Category Archives: TRS

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.

Teach the Vote’s Week in Review: Sept. 23, 2016

Here’s your recap of this week’s education news:

 


medwt16002A subcommittee of the U.S. House Committee on Education and the Workforce met on Tuesday to discuss a funding-related proposal under the Every Student Succeeds Act (ESSA). The proposal, which isn’t completely new, is referred to as “supplement, not supplant” and requires states to show that federal money is only used to bolster a state’s education budget; dollars from the feds cannot be used to replace funding that the state would otherwise spend. The recently updated rule proposal released by the Department of Education (ED) alters the way states must demonstrate compliance, and considerable disagreement has surfaced over the new interpretation.

The Subcommittee on Early Childhood, Elementary, and Secondary Education showcased that disagreement this week. Republicans generally feel that King has far overstepped his bounds and others have specific concerns about how the new language will realistically affect states and local school districts. King and his supporters, however, maintain that the rule is a step toward better leveling the playing field for disadvantaged students. The U.S. Senate education committee held a hearing earlier this year, when the proposal was in an earlier, non-finalized form. The comment period on the proposed rule runs through Nov. 7.

Meanwhile this week, the same committee’s leadership sent a letter to Secretary King asking him to outline ED’s remaining regulatory plans. The U.S. House Republican education leaders expressed concern over “midnight rulemaking,” or rulemaking that takes place in the months prior to an outgoing president’s departure from office. One piece of non-binding regulatory work King can check off of that list is guidance on how schools and states can better support English language learners under the new law. ED released the guidance today, which touches on things like how states can spend certain federal funds and how to approach specific ELL populations. Something that could be added to his regulatory to-do list is guidance on how funding under Title II can be used to address teacher shortages, as Congress’s Democratic education leaders sent a letter this week requesting input.

Watch for more on supplement, not supplant and other regulatory issues facing ED as time ticks away on this administration’s stay in office.

 


TRS logoThe Teacher Retirement System (TRS) board met in Austin this week. ATPE Lobbyist Monty Exter attended the board meeting and provided a recap of the board’s actions and agenda. The board adopted policy changes affecting current and future beneficiaries, altered TRS Active Care rules to benefit employees going from part-time to full-time status, and heard presentations on the TEAM project and Brexit, among other issues addressed. Read Exter’s post to learn more.

 


EA report released last week by a national think tank called the Learning Policy Institute looks at what they project to be a growing teacher shortage in the United States and makes research-based policy recommendations to reverse the trend. The report notes that declining enrollment in educator preparation programs, high attrition rates, and a rising student population pose a particular threat to teacher shortages in the United States and anticipates shortages to grow if measures aren’t taken by policymakers to address and reverse the trend.

Using research from the report to determine what factors play a serious role in both deterring and detracting new and veteran teachers from the profession, the institute simultaneously assigned a “teaching attractiveness rating” and “teacher equity rating” for every U.S. state. Texas received a 2 for its teaching attractiveness rating, a rating aimed at showing how supportive the state is of teacher retention and recruitment, based on the factors that contribute to working conditions, compensation, teacher qualifications, and teacher turnover. On teacher equity, Texas received a 2.3, which indicates the extent to which students are equitably assigned uncertified or inexperienced teachers. The ratings were based on a 1 to 5 scale.

Read more about this report and dig deeper into its findings and policy recommendations in ATPE Lobbyist Kate Kuhlmann’s post from earlier this week.

 


Elections 2016 Card with Bokeh BackgroundTexas Educators Vote, a coalition of Texas public education groups who are working together to create a culture of voting in Texas public schools, is preparing for the upcoming general election and needs your help! The coalition, of which ATPE is a member, is looking for leaders to help organize local educators to vote in support of Texas public schools. The coalition will provide the tools necessary to get educators in your area motivated and educated, and the role will require minimal time and effort. The reward, however, will be huge: educators receiving the support and encouragement they need to vote in support of their profession and on behalf of the 5 million Texas school children who don’t have a vote. Learn more here.

This week the Texas Secretary of State’s (SOS) office reported an uptick in registered voters ahead of the election in November. Approximately 14.7 million voters are registered to vote in Texas, and the SOS expects that number to rise above 15 million. This increase in registered voters is good, but we must ensure that the number of public school advocates registered to vote grows too. Last week we reported that the Senate Education and Senate State Affairs committees held interim hearings focused on a handful of controversial policies like vouchers and payroll deduction, and, this week, Lieutenant Governor Dan Patrick gave a speech on his vision for passing vouchers in Texas next session. The interim hearings continue next week as the House Public Education Committee is set to spend two days studying the Texas school finance system (watch for more next week!). The stakes are high for our kids and for your profession, and it is crucial that we vote for pro-public education policymakers who support you and the kids in your classroom.

The last day to register to vote in the general election is Oct. 11, and early voting begins on Oct. 24. Click here to learn more about the election and to make sure you are registered to vote before it’s too late!

 


Recap of Sept. TRS board meeting

The Teacher Retirement System (TRS) board is meeting in Austin this week for a regularly scheduled meeting. The board will wrap its two day meeting today. Here is a breakdown of the board’s agenda and actions taken so far.

First, the board adopted several policy changes, including changes that will impact current or future beneficiaries.

§ 25.31, relating to Percentage Limits on Compensation Increases
This change impacts a small group of members whose first year of service is a short or partial year (it’s particularly impactful to those who enter the system toward the end of their career). Under the current rule, a partial year of employment creates an artificially low compensation number for the member’s first year. The member is then limited to an increase not to exceed 10% in each subsequent year. Under the new rule, only the year that counts as service credit (approximately five months of service) will be considered with regard to the limit on year-over-year compensation increases for the purposes of calculating the member’s highest five years of compensation.

