Tag Archives: budget

School finance commission considers first round of recommendations

The Texas Commission on Public School Finance met Tuesday morning to discuss recommendations from the working group on outcomes, lead by Todd Williams. Commission Chair Scott Brister opened the meeting by requesting suggestions for how to pay for the various recommendations the commission has received.

Texas Commission on Public School Finance meeting July 10, 2018.

Texas Education Agency (TEA) Chief School Finance Officer Leo Lopez was the first invited witness, and provided an overview of how public education in Texas is funded. Currently, the state pays 36 percent of the total cost of funding schools. Excluding local recapture, the bulk of funding – 51 percent – is carried by local property taxes. Recapture, which is also local funding but was counted separately for the purposes of Lopez’s presentation on Tuesday, amounts for three percent of funding. The remainder comes from federal funding.

According to TEA’s numbers, state funding on a per-student basis has remained flat since 2008. When adjusted for inflation, this represents a decline in actual dollars. In the same time period, the biggest increase in funding has come from local property taxes. Legislative Budget Board (LBB) Assistant Director John McGeady explained that while the LBB and TEA use different calculations to determine state spending, both sets of data show the state’s share of funding has steadily declined over the past decade.

Williams introduced the same recommendations the working group approved last week, which include outcome-based incentives at the 3rd, 8th, and 12th grade levels. The 3rd grade reading gateway would be supplemented by increased funding for schools with high populations of economically disadvantaged and English learner students that could be used to provide full-day prekindergarten. The 8th grade incentives would target reading and Algebra I, and 12th grade would focus on indicators of post-secondary readiness.

The recommendations from the outcomes working group also include a performance pay system that would reward teachers who complete more rigorous educator preparation programs, provide higher pay for educators according to locally-developed, multi-metric performance evaluation programs, and incent administrators to direct the highest performing educators into campuses and grade levels with the greatest need.

State Sen. Paul Bettencourt (R-Houston), who has argued against increasing school funding, argued fiercely against objective data presented by Williams that indicate Texas will miss its “60×30” goal by two decades years. The goal is to ensure that 60 percent of Texas 25- to 34-year olds obtain a postsecondary degree or certificate by 2030. According to current rates of postsecondary attainment, the state will not reach this goal until 2051. Bettencourt argued businesses rely on net migration into the state, despite the fact that this necessarily reduces the number of high paying jobs available to students educated in Texas.

Williams told the members he would welcome feedback on the recommendations, and suggested more testimony could be taken, specifically from the Texas Higher Education Coordinating Board (THECB) regarding 60×30 progress. State Rep. Diego Bernal (D-San Antonio) suggested the working group could collect comments and produce a revised draft.

Williams estimated the cost of implementing the recommendations at $1 billion annually, or $2 billion per biennium. This would gradually increase to $2.5 billion annually over a ten-year period, as districts meet stretch goals and additional districts phase in the recommendations. This could ultimately save the state money by higher-paid workers contributing more state taxes, and fewer state resources would be needed for uninsured medical costs and incarceration. The expenditures working group is expected to meet August 9 to work on recommendations. House Public Education Committee Chair Dan Huberty (R-Houston), who leads the expenditures working group, said more than 200 recommendations have been received. The full commission does not plan to meet until September.

Brister said the commission will not hold a vote until the total cost of recommendations can be calculated and until the commission can determine from where the money to pay for them will come.

Working group releases first set of school finance recommendations

The Texas Commission on Public School Finance working group on outcomes met Tuesday in Austin to consider recommendations based on more than 60 hours of testimony heard by the commission since its first meeting in January.

School finance commission working group on outcomes meeting July 3, 2018.

Group leader Todd Williams began the meeting reading from a detailed report that suggested the state should invest more dollars in specific strategies to accelerate reaching the “60×30” goal of ensuring 60 percent of students go onto post-secondary success by the year 2030.

Common themes from testimony included the importance of early intervention, since only 60 percent of students arrive at school kindergarten-ready. The report indicated teachers are the most important in-school factor in student outcomes, and funding should ensure that every teacher candidate has access to high quality educator preparation programs, ensure they stay in the profession and classroom, and ensure they address student challenges as early as possible.

