Category Archives: TRS

Teach the Vote’s Week in Review: Aug. 18, 2017

Here’s your post-special session edition of ATPE’s Teach the Vote weekly wrap-up:

 


ThinkstockPhotos-455285291_gavelTuesday night marked the end of the 85th Legislature’s special session, and ATPE is pleased that a number of anti-public education proposals were defeated. The legislature declined to grant Gov. Greg Abbott’s request for a private school voucher program for students with special needs, opting instead to fund state grant programs that will aid public school students with autism, dyslexia, and other challenges. Also blocked were discriminatory bills to take away educators’ access to payroll deduction for their association dues. ATPE is thankful for the educators who called and wrote to their lawmakers or visited the capitol to take a stand for educators having the same rights as other public employees and being able to continue to manage their own money as they choose.

The special session also resulted in some gains for public education through the passage of House Bill (HB) 21 by Rep. Dan Huberty (R-Kingwood). Although the Senate would not agree to the $1.8 billion in additional public school funding that the House approved or to tapping into the state’s rainy day fund, the final bill does add $563 million over and above the budget passed by lawmakers during the regular session. That extra money will help some districts facing the loss of Additional State Aid for Tax Reduction (ASATR) funds this year, provide assistance for charter school facilities, and significantly, inject $212 million into the TRS-Care health insurance program for retired educators. The Senate rejected any long-term structural changes to our school finance system, which were favored by the House, but they included language in HB 21 to create a school finance commission that will study the issue over the next two years.

The Senate approved its version of HB 21 by a vote of 25 to 6 late Monday night. The House voted 94 to 46 to accept the Senate’s version of HB 21 Tuesday evening, with a number of representatives expressing disappointment that the bill did not do more, and many who stated they were reluctantly voting for it in the interest of preserving some modest gains for the schools in their districts. Shortly thereafter, the House surprised many by adjourning sine die upon a motion by Chairman Huberty, one day before the expiration of the 30-day special session. The Senate similarly adjourned sine die a few hours later after declining to accept a House version of a property tax bill. In a press conference late that night, Lt. Gov. Dan Patrick was quick to blame the House and its leadership, including Speaker Joe Straus, for preventing more of the governor’s special session agenda from being passed. For his part, Gov. Abbott similarly complained that the House had obstructed bills, despite the fact that legislators gave final approval to bills covering half the items on the governor’s special session call.

With the governor’s signature on the bill, the next step for HB 21 will be for the Commissioner of Education and TRS board to propose and adopt rules implementing various aspects of the law. (Read more about the TRS-Care changes being considered next week in the next section of today’s wrap-up.) We’ll keep you posted on all the rulemaking developments and let you know how you can provide input to state policymakers during that process here on Teach the Vote.

ATPE Executive Director Gary Godsey said in a press statement, “We appreciate those in the legislature who fought for additional funding and structural improvements to our school finance system. ATPE looks forward to working with lawmakers during the interim to recommend longer-term solutions that will help all Texas students excel and enable us to recruit, reward, and retain the best educators in our public schools.”

 


Drugs and MoneyThe Teacher Retirement System (TRS) Board of Trustees will be meeting next Friday, Aug. 25, to consider changes to the TRS-Care healthcare program for retired educators. As noted above, the passage of HB 21 during the special session means that TRS will have an extra $212 million this biennium to offset rising costs of TRS-Care. ATPE Lobbyist Monty Exter has been attending meetings with TRS staff to learn how the additional money will be used to help retired teachers. Check out his blog post for more on the specific changes the TRS board is expected to adopt next week.

 


tea-logo-header-2On Tuesday, the Texas Education Agency announced the 2017 accountability ratings for school districts and campuses. The overwhelming majority of schools (95 percent) earned a “Met Standard” rating this year, and there were fewer campuses receiving an “Improvement Required” rating in 2017. Final 2017 ratings will be shared in December following an appeal period for schools seeking to change their ratings.

View the complete accountability ratings on the TEA website here. ATPE congratulates the students and staff of all our high-achieving public schools!

 


During the special session, ATPE's Governmental Relations staff presented House Speaker Joe Straus with an honorary resolution passed by the ATPE House of Delegates in July.

During the special session, ATPE’s Governmental Relations staff presented Texas House Speaker Joe Straus with an honorary resolution passed by the ATPE House of Delegates in July.

 

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.

Busy House tackles TRS, vouchers & merit pay

The Texas House of Representatives approved a pair of bills designed to aid retired teachers who have experienced sticker shock under new TRS-Care rates that resulted from the legislature’s underfunding of the health care program for retired public school employees. Inadequate funding formulas created a $1 billion shortfall for TRS-Care heading into the next biennium, which House lawmakers fought to close by contributing roughly $500 million to the program. Their efforts prevented TRS-Care from completely collapsing, but rate hikes were required to make up for the remaining deficit.

House Bill (HB) 20 by state Rep. Trent Ashby (R-Lufkin) would make a one-time $212 million appropriation from the $11 billion economic stabilization fund (ESF) to lower premiums, deductibles and out-of-pocket costs for retired teachers. HB 80 by state Rep. Drew Darby (R-San Angelo) would provide for a cost-of-living adjustment (COLA) once TRS-Care is designated actuarially sound.

