contribution, which has not changed since the inception of the program in 2001. The committee unfortunately declined to recommend an increase in the state’s share.

Ultimately, the committee concludes that its proposed HD Plan would be “the most viable and realistic option” for addressing health care affordability for active educators, noting however that more districts would be looking at offering their own health care plans in lieu of the state program. The report advises that school employees should drive decisions about TRS-ActiveCare changes going forward:

“However, if school districts and active public education employees adamantly oppose the proposed changes in the HD Plan to curb the affordability problem, TRS-ActiveCare may continue operating under the current model. The fact is, premiums for all plan options will continue to increase as health care costs rise. Nevertheless, districts and employees may still prefer the stability that TRS provides and the multitude of coverage options. The decision to make significant changes to the plan, or continue in its current form, must ultimately be left to the active public education employees. The employees are in the best position to recognize what is in their best interest and the legislature should support them in any way possible.”

Rep. Justin Rodriguez

Rep. Justin Rodriguez

Rep. Justin Rodriguez was the lone committee member who declined to sign the final report. He wrote in a letter to House Speaker Joe Straus (R), “I do not believe the solution requires a significant shifting of the burden onto our TRS retirees and active public education employees who have sacrificed and worked tirelessly to develop the next generation of Texans.” Rodriguez added, “I would hope that any proposed solution… would entail a shared, and meaningful, contribution of state resources.”

Rep. Trent Ashby

Rep. Trent Ashby

Committee member Ashby supplemented the report with his own letter aimed at offering additional insights to active and retired educators concerned about the proposals. First and foremost, he called the report “a starting point” for further discussions on how to proceed. Ashby wrote, “Though the report contains options I do not support, I look forward to the responses of active and retired teachers who have opinions on how we can best provide stable footing for the programs in perpetuity.” Ashby added his own warning that absent changes, “the result could be catastrophic. Without action, TRS-Care will eventually fail altogether.”

ATPE similarly cautions that the long-awaited interim study report is merely a recommendation and that no decisions have been made at this point for the future of TRS-Care and TRS-ActiveCare. The 85th legislature will have ample opportunity to solicit and consider feedback from education stakeholders before and during the 2017 legislative session, and ATPE will be there to weigh in and advocate for the very best options for active and retired educators.

Read the full interim committee report here, which includes a number of attachments. We invite you to share your feedback with us on this critically important ATPE legislative priority. As always, stay tuned to Teach the Vote and ATPE.org for further analysis and updates as the legislative session approaches.

Teach the Vote’s Week in Review: Oct. 28, 2016

Vote! Vote! Vote!…and catch up on this week’s education news:


GR_VOTE_WEBEarly voting is underway and Teach the Vote has all the information you need to know before going to the polls. The ATPE Governmental Relations team joined ATPE Executive Director Gary Godsey at the voting booth earlier this week to cast votes for public education. Join our GR team and cast your ballot today!

Early voting runs through Friday, Nov. 4, and Election Day is Tuesday, Nov. 8. Voters are turning out to vote in record numbers across Texas; be sure to make plans now to take advantage of the convenience of early voting, which often means shorter lines and helps you avoid last minute scheduling conflicts that could prevent you from casting a vote!

ATPE State Treasurer Tonja Gray casts her vote in the 2016 general election!

ATPE State Treasurer Tonja Gray snaps a selfie after voting in the 2016 general election!

Once you’ve voted, be sure to head over to ATPE’s Facebook page to enter ATPE’s early voting contest. Just snap a selfie with your “I Voted!” sticker and upload your photo in the comments section of the contest post pinned to the top of ATPE’s Facebook page. Three photos will be randomly selected to win a Target gift card.

Don’t forget to visit our 2016 Races page before voting to see where your candidates for the Texas Legislature of State Board of Education stand on public education issues. You might also want to consider the endorsements of an influential parent group, which supports candidates who share the group’s high-quality public education principles.

Already voted? Check out ways you can help ATPE and the Texas Educators Vote coalition in encouraging your colleagues to vote for their students, classrooms, and careers!

 


Piggy bank with glasses and blackboardTeacher retirement was a popular topic this week. On Wednesday, the Texans for Secure Retirement coalition, of which ATPE is a member, conducted its third annual symposium in Austin. ATPE’s newest team member, Lobbyist Mark Wiggins, attended the symposium and reports on it here. The program included projections for the upcoming legislative session by Pension Committee Chair Dan Flynn (R-Van), an analysis of the current political climate from former state representative Vicki Truitt, and presentations on a popular trend: the push for pension reform by Wall Street fund managers and others wanting a piece of the pie. While you’re catching up on the symposium, be sure to learn more about Mark and the great experience he brings to the ATPE team!