In order to achieve post-secondary achievement, the report suggested funding should ensure graduates do not require remediation in higher education and that achievement of a post-secondary credential is not only expected, but achievable, affordable and supported. In addition, the report suggested systemic incentives, including ensuring that financial incentives are tied to the achievement of our most critical outcomes.

The working group’s formal recommendations encompass three core principles: Ready to learn, ready to teach, and ready to earn. According to the report, funding should include some specific incentives within the formula funding tied to specific goals at critical gates.

The first of these incentive gates is 3rd grade reading, and the working group is recommending providing an additional weight for low income and/or English language learners for pre-K through grade 3. At each district’s discretion, dollars from this 3rd grade reading investment would be sufficient to be used to fund full day pre-K, tutoring interventions, expanded dual language programs, specialized multi-year early childhood professional development, and a longer school year.

The second incentive is funding for every 8th grader who meets the state’s standard in reading and Algebra I. This is expected to help increase college readiness. The third incentive is funding for every high school graduate assessed as college or career ready, who successfully achieves industry certification or enrolls in college or the military. Incentives for rewarding low-income student achievement should be higher in recognition of the greater associated challenges. State Rep. Diego Bernal (D-San Antonio) was emphatic that incentives should not further increase inequity in the school funding system.

The fourth incentive is to provide the optional ability for districts to implement multi-measure evaluation systems and fund higher teacher distinction levels to attract and retain high-quality teachers. The working group noted the issues with current salary levels in recruiting and retaining teachers, and expressed the goal that districts be able to pay top-quality teachers more. Melissa Martin, the only teacher on the commission, said she’s torn over performance pay. Martin voiced concern that evaluations are property constructed and not totally subjective, which could introduce campus politics into the process.

The working group included the following additional recommendations:

  • Adjust compensatory education funding (currently $3.9 billion annually) in recognition that “free and reduced lunch” percentages are a very simplistic measure and do not adequately reflect the varying levels of poverty that exist throughout the state.
  • Strongly consider eliminating the five end-of-course (“EOC”) STAAR assessments and replacing with either SAT or ACT assessments that can measure growth based on a pre-SAT/ACT assessment given in 9th grade vs. a SAT/ACT assessment given in the 11th grade.
  • For districts choosing to implement a full day Pre-K program, consider crediting the appropriate full-day attendance for purposes of funding within the Foundation School Program.
  • TEA financially incent dual language strategies and disallow ELL pullout strategies as an accepted approach toward ELL instruction for larger districts exceeding 5,000 students (this subset of districts educates roughly 80% of all Texas students).
  • Align the current CTE weight of 1.35 (equivalent to $2.2 billion annually) toward CTE programs of study that are vigorously tied to the attainment of living wage credentials aligned with current workforce need and/or which provide students with critical financial literacy skills.
  • Amend legislation to require that failing ISD elementary and middle school campuses may be reconstituted after three years with an ACE-like school reconstitution plan (where better educators have been purposely placed at the struggling campus) with the state providing matching funds to reduce district costs.
  • To reduce prison recidivism and its associated costs to the state, TEA should amend the accountability system to incent school districts to help formerly incarcerated individuals receive their high school diploma or GED.
  • State funding should target professional development training towards schools/districts willing to launch blended learning and personalized learning pilots that help students matriculate faster than their peers if necessary, providing net savings in the long run to the state due to paying for less seat time.
  • Schools should be incentivized by the academic accountability system by creating a separate post-secondary readiness academic distinction. In addition, additional state funding should be awarded if the high school achieves the post-secondary readiness academic distinction.

The working group also expressed support for researching the costs associated with providing all-day pre-K for teachers’ children. The report concludes, “For us to succeed requires very substantive, immediate action on the part of the state (emphasis in original document) – we simply cannot “tweak” our K-12 system to meet this critical objective. Only by making strategic, impactful investments above current levels in the key areas noted, and implementing the innovative structural formula changes that are necessary, can we ensure Texas remains a thriving economy that all of its citizens can participate in.”

