Tag Archives: TRS Board

House Appropriations hears from TEA and TRS

The House Committee on Appropriations met Monday to hear from the Texas Education Agency (TEA) and Teacher Retirement System (TRS) on the issues of school safety, school finance, the teacher pension system, and active and retiree educator health insurance. Before delving into the meat of the hearing, Cmomittee Chairman John Zerwas (R-Fulsher) also announced membership of the subcommittees that will be overseeing separate subject areas of the budget.

The subcommittee on Article III that oversees public education funding will be chaired by Rep. Greg Bonnen, and include Vice-chair Armando Walle and Reps. Mary Gonzalez, Donna Howard, Matt Schaefer, Carl Sherman, Lynn Stucky, and Gary VanDeaver.

House Appropriations Committee meeting Feb. 4, 2019

Other subcommittees include: the subcommittee on Articles I, IV, V; the subcommittee on Article II; the subcommittee on Articles VI, VII, VIII; and a new subcommittee on  Infrastructure, Resiliency, and Investment.

The committee heard first from Texas Education  Commissioner Mike Morath on the topic of school safety, including physical precautions such as metal detectors and alarms. Morath noted there is no single investment in school safety that will address all current weaknesses and that the agency isn’t and hasn’t traditionally been tasked or resourced to help districts with regard to mental health components of school safety.

TEA’s Chief School Finance Officer Leo Lopez followed with a high-level overview of how public schools are funded. Lopez explained how the basics of tax rates, weights, allotments, and adjustments work to together to create a districts M&O entitlement; facilities funding; charter funding; and recapture. Also mentioned during the discussion were statutory quirks and system complexities like the fact that the basic allotment is set in statute, but legislators each session have the option of funding at higher levels through the appropriations bill. The committee also discussed how in 2011 the legislature created a mechanism called the Regular Program Adjustment Factor that allows lawmakers to decrease the entire Foundation School Program (FSP) entitlement for every district with a single adjustment.

TR) Executive Director Brian Guthrie walked committee members through pension fund operations. Guthrie explained the TRS board’s decision to lower the assumed rate of return last summer to 7.25 percent down from 8 percent, which came as a result of market forecasts and input from the fund’s actuary. This caused the funding period for pension fund liabilities to extend from 32 years up to 87 years. Under state law, the TRS fund cannot offer a cost of living adjustment (COLA) to retirees unless the amortization period noted above is within 31 years.

Guthrie noted that the agency is requesting a 1.8 percent increase in the contribution rate in order to achieve a 30-year amortization period, which would allow for the possibility of a future increase in benefits, such as a COLA. This would cost $1.6 billion for the biennium from all funds.

Responding to a question from Rep. Giovanni Capriglione, Guthrie estimated the average pension payment for a TRS annuitant to be about $2,000 per month. This average figure covers all classes of public education employees, including auxiliary staff, such as bus drivers and custodial staff. For classroom teachers who have worked in Texas schools for 30 years, that amount is closer to $4,000 per month.

Guthrie then explained the healthcare programs under the agency’s umbrella: TRS-Care for retired educators and TRS-ActiveCare for active educators. Healthcare costs have skyrocketed in Texas, despite rising at a level slightly below the national average. This resulted in a $1 billion shortfall for TRS-Care heading into the previous legislative session, which was addressed by a temporary infusion of additional state funding, coupled with a significant increase in fees and reduction in benefits. The fund continues to run at a deficit.

Rep. Schaefer asked what impact a pay increase would have on the pension fund. Guthrie indicated that if all teachers saw a raise, there would be a negative short-term impact for TRS as a result of higher salary calculations for retiring members without the benefit of higher contributions. Guthrie suggested this could be mitigated by phasing in the salary increases’ impact on the calculation of a member’s highest five years of earnings. Guthrie suggested the short-term impact on TRS-Care would be positive.