The Teacher Retirement System (TRS) Board of Trustees also met this week. ATPE Lobbyist Monty Exter attended and provides a report on the soundness of the fund and plans for the upcoming legislative session here.

 


In a story published this week by the Texas Tribune, Aliyya Swaby reports on the latest development in a state practice involving special education students. The fallout results from a Houston Chronicle investigation that found officials at the Texas Education Agency (TEA) set an arbitrary 8.5 percent cap on the amount of students in Texas that receive special education services. The response to the report has been strong and includes concern from many elected officials. The Tribune reports on a letter sent this week to TEA Commissioner Mike Morath. The letter from Speaker Joe Straus calls on the agency to immediately suspend and overhaul the alleged practice.

 


skd282694sdcThe Texas Education Agency (TEA) released its final financial accountability ratings for the state’s public schools in the 2015-16 school year. As we reported when TEA released the preliminary ratings, the vast majority of Texas school districts and charters earned a superior rating under the School Financial Integrity Rating System of Texas (FIRST).

The FIRST rating system uses 15 financial indicators to assign the state’s school districts and charter schools a letter grade of A, B, C, or F. A corresponding financial management rating is also assigned: Superior (A), Above Standard Achievement (B), Meets Standard (C), or Substandard Achievement (F). Read more about the final FIRST ratings in TEA’s press release found here.

 


EThe 2015 science scores on the National Assessment of Education Progress (NAEP), the assessment used by policymakers to gauge the academic success of our nation’s students, are out this week, and Texas students in the fourth and eighth grade outperformed the national average. Further, when looking at disaggregated data, white, African-American, and Hispanic fourth- and eighth-grade students rank in the top ten nationally. In some cases, they rank as high as second when compared to their peer student populations throughout the country. Commissioner Morath called the strong performance “a reflection of effective teaching and rigorous curriculum seen on Texas campuses every school day.” Read more about NAEP and the strong performance of Texas students and educators in TEA’s press release found here.

The science scores of fourth- and eighth-grade students also show improvement across the nation, with racial and gender achievement gaps shrinking. At the high school level, scores remained stagnant.

 


Head to the voting booth, educators, and take your friends and colleagues with you!

TRS: fiscal year wrap and looking forward to session

Piggy bank with glasses and blackboardThe 2016 fiscal headline for the Teacher Retirement System (TRS): the fund continues to beat expectations.

TRS fund managers brought in $11 billion this year bringing the total fund assets to $132.7 billion. The one year rate of return was 7.38 percent, which is just shy of the long term eight percent expected rate of return. Still, it’s considerably better than last year’s percentage and a very good rate of return considering the 2016 market.

As a result of Senate Bill 1458 passed in 2013, TRS went through some major design changes, including changes in retirement age and funding rates. The bill was designed to dramatically improve the long-term health of the fund and move it toward being a fully funded pension system. As part of that long-term plan, there was an expectation that unfunded liabilities would increase slightly before beginning to decrease substantially.

As expected, the pension’s unfunded liability has moved from $33 to $35 billion and its expected funding date from 33 years to 33.9 years. The expectation at this point in the life cycle of the current plan was that the funding date would be closer to 36 years, which again points to the plan outperforming expectations.

The funded ratio has gone from 80 percent to 79.7 percent. While this slight decrease was fully expected, many of the board members lamented the drop below 80 percent, which is considered a psychological benchmark for the board as it relates to common perceptions of pension fund health. The staff projects that the fund will be back above the 80 percent threshold within approximately seven years.

TRS Executive Director Brian Guthrie previews some of the agency’s legislative goals at yesterday’s board meeting: the TRS proposed omnibus bill for the 85th Legislative Session.