The recommendations carry an estimated $1 billion annual price tag, which would average out to about $200 per student and a 4 percent increase in the current basic allotment – still below 2008 inflation adjusted funding levels. This would gradually increase to $2.5 billion annually by 2030, which would average out to $450 per student, which would only be achieved if all districts implement performance pay programs. According to the report, this would still place Texas in the lowest quartile of per-student spending compared to other states.

The report argues these measures could pay for themselves by creating up to $4 billion in incremental potential yearly earnings and up to $250 million in additional state sales taxes for each yearly graduating cohort. Better-prepared graduates will earn more money and pay more in taxes. The report suggests success could also reduce growth in the approximate $12 billion the state spends each year in uninsured medical costs and incarceration.

The report, as amended, was approved with a unanimous vote of the five working group members. You can read all of the recommendations in the full draft report from the outcomes working group here, however some of the recommendations were altered or struck in Tuesday’s meeting. This article contains the most up-to-date versions of the recommendations. The full commission meets July 10.

Senate committee talks school security programs

The Senate Select Committee on Violence in Schools and School Security met for the second day in a row Tuesday. While Monday’s hearing was dedicated to discussing school infrastructure and design that can help address school safety, Tuesday’s hearing centered around school security programs and resources. Invited testimony was primarily represented by law enforcement officers who discussed the following charge:

“Study school security options and resources, including, but not limited to, the school marshal program, school police officers, armed school personnel, the Texas School Safety Center, and other training programs to determine what improvements can be made to provide school districts and charter schools with more robust security options.”

In addition to representatives from various levels of law enforcement, invited testifiers included the director of the Texas School Safety Center, a superintendent, and a principal. All were there to highlight existing programs in Texas and offer other options. A considerable amount of time was spent on the School Marshal Program, which allows Texas school districts to appoint School Marshals on campuses who are authorized to carry firearms. On the School Marshal Program and other programs discussed, panelists emphasized strong training for participants.

One of the invited panelists, a retired principal from Friendswood ISD, also made a strong case for reducing class sizes in schools to address school safety. She highlighted what she has heard from educators in schools and what she knows from her own experience in the field: relationships are a key element of school safety and teachers cannot have meaningful one-on-one relationships with their students when there are 35 or more students in a classroom. She argued that reducing class sizes could improve the opportunity for teachers to really know and understand their students.

ATPE provided written testimony to the committee that highlighted relevant positions in our member-written-and-approved ATPE Legislative Program and pressed committee members to keep several things in mind as they continue these important discussions: (1) respect that the wishes of local school districts and their communities differ broadly based on local needs, (2) understand that adequate funding must accompany any proposals to address school safety, and (3) engage educators in the discussions as they continue.

Public testifiers included a number of Texas students and a big contingent of activists from the group Moms Demand Action, who were largely there to oppose the discussion around arming educators. The committee is not scheduled to meet again at this time, but future hearings are expected. Chairman Larry Taylor (R-Friendswood) said that the committee will host a meeting dedicated to mental health in July.

In last-minute meeting, revenue working group gets orders

The Texas Commission on Public School Finance working group on revenues met briefly Tuesday evening after the commission’s formal meeting adjourned. Unlike the other two working groups, the revenues group led by state Sen. Paul Bettencourt (R-Houston) did not post a public notice following Texas open meetings guidelines.

Texas’s open meetings law was passed to limit secret government meetings and ensure the public has access to deliberations of public interest. The law explicitly applies to the school finance commission as a whole, however its application to working groups of the commission is less clear. The only notice was posted the day of the meeting in an obscure portion of the Texas Education Agency (TEA) website. Because notice was not provided according to guidelines laid out by the open meetings law, few people attended the revenues meeting and no audio or video of the meeting is available.

According to those inside the meeting, Sen. Bettencourt stated the working group will aim to score various spending and revenue proposals, including raising the state sales tax or gas tax, enacting the performance pay program proposed by TEA Commissioner Mike Morath, limiting recapture, extending the Universal Service Fund (USF) tax on land telephone lines to cell phones, and the 2.5 percent tax cap proposed by Gov. Greg Abbott during the special session. Bettencourt requested members submit their ideas for study topics before the full commission meets again July 10.