The House passed HB 20 by a vote of 130-10, with state Reps. Briscoe Cain (R-Deer Park), Matt Krause (R-Fort Worth), Mike Lang (R-Granbury), Jim Murphy (R-Houston), Matt Schaefer (R-Tyler), Matt Shaheen (R-Plano), Jonathan Stickland (R-Bedford), Valoree Swanson (R-Spring) and Bill Zedler (R-Arlington) voting no. HB 80 was approved by a vote of 139-2, with state Reps. Yvonne Davis (D-Dallas) and Carol Alvarado (D-Houston) voting no.

“Based on the feedback we’ve heard back home, the House cast an overwhelming vote Tuesday to help retired teachers who are facing very steep increases in their monthly expenses,” House Speaker Joe Straus (R-San Antonio) wrote after Tuesday’s vote.

“Helping retired teachers is one of the most significant and important things that we can do in this special session, and I’m proud that the House came together today to support these educators,” said Straus. “This vote was a smart and appropriate use of about 2 percent of the $11 billion that is projected to be in the state’s Rainy Day Fund in the next budget cycle. It will keep the Rainy Day Fund balance at a historically high level while helping Texans who have committed their lives to the education of our children.”

In committee news, House Public Education Committee Chairman Dan Huberty (R-Houston) recommitted school finance HB 21 to the committee Monday afternoon. The committee then met briefly Monday evening to approve a committee substitute to HB 21 that removed the charter school funding added to the version filed at the beginning of the special session. The committee reconvened Tuesday to hear the following bills:

House Public Education Committee meeting August 1, 2017.

House Public Education Committee meeting August 1, 2017.

HB 54 by state Rep. Shawn Thierry (D-Houston) would require school districts to reimburse classroom teachers at or below the sixth grade level up to $600 per school year for the cost of classroom supplies. Reimbursement would be paid through state and federal funds identified by the commissioner of education. ATPE supports this bill.

HB 60 by state Rep. Gina Hinojosa (D-Austin) would exempt school buses from paying tolls. Similar legislation passed the Senate on the local and consent calendar during the regular session.

HB 130 by state Rep. Jeff Leach (R-Plano) would require school districts to annually report the expenses related to administering the STAAR test. ATPE supports this bill.

HB 132 by state Rep. Ron Reynolds (D-Missouri City) affects Fort Bend ISD, and would change the board of trustees from the current at-large system of representation to a hybrid system to include single-member districts.

HB 145 by state Rep. Jessica Farrar (D-Houston) would allow school districts to employ a social worker to provide “services specialized to assist students and families and designed to alleviate barriers to learning, connect the home, the community, and the school, advocate for the best interest and academic success of students, strengthen relationships, and assist with basic and psychosocial needs.” ATPE supports this bill.

HB 149 by state Rep. Cindy Burkett (R-Sunnyvale) would allow school districts to proportionally reduce the days of service required of an educator employed under a ten-month contract if the district anticipates providing less than 180 days of instruction, according to its academic calendar. This change would not affect an educator’s salary. ATPE supports this bill.

HB 157 by state Rep. Barbara Gervin-Hawkins (D-San Antonio) would expand eligibility requirements for admission to an educator preparation program to include a high school equivalency certificate and full-time wage-earning experience obtained while serving in the United States armed services. ATPE submitted testimony against HB 157, pointing out research that has correlated poor preparation with lower retention and higher attrition rates for classroom teachers. This makes selected the best qualified candidates all the more important. Furthermore, expedited preparation programs are untested in Texas, and standards should not be further degraded until more is known about program effectiveness.

HB 191 by state Rep. Phil King (R-Weatherford) would create a commission to recommend improvements to the public school finance system. The 13-member commission would include four members appointed by the governor, four appointed by the lieutenant governor, four appointed by the speaker of the House and would be chaired by a member of the State Board of Education (SBOE). Members would include legislators from each chamber, members of the business and civic communities, and a public school administrator or elected school board trustee. ATPE submitted neutral testimony on HB 191, pointing out that legislators have previously studied school finance as part of their interim charges. With school finance reform added to the expanded special session call, lawmakers should focus efforts toward substantive changes. Furthermore, any commission that studies school finance should incorporate educator input.

HB 198 by state Rep. Travis Clardy (R-Nacogdoches) would order school districts to increase teacher pay and would create a system of teacher performance designations carrying additional pay for teachers who demonstrate high levels of student growth. HB 198 would order districts to raise the average teacher salary by $1,000 every other year, beginning with the 2021-2022 school year. Districts in which the average teacher pay is less than $51,000 per year would also be required to raise the average teacher salary by $1,000 for the 2019-2020 school year. School districts that received less state and local maintenance and operation (M&O) funding under the Foundation School Program (FSP) or the same or less state and local funding per weighted average daily attendance (WADA) than the previous year would be exempt.