Asked by Rep. Stucky how much it would cost to make TRS-Care sustainable, Guthrie suggested it would take more than $12-15 billion to create a corpus sufficient to produce funding as a result of investment returns. Even then, that process would take some time to get up and running. The deteriorating value of TRS-Care has led many retirees to leave the program, which exacerbates the financial stresses facing it. Guthrie added that the population was beginning to stabilize.

TRS-ActiveCare, which allows smaller and mid-size school districts to enjoy the benefits of group coverage through a combined risk pool, also faces affordability challenges due to statutory restrictions on how that program is funded. Five percent of districts – primarily the state’s largest districts, such as Austin and Houston – have opted out of TRS-ActiveCare. Last session, legislation was considered to allow districts a one-time opportunity to opt in or opt out, but such a bill was not passed ultimately.

Teach the Vote’s Week in Review: Dec. 14, 2018

From school finance and retirement to school accountability ratings, here’s your weekly wrap-up of education news from the ATPE Governmental Relations department:


School finance commission meeting Dec. 11, 2018

The Texas Commission on Public School Finance met on Tuesday of this week to begin deliberating recommendations for the body’s final report due at the end of this month. Among the suggestions discussed Tuesday were (1) outcomes-based funding hinged upon early literacy and student preparedness for entrance into college, the military, or a career field without remediation; and (2) a high-quality teacher allotment that would require school districts to develop local, multi-measure assessments of their educators. Those assessments would need to comply with criteria outlined by the legislature.

While some members of the commission bristled this week at the idea of requesting more funding from the legislature, others, including House Public Education Committee Chairman Dan Huberty (R-Humble), stated that he would refuse to sign a report that did not request more funding. Sen. Paul Bettencourt (R-Houston), chair of the commission’s working group on revenues, suggested that the full commission adopt Gov. Abbott’s plan to cap property taxes at 2.5% annually. Meanwhile, Leo Lopez, Chief Finance Officer for the Texas Education Agency, pointed out during Tuesday’s hearing that the governor’s plan is more of a property tax relief plan than a school finance reform plan.

A more detailed breakdown of Tuesday’s meeting can be found in this week’s blog post from ATPE Lobbyist Mark Wiggins.

Other recommendations in the commission’s draft report, which can be previewed here, include prioritizing the state’s “60×30” goal, which is to have 60 percent of high school graduates eligible to enter the workforce with an industry certification, successfully join the military, or enter college without the need for remediation by the year 2030. More technical recommendations include reallocating $5.34 billion in existing revenues and revising the current weights and allotments in order to boost the basic allotment, which provides a baseline of funding for all 5.4 million school children in Texas. Throughout the commission’s year of deliberations, scores of education stakeholders and experts have shared their input, including invited testimony from ATPE back in February.

The commission will meet once more on Wednesday, Dec. 19, to vote on its final recommendations before submitting its report to the legislature as required on or before Dec. 31. Stay tuned to Teach the Vote for updates on the final vote.


The Teacher Retirement System of Texas (TRS) Board of Trustees met in Austin at the TRS headquarters on Thursday, Dec. 13, and Friday, Dec. 14, for its final meeting of 2018. Board committees met on Thursday. Each committee’s meeting materials can be found below. The full board met Friday morning to consider the following agenda. Video of the board committee meetings and the full board meeting is also available for viewing.

For additional information, view the following TRS board meeting materials:


Today the Teacher Retirement System of Texas (TRS) released an updated Pension Benefit Design Study. This recent study augments the body of knowledge generated by a 2012 study on the pension program for Texas educators. The updated study released today by TRS outlines benefits and statistics about the pension system, and includes such findings as these, which are in line with ATPE’s positions on TRS:

• A total of 96 percent of public school employees do not participate in Social Security. For many TRS members, the only source of lifetime income in retirement is their TRS benefit. A lifetime benefit helps mitigate the risk of a retiree who — due to longevity, market volatility or failure to invest adequately — outlives his or her savings.