A snapshot of the proceedings was posted on social media:

Runoff Spotlight – Get to know the candidates in House District 4

When it comes to public education, the Texas Legislature has incredible power to decide how our students are educated, how our schools are funded, and how our educators are treated. From per-pupil funding to student testing to teacher pay and benefits, these issues and more will be at the forefront of the 2019 legislative session, making the 2018 election cycle extremely critical. Most of the legislators who will make up the ranks of the 86th legislature next January were decided on March 6 when Texas held its primary elections, and the bulk of the rest are looking toward competitive races in November. For the residents of a few key districts, however, the decision on who will represent them next session will be made on May 22, 2018, which is the date of the primary runoff election.

ATPE is taking a closer look at some of the runoffs that will be decided in May, where the candidates squaring off against each other have identified public education as a key campaign issue. Today, we’re analyzing the Republican primary runoff for House District (HD) 4. To learn more about the candidates vying for this seat, click on the candidate’s name and you will be taken to that candidate’s full profile on Teach the Vote.

The Candidates: Keith Bell (R) vs Stuart Spitzer (R)

HD 4 covers all of Kaufman and most of Henderson counties. The incumbent Rep. Lance Gooden (R) is running for a U.S. congressional seat, creating an open seat.

Candidate Keith Bell is a business owner and rancher who has served on the Forney ISD school board for 20 years. Responding to the ATPE Candidate Survey, Bell has said enhancing school funding is his biggest priority, should he get elected. He has been endorsed by the pro-public education groups Texas Parent PAC and Texans for Public Education.

Candidate Stuart Spitzer represented HD 4 during the 84th legislative session before losing his seat to Gooden. While he did not respond to this year’s ATPE Candidate Survey, Dr. Spitzer stated in response to the 2014 ATPE candidate survey that he believes TRS is a part of the “nanny” state and called 401(k) style investment of teacher retirement dollars a “liberty issue,” adopting language  commonly used by  those who support dismantling the TRS defined benefit pension system. Spitzer has been endorsed by the Texas Home School Coalition, a pro-voucher organization, and by Empower Texans/Texans For Fiscal Responsibility, which supports limiting state spending on public education; eliminating educators’ right to use dues deduction; private school vouchers; and privatizing the management of existing public schools.

For additional information on this race or the primary runoff elections in general, contact ATPE Government Relations at government@atpe.org.

Teach the Vote’s Week in Review: April 27, 2018

Here’s your weekly wrap-up of education news from ATPE Governmental Relations:


This May, many Texans will be making not one, but two trips to the ballot box. ATPE wants to ensure that all educators are aware of the two important elections taking place next month.

Saturday, May 5th is the uniform election date when municipal propositions, elections, and issues will be decided. Meanwhile, Tuesday, May 22nd is when state level primary runoff elections will be held. While any registered voter can participate in the May 5th municipal election, participation in the primary runoffs depends on whether you previously voted in the March primaries and in which primary election you voted.

For more information about the candidates and your eligibility to vote in the upcoming primary runoffs, check out this new blog post by ATPE Lobbyist Monty Exter.

 


Texas has a new “Grow Your Own” grant program designed by the Texas Rural Schools Taskforce to address  challenges faced by rural school districts and foster a more robust and diverse teaching force. This week, TEA released the names of the 25 school districts that received the 2018-19 “Grow Your Own” grant. Read more about them in this blog post from ATPE Governmental Relations Specialist Bria Moore.

 


The Texas Education Agency has finalized its plan to address special education. Professional development for special education teachers; resources and outreach for parents of special needs children; funding at the district level for students previously denied access to special education services; and additional staffing and resources were the four final measures proposed by TEA in its efforts to redress issues plaguing special education in the state. While the proposed measures would cost the state $212 million over the next five years, TEA is unable to commit additional funds to support the plan leaving the burden to fund these measures on the shoulders of the 86th Legislature which is set to reconvene in 2019. ATPE Lobbyist Kate Kuhlmann explains more about the plan in this blog post.