Each session TRS drafts a bill designed to take care of statutory inconsistencies, address the agency’s current needs, and streamline its statutory framework. Some sessions the bill is more significant than others. With SB 1458 only two sessions behind us and the agency going into sunset review (a process that essentially amounts to an audit of the agency and one that all state agencies undergo on a scheduled basis) in the 2019 legislative session, this year’s bill is expected to be fairly light. TRS staff shared four primary recommendations covered by the draft bill with the board:

  • Clarify statutes relating to certain plan terms, electronic communication with participants, IRS plan qualification & compliance, and reporting deadlines from reporting entities.
  • Correct statutory references from the TRS Board of Trustees to the Higher Education Coordinating Board regarding certifying contributions to Optional Retirement Fund.
  • Remove the requirement in the Education Code that the TRS Board of Trustees determine whether a school district offers group health coverage that is comparable to TRS Active-Care.
  • Clarify statute to ensure that additional and enhanced personal financial information required by the TRS Board of Trustees provided by key employees is not subject to public disclosure.

What could be major legislation around TRS-Care and TRS-ActiveCare will be brought forward as separate legislation likely by House Chairman Dan Flynn and Senate Chairwoman Joan Huffman. Their joint interim report on the subject has not yet been released.

Board members hears how TRS stacks up against its peers.

The board heard a presentation from outside consultant, CEM Benchmarking, on a study performed by the company that compares TRS with similar US pension funds. The take away was that TRS is extraordinarily efficient in delivering good service to its members. The agency’s service scores were right at the median but the agency spent on average only about one third as much as its peers to achieve that result.

The two standout areas in the report, in addition to the very low cost per member, were call center performance and efficient pension inceptions. At just over two minutes, hold times when calling into TRS were a full minute and a half less than the peer group average and have decreased by more than half in recent years. In addition, busy signals, dropped calls, and hang ups have been reduced from nearly 25 percent of all calls to less than eight percent.

In what may be the most important metric for new retires, TRS knocks efficient pension inceptions out of the park. The consultant considers an efficient pension inception to be one in which the beneficiary receives their first pension check within 30 days of notifying the fund of their intention to begin drawing retirement. This essentially means receiving the check within the same month as their final pre-retirement pay check, thereby avoiding any interruption of income. TRS achieves that result 99.9 percent of the time, compared to 86.7 percent for the peer group.

If you would like to watch the full TRS board meeting it can be viewed here.

Public pensions eyed by outside interests

Tweaking the Teacher Retirement System seems to be a back-burner issue for lawmakers heading into the next legislative session, but outside interests are angling for big changes just a bit further down the road.Credit Crunch USA

Texans for Secure Retirement, a coalition of state employee groups, including ATPE, gathered advocates together Wednesday to focus on safeguarding and improving the public retirement system.

Addressing the group, state Rep. Dan Flynn (R-Canton), who chairs the Texas House Pensions Committee, said efforts to shore up the Employees Retirement System (ERS) during the 2015 legislative session helped get ERS “going in the right direction.” Legislators will determine its fate through the Sunset process this session (beginning in January), and TRS will undergo the same process in 2019.

So what does this have to do with educators’ pensions?

A few interest groups are pressuring government employers to abandon traditional “defined benefit” (DB) pension plans, which promise you’ll receive guaranteed retirement income for the rest of your life, based on your salary and length of service. Once the most common type of retirement plan around, DB plans have gradually been phased out by private sector employers in favor of “defined contribution” (DC) plans like 401(k)s, which promise to deliver a lump sum upon retirement, based upon monthly contributions.

Lower interest rates, tougher regulation and a desire to cut costs have all contributed to the private sector’s switch; and it’s true that many private sector employees are spending less time with a single employer – which has a negative effect on DB retirement income. Yet for long-term employees like teachers, the average DC plan yields comparatively little retirement support and exposes retirees to the risk of outliving their money. For example, an annuitized 401(k) balance of $100,000 could translate to around $400 a month in retirement. Furthermore, while your retirement is actuarially sound and managed by full-time professionals, 75 percent of DC funds failed US Department of Labor audits in 2013.

So why the interest?

The $130 billion portfolio managed by TRS is a big, shiny apple to Wall Street fund managers – but it’s your money, and its strength lies in conservative, long-term investment. The push to convert plans isn’t very big and currently appears concentrated at the local and county levels, where some plans need significant work to get their fiscal houses in order. Unlike the troubled local plans DC conversion proponents like to point to, TRS has remained sound over the years. This is largely thanks to stable funding, sound investing, and a conservative benefit structure.

These fundamentals were further strengthened by the passage of Senate Bill 1458 by former state Sen. Robert Duncan in 2013. Thanks to SB 1458, passed in large part due to the efforts of the ATPE lobby team, it’s unlikely we’ll see discussion of major changes to teachers’ retirement this session, but it’s something we’ll continue to watch closely for you.