• A majority of TRS members would end up more financially at-risk by investing on their own in a plan with a defined-contribution component.

• The TRS benefit, as currently designed, replaces roughly 69 percent of a career employee’s pre-retirement income when that person initially retires.

• Alternate plans would be 30 to 124 percent more expensive than the current defined benefit plan to provide the same benefit level upon an employee’s retirement.

More information about the study can be found in this TRS press release, along with a one-pager about the pension program. The full text of the new report can be accessed here.

Preserving the integrity and solvency of the TRS defined-benefit pension plan for educators is one of ATPE’s priorities for the 86th legislature.


The Texas Education Agency (TEA) has released its final academic accountability ratings for the 2018 year. The ratings include results for 1,200 school districts and charters and over 8,700 campuses within the state. While preliminary ratings were released in August, this final release includes the ratings of districts and charters that contested their initial ratings. More information about the accountability ratings can be found here. To search the ratings by district or campus, visit TXschools.org 

 


 

Showdown at TRS quarterly board meeting

The TRS board met for its quarterly meeting in in Austin this week. Per the board’s new schedule all subcommittee meetings were held on Thursday, April 19, with the full board meeting today, Friday, April 20.

Thursday’s subcommittee meetings included the Benefits Committee; the Budget Committee; the Strategic Planning Committee; the Policy Committee; the Audit, Compliance and Ethics Committee; and the Investment Management Committee. Committee agendas are attached in the links above.

Perhaps most significant among the committee discussion was the recommendation of new rates and policy design for TRS-ActiveCare for the 2019/20 school year. ActiveCare is a pass-through program, meaning the amount of money coming in from the state is fixed and any additional expense to run the plan is passed through directly to ActiveCare participants. In addition to some level of recommended increase for each of the ActiveCare plans, the staff recommended that enrollment for ActiveCare-2, the traditional PPO plan, be capped to existing participants. The Benefits Committee moved to recommend the staff recommendations to the full board, which adopted those recommendations during their Friday meeting. More detail about each of the ActiveCare plans including costs can be found in tab 3 of the attached Benefits Committee Board book.

Other committee highlights included a discussion of the need for increased authorization to hire additional full time employees (FTEs). The additional FTEs would primarily be utilized to increase staffing (and decrease wait times) in the TRS call center, as well as to continue providing for the midrange staffing needs associated with TRS’s efforts to update its technology infrastructure, known as project TEAM. The new Strategic Planning Committee also held a lengthy conversation with TRS’s new director of communications. In laying out her vision, she emphasized being more proactive and less reactive in the agency’s communications.

The full board began its meeting today by taking public testimony. A number of active and retired educators were present to testify, as well as governmental relations professionals from three of the four statewide teacher groups (including ATPE) and Tim Lee, the executive director of the Texas Retired Teachers Association. By and large the testimony was focused on the board’s upcoming decision to change the expected rate of return on the pension fund later on today’s agenda, as well as personal stories of the real world consequences of changes made to the TRS-Care health insurance program. The TRS members expressed compelling arguments that the expected rate of return should not be lowered at all from the current 8 percent mark. Organizational testifiers were in agreement that lowering the rate from 8 percent to 7.25 percent was overly aggressive, and all supported a much more gradual approach to lower the rate, starting with dropping it first to 7.75 percent.

After public testimony concluded, the rate of return discussion was the first item taken up by the board. TRS executive director Brain Guthrie presented the staff position, which heavily favored a rate of 7.25 percent. At the end of that discussion, one of the board members appointed to represent TRS members moved to set the rate at 7.5 percent. The motion failed on a vote of four to four. Then one of the board members appointed from the financial sector moved to set the rate at 7.25 percent. That motion also failed on a vote of four to four. At that point the board postponed further action on the item until its July board meeting, and the board moved on to consideration of the rest of its Friday agenda.

You can watch an archive of the full Thursday committee meeting here and the full Friday board meeting, including public testimony, here.