The bill would create a three-tiered program to designate accomplished, distinguished and master teachers. The “accomplished” designation would require a national board certification issued by the National Board for Professional Teaching Standards, for which districts would be eligible to receive a $1,900 advance from the FSP in order to cover the cost. To become “distinguished,” an accomplished teacher would need to show student growth in the top 25 percent of teachers in a similar certification field over the most recent three years. A master teacher must perform in the top five percent. Eligibility requirements and performance metrics would be established by the commissioner of education through negotiated rulemaking with educators and experts in the field of education. Applicants would be evaluated by a peer review panel consisting of a majority of master teachers.

Districts would receive an additional $4,000 in state funding for each accomplished, distinguished and master teacher employed. Alternately, rural and majority economically disadvantaged schools would be eligible to receive $8,000 for each distinguished teacher and $20,000 for each master teacher. Schools that receive alternate funding would be required to raise the average annual pay of teachers who receive additional funding to $68,000 within three years and $85,000 within five years.

ATPE lobbyist Monty Exter testified neutrally on HB 198, pointing out that the devil is in the details of any merit pay system. While the bill has some promising components, there are concerns regarding the viability of funding and how to go about designing a system that works well in both small, rural schools and large, urban schools. It is also important to ensure that such a program does not become heavily reliant upon standardized test scores. ATPE applauds efforts to develop meaningful legislation, and encourages lawmakers to continue this conversation through the interim in pursuit of a plan that will achieve the critical grassroots buy-in necessary to be adopted statewide.

HB 200 by state Rep. Mary González (D-El Paso) would create an 18-member commission to recommend improvements to the public school finance system which would include the chairmen of each chamber’s committee overseeing public education. Appointed positions would be required to include a parent, an administrator, a classroom teacher, and specialists in special education, bilingual education and career and technology education (CTE). The committee would be required to broadcast meetings live via the Internet. ATPE supports this bill.

HB 204 by state Rep. Dan Huberty (R-Houston) would require electrocardiograms for students participating in University Interscholastic League (UIL) sports.

HB 224 by state Rep. Morgan Meyer (R-Dallas) would entitle districts purchasing attendance credits to retain M&O tax revenue sufficient so that funding would not drop below the average M&O costs for the preceding three school years.

HB 231 by state Rep. Tomas Uresti (D-San Antonio) would add teacher turnover information to the information required in the performance report of a public school district. ATPE supports this bill.

HB 232 by state Rep. Helen Giddings (D-DeSoto) would include prekindergarten in the 22-student class size limit currently in effect for kindergarten through grade four. ATPE supports this bill.

HB 253 by state Rep. Ron Simmons (R-Carrollton) is the Senate’s voucher bill, and is identical to the filed version of Senate Bill (SB) 2. The bill includes a $10,000 voucher for special education students, continued ASATR funding for certain schools that say the funding is necessary, $60 million in facilities funding for fast growth school districts, $60 million for facilities funding for charter schools, and a limited grant program for public school special education students to access up to $500.

Parents of disabled children have raised numerous concerns, and ATPE lobbyist Monty Exter testified against HB 253. The voucher in HB 253 would not cover the full cost of private special education tuition in most cases, which can average around $30,000, and which some public school districts required to fully cover under existing federal laws. Admission to private institutions would not be guaranteed, transportation is not guaranteed, and participating students would be required to waive their federal rights and protections under the Individuals with Disabilities Education Act (IDEA).

HB 263 by state Rep. Nicole Collier (D-Fort Worth) would require charter schools to adjust their admissions policies to prioritize students who reside within the school’s attendance zone.

HB 264 by Rep. Hinojosa would prohibit charter schools from maintaining admissions policies that discriminate on the basis of discipline history. ATPE supports this bill.

HB 272 by state Rep. Linda Koop (R-Dallas) would create a state financing program administered by the Texas Public Finance Authority (TPFA) to assist school districts with certain expenses. The program would have the authority to issue up to $100 million in bonds or other obligations, which would be guaranteed by the Permanent School Fund.

HB 290 by state Rep. Drew Springer (R-Muenster) would modify the sparsity adjustment to increase funding for small school districts operating programs with fewer than 130 students.

HB 306 by Rep. González would order an annual increase in the basic allotment by the greater of the national inflation rate or one percent of the allotment for the preceding school year. ATPE supports this bill.

HB 320 by state Rep. Gary VanDeaver (R-New Boston) would create an education enhancement program for certain students with disabilities. The program would cover costs for transportation, private tutoring, educational therapies and related services for students with dyslexia, autism, speech disabilities, and learning disabilities. Program participants would continue to be public school students and would retain IDEA rights. The program would be funded at $10 million per year from the state’s general revenue fund. ATPE lobbyist Monty Exter testified in support of HB 320, while also pointing out room for improvement. Exter suggested agency oversight can and should play a role in ensuring children receive the correct services and is in a position to review disputes between parents and local school districts.

HB 324 by state Rep. Harold Dutton (D-Houston) would require any district with a student enrollment that includes more than 1,000 African-American males to use only the academic achievement differentials among African-American males for accountability purposes under the first domain of the “A through F” school accountability system.

HB 325 by Rep. Dutton would include a student residing in the boundaries of a school district who is attending an open-enrollment charter school in calculating the district’s WADA.

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.

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.