 


Houston ISD has notified district teachers of its plan to begin staff layoffs. As reported by the Houston Chronicle this afternoon, district employees received correspondence informing then that an unspecified number of layoffs would begin shortly due to budget constraints in the district. The financial strain of Hurricane Harvey coupled with new recapture woes have resulted in a projected deficit of $115 million for the district. The HISD administration has said that the number of layoffs will depend on how many teachers leave the district through attrition at the end of this school year.

Today’s announcement comes on the heels of a highly contentious HISD board meeting earlier this week that was shut down when protests broke out over a planned vote to turn over management of some of the district’s struggling campuses to a charter school operator. That move is part of a plan authorized by new legislation that ATPE opposed in 2017. Schools otherwise facing closure have an option to partner with charter holders for a temporary pause in their progressive sanctions, and HISD has proposed this course of action for 10 of its campuses despite heavy opposition from the community. Waco ISD also took similar action this week, opting to partner with a charter operator to avoid the closure of five struggling campuses in that district.

Stay tuned to Teach the Vote for updates on this developing story.

 


From The Texas Tribune: Texas teachers’ pay is average. But their pensions are among the lowest in the country.

By Alex Samuels, The Texas Tribune

Photo by Jacob Villanueva/iStock

Today’s Texplainer question was inspired by reader Tiffany Adair.

Hey, Texplainer: How do employment benefits for Texas educators compare to those in other states?

This question has been a point of contention between lawmakers and educators for many years. Texas teachers say they’re frustrated due to a lack of state funding for public education. But lawmakers say the uncertainty surrounding the budget makes it hard to allocate better benefits for educators.

If you look at the raw numbers, Texas ranked 27th in the nation for teacher pay in 2016, according to the National Education Association. On average, Texas teachers earned $51,890 — roughly $6,500 below the national average.

However, teachers have long argued that inadequate funding for public schools cuts into their salaries. During the 2008 fiscal year, the state covered roughly 48.5 percent of the cost of public education, according to the Legislative Budget Board. By the 2019 fiscal year, that figure will be closer to 38 percent. Over the same period, teacher salaries remained about the same [Texas teachers, on average, earned roughly $47,000 in 2008].

“One of the biggest costs to education are the teachers and other employees at a school district. That’s the biggest cost to the state,” said Clay Robison, a spokesman for the Texas State Teachers Association. “When you start cutting education in Texas, you’re shortchanging teachers. We’re already behind the national average when it comes to teacher pay, and we’re getting further behind.”

But salaries aren’t the only component to consider when looking at how Texas teachers fare compared to their peers in other states, said Ed Allen with the American Federation of Teachers.

“When looking at a nationwide comparison, most people factor in the salaries. But when teachers get older, what’s being paid into retirement and the health insurance becomes a really big deal,” Allen said.

When it comes to health care benefits, advocates say Texas teachers are stuck in 2002. That’s when state lawmakers created the plan known as TRS-ActiveCare. The teacher health insurance program, which is run by the Teacher Retirement System of Texas, requires the state to contribute $75 per employee toward monthly health care premiums.

Nearly 430,000 public school teachers and retirees are covered under the plan, which is used by many of the state’s 1,200-plus school districts. Since the program went into effect, employees’ share of premiums have more than doubled, while the state’s contribution to teacher’s health care has remained the same.

“When your salary is barely going up year after year, health care costs are going up considerably and you’re not getting any additional money put toward those healthcare cost by your employer — which is the state in this case — then effectively you’re taking a year over year cut to your salary,” said Monty Exter, a lobbyist at the Association of Texas Professional Educators.

Under the TRS-ActiveCare program, districts are also required to put a minimum of $150 per employee per month toward health insurance premiums, with the option of contributing more. But Exter said that can be difficult for districts as education budgets are squeezed.

Joel Solomon, a senior policy analyst with the National Education Association, said it’s hard to compare Texas teacher health insurance programs to other states since the structure of such programs varies nationwide. But, he said, “when we look at educators’ health benefits around the country and how important … ensuring quality health benefits to educators are, what we see in Texas is deeply troubling.”