§ 29.83, relating to Calculation of Amount of Retirement Benefit
This change positively affects a small group of TRS members whose years of service include years in a reciprocal system outside of TRS. By making this change, members who retire before normal retirement age will have a less harsh decrease in their retirement benefits than they otherwise would under the existing rule.

The board also made a change to TRS Active Care, implementing a new rule that allows an employee going from part-time to full-time employment to immediately enroll without waiting for the next open enrollment period. This change benefits both the employee, who is gaining access to state and potentially new district dollars toward their insurance premiums, and the district, who is required under the federal Affordable Care Act (ACA) to offer coverage to all full-time employees.

On the legislative front, the board is scheduled to hear an update on the system’s legislative priorities during its October meeting. Expect the legislative priorities to focus heavily on TRS health care.

An additional (potentially legislative) issue being watched by TRS staff is a downward shift in the average expected rates of return used by large funds to create their actuarial valuations. Currently TRS assumes that long-term investment returns will average 8%. This number is critically important because it is a huge factor in determining the assumed amount of money available to pay benefits. The ability to pay benefits into the future, or a fund’s unfunded liability, is the primary indicator of a fund’s health. Because assumptions of future investment returns are based on an assumed (not real) number, decreasing the assumed rate of return dramatically decreases future assumed investment returns that can be used to pay for retiree benefits and increases the fund’s unfunded liability. The only way to decrease a fund’s unfunded liability in the face of lower assumed investment returns is to increase member and employer contributions. TRS staff have indicated that they hope to avoid serious discussions on changing the assumed rate of return until after the upcoming legislative session, primarily to avoid drawing attention away from the TRS Care issue, which is currently more pressing.

The technology infrastructure update continues to move forward. To date the TEAM project has provided TRS with improved technical infrastructure, better data, documented business rules, an enhanced financial data hub, and a new website.

The board received a presentation preview of the new site including the following short video produced by TRS. The new website goes live on Monday.


The project timeline for the completion of this project has been extended to ensure that the work is done correctly and that implementation dates align with the school year. Phase 1A and 1B are complete. The remainder of Phase 1 will go live in August of 2017. Phase 1 was initially scheduled to go live this year. Phase 2 which is progressing concurrently to Phase 1 is scheduled to go live by August of 2019, but may be ready by 2018.

Finally, the board heard a fascinating presentation on the causes and effects of Brexit from Brit Harris, Chief Investment Officer of TRS, and Jes Staley, CEO of Barclays. Many of the underlying issues surrounding immigration, income inequality, and the effects of globalization which drove the vote are present in many countries around the world including the U.S.

Teach the Vote’s Week in Review: June 17, 2016

These are stories making news this week in the Texas education world:


Josh Sanderson

Josh Sanderson

The Teacher Retirement System (TRS) board is meeting this week and tackling some difficult decisions about funding active and retired educators’ healthcare needs. Inadequate funding from the legislature over a period of many years has created a looming problem that must be solved. ATPE Lobbyist Josh Sanderson is attending the meetings this week and has provided a summary of the changes that are in store for TRS members. Click here to check out Josh’s latest blog post on TRS developments.


ThinkstockPhotos-481431733As we have been reporting on Teach the Vote recently, there were some very close races in the May 24 primary election runoffs that resulted in recounts. In House District 54, a recount was sought in the race to succeed Rep. Jimmie Don Aycock (R-Killeen), the popular chairman of the House Public Education Committee who did not seek re-election. Killeen mayor Scott Cosper (R) defeated Austin Ruiz (R) on runoff election night by 43 votes. Yesterday, we learned that the recount request by Ruiz has confirmed Mayor Cosper to be the winner of the Republican nomination. Cosper, who was endorsed by the outgoing Aycock and by Texas Parent PAC in the primary, will next face Democrat Sandra Blankenship in the general election in November.

We reported earlier this month on another recount in which Rep. Wayne Smith (R-Baytown) lost to challenger Briscoe Cain (R) in House District 128. With recounts completed, attention turns now to the general election. Keep up with Teach the Vote in the coming months for information about contested races for the Legislature and State Board of Education in November.

 


Monty Exter

Monty Exter

Earlier this week, the Texas Commission on Next Generation Assessments and Accountability held yet another work session to try to reach consensus on recommendations for the 85th Legislature. ATPE Lobbyist Monty Exter provided an update on this week’s meeting and has been reporting on some of the issues that commission members are grappling to address. Testing concerns have been of particular interest to many commission members, education stakeholders, and the media, especially in light of several glitches that plagued this year’s administration of the STAAR tests to students. Meanwhile, State Board of Education (SBOE) members are also encouraging the public to share their feedback on testing and accountability. Click here to read more about the SBOE public survey that is open through June 30.

 


Kate Kuhlmann

Kate Kuhlmann

ATPE Lobbyist Kate Kuhlmann contributed a blog update this week on the meetings held by the State Board for Educator Certification (SBEC) last week. The board held both a work session to explore the role of educator preparation programs (EPPs) and trends in educator certification, along with its regular board meeting on Friday, June 10. Read Kate’s latest blog post to learn more about the actions taken by the board and some significant agenda items that were postponed.

 


ThinkstockPhotos-100251374Next week, ATPE staff and state officers will be in the nation’s capital advocating for federal education priorities. They will be meeting with members of Texas’s congressional delegation to urge action on Social Security legislation, discussing policy issues with U.S. Department of Education officials, and attending a hearing on the implementation of the Every Student Succeeds Act (ESSA). Follow @TeachtheVote on Twitter for updates from our team in Washington, DC.