When it comes to retirement funding, a majority of states pay into both a pension plan and Social Security. Texas is in the minority of states that only pay into a pension fund and does not pay into Social Security for the majority of its teachers — which means most Texas teachers won’t have access to Social Security benefits when they retire. Fewer than 50 of the state’s districts participate in Social Security on their own.

Among states that only offer a pension plan for teachers, Texas is dead last when it comes to funding its pension programs — by a lot.

For years, Texas only paid 6 percent — the constitutional minimum — into the Teacher Retirement System. It now pays 6.8 percent, according to the National Association of State Retirement Administrators. And the Texas Constitution says the state’s contributions to pension funds can’t eclipse 10 percent without a constitutional amendment approved by voters.

“The next closest non-Social Security state had a retirement contribution rate at least double ours,” said Ann Fickel, the associate executive director of the Texas Classroom Teachers Association. The median contribution for the other 14 other states that don’t pay into Social Security for their teachers is around 18 percent, she added.

“As retirees’ costs rise, especially for medical care, there will be pressure on lawmakers to find a way to increase benefits for retired teachers,” Fickel said.

The bottom line: When it comes to teacher pay, Texas ranked 27th in the nation — right around the middle. But Texas is dead last in teacher retirement funding and puts a little more than the minimum into the Teacher Retirement System.

Disclosure: The Texas State Teachers, the Association Association of Texas Professional Educators and the Texas Classroom Teachers Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2018/04/20/texas-teachers-employee-benefits-dead-last-retirement-funding/.

 

Texas Tribune mission statement

The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

School finance commission focuses on tax policy

The Texas Commission on Public School Finance met today in Austin to cover an agenda focused on tax policy. The day included invited testimony from a series of witness representing both out-of-state entities and Texas-based stakeholders.

National representatives offered individual assessments of the Texas taxing structure as well as perspectives on various reforms. The representatives hailed from the Tax Foundation, Tulane University’s Murphy Institute, the Lincoln Institute of Land Policy, and the Institute on Taxation and Economic Policy. Their individual presentations centered around a variety of policy reforms, including revisions to the property tax, an expansion of the sales tax base, changes to corporate taxing, better tax transparency policies, an update to the gas (or vehicle usage) tax, and a focus on more targeted relief over broad based relief. The broad look at tax policies seemed to drive an overall message that some combination of reforms is the best approach.

The commission also heard from the Texas Education Agency and the Comptroller’s Office regarding Texas’s current sources of funding for public education. The high-level presentation focused on the coordinating chart, which identified the Foundation School Program appropriations and their 2018-2019 biennium levels.

Texas-based entities invited to testify included a range of stakeholders. While many of the same broad tax policy reforms mentioned by the national panelists were addressed, the group offered perspectives more narrowly focused on the Texas taxing and school finance systems. For example, one testifier highlighted a lack of taxpayer transparency with regard to how certain tax revenues are directed. While some education funding is diverted to other budget areas, other revenue is used to supplant the state’s share of education funding when those dollars are intended to be supplemental funding.

Links to the witnesses presentation materials can be found here and a recording of the meeting can be viewed here. The commission’s Working Group on Expenditures will meet tomorrow morning and will hear invited testimony on the cost of education index, compensatory education, and the transportation allotment.

The Rainy Day Fund roadshow makes a stop in the House Appropriations Committee

The House Appropriations Committee, similar to its counterpart in the Senate, heard a number of interim charges Wednesday. Of note for public education, and for educators in particular, was an interim charge to continue to study strategies to use the Economic Stabilization Fund (ESF), also known as the “rainy day fund,” to generate additional revenue for state obligations without compromising the fund’s intended purpose. The charge instructed lawmakers to evaluate the current methodology used to set the ESF cap.

The committee heard testimony on ESF investment history, utilization, and investment practices from the Legislative Budget Board, the state comptroller, and the Texas Taxpayers and Research Association, whose executive director helped draft the legislation that brought the ESF into existence.

Read more about Comptroller Glenn Hegar’s plan to invest ESF dollars to create new revenue stream to fund state priorities and why that revenue is needed, in this previous Teach the Vote blog post.

Senate State Affairs Committee discusses future of TRS pension fund

The Senate State Affairs Committee met in Austin this week to discuss interim charges about the health of various state and municipal pension systems, including the Teacher Retirement System (TRS) of Texas. The committee heard invited testimony from the staff and members of the Texas Pension Review Board (PRB), as well as the heads of several pension systems, including TRS Executive Director Brian Guthrie.

Some of the more general discussion included senators, including Sen. Charles Schwertner in particular, making the case that defined benefit pension systems are somehow inherently flawed and should be scrapped and replaced with 401(k)-style defined contribution systems. This now tired pitch, whose real aim is to line the pockets of private money managers, has been soundly refuted on many fronts, particularly as it applies to TRS. First 401(k)s have proven to be not so wonderful retirement vehicles. For the average American population which relies on them for the bulk of their retirement planning, these investment vehicles have proven to be a tool that generally leads to a woefully underfunded retirement account that is highly sensitive to market volatility and has left many in bad positions with regard to their retirement security. Second, 401(k)s were never meant to stand alone. They were really meant to be a supplement to a more traditional pension system, but even as that has gone by the wayside for many, they are still intended to be on top of Social Security benefits. However, most Texas educators will not receive full Social Security benefits because neither the educator nor the state is paying into Social Security on their behalf. This leads to the final falsehood promulgated by retirement privatizers, that defined benefit pension plans simply cost too much. The truth is Texas has been getting by on the cheap for decades.

Retirement experts will tell you that you should be putting away around 25 percent of your pre-retirement income for use in retirement. Half of that amount, 12.5 percent, is normally covered by contributions to Social Security. Any reasonably good private employer will put up a match of 4 percent, or better, toward an employee’s individual retirement account, in addition to paying the required 6.25 percent employer’s share of Social Security. This means that these private employers are on the hook for a little more than a 10 percent toward their employee’s retirement. Likewise, their employees must also put the required 6.25 percent into Social Security and typically an additional 4 percent or more into their own retirement accounts to access the employer’s match. For years the state of Texas only contributed 6 percent, the constitutional minimum, into the TRS pension system. Thanks in large part to the work of ATPE the state bumped that contribution up to 6.8 percent a few sessions ago. However, at only 0.55 percent above what the state would otherwise have to pay into Social Security, Texas still contributes less than half of what the next lowest state not paying into Social Security pays towards it educators’ retirements. Most Texas teachers are themselves contributing 7.7 percent, or just 1.45 percent above what they would otherwise be paying toward Social Security, into their pension system. When you add in the 1.5 percent districts are contributing into the TRS pension plan, the total contribution comes to 16 percent. At 16 percent, contributions into TRS are substantially less than what even average employers and employees are contributing toward retirement, and despite being many educators only source of retirement income, that is only 64 percent of what experts recommend putting away. So far from being “too expensive” as some lawmakers insist, the TRS pension system has been an exceedingly good deal for the state of Texas.

This discussion is of particular importance at this moment because while TRS has been reasonably healthy for a long time and has been on track to be actuarially sound (very healthy) within the next five years, those statistics have been based on TRS’s current assumed rate of return of 8 percent. Based on the advice of the external actuarial firm with which TRS contracts, the TRS board is considering lowering that assumed rate of return. In order to maintain the positive trajectory of the fund, legislators will need to increase the contribution rate going into the fund. Per the discussion above, these increased contributions are long overdue, and had lawmakers increased them previously, the fund would be in a much better place today. Additionally, many retirees wouldn’t have gone more than a decade without a cost of living adjustment. If TRS lowers its assumed rate of return, however, the decision to increase contributions will no longer be a luxury; it will be an imperative. ATPE is advocating for this process to take place gradually over a number of years so that the increased contributions, corresponding to a gradually decreased assumed rate of return on investments, won’t be a shock the system for either the state or educators who will both share the burden of increased contributions.

Whether a gradual approach is taken or a more “one and done” approach is used, as is being advocated by TRS, the important thing is that educators stay fully engaged with their legislators, and in choosing their legislators this election year, so that the health of the pension fund is secured.