Tag Archives: TRS Board

TRS board holds its fall meeting

Teacher Retirement System (TRS) of Texas Executive Director, Brian Guthrie, presented his comments to the TRS Board of Trustees virtually today, the final day of the board’s fall meeting.

Since the last board meeting, representatives form Texas’ largest public trust fund have participated in the National Council on Teacher Retirement (NCTR) annual trustee workshop and the National Association of State Retirement Administrators (NASRA) annual conference. Both events were held virtually. Later this fall TRS will attend the NCTR annual meeting.

Conferences are not the only thing at TRS that has transitioned to a virtual format. To ensure the safety of its staff, retirees, and active members nearing retirement (the last two cohorts both falling into higher risk age brackets), TRS has been closed to the public and its employees have been working on a largely remote basis. Guthrie anticipates more employees and contractors physically returning to work in October and the agency opening to the public in January 2021. Guthrie reported that TRS members have been largely complimentary or at least understanding of the service they were receiving in the virtual environment. Additionally, TRS has implemented policies, such as virtual huddles, to counter the sense of disconnection that extended exposure to a remote environment can cause.

After briefing the board on these more internal issues, Guthrie turned to updates on the agency’s recent and upcoming interactions with the legislature.

TRS staff has been submitting a number of interim documents in response to legislative committee requests for information, which has been the primary method used by committees to collect public and agency comments in lieu of holding public interim hearings this year. So far TRS has presented comments to the House Pensions, Investments, and Financial Services Committee, the House Appropriations Committee, and the House Insurance Committee, and TRS will be submitting comments soon to the Select Committee on Statewide Health Care Costs. TRS is going through the sunset review process currently, and the agency will also likely participate in a Sunset Advisory Commission hearing in October. The postponed sunset hearing had originally been scheduled for April of this year.

In addition to requests for information, TRS is preparing to submit its biannual legislative appropriations request (LAR) to the Governor’s office on September 25. In working with key legislative and gubernatorial staff, the agency was instructed to include in its base budget request the planned increase in state contribution rates passed as a part of Senate Bill 12 from 2019. This is very good news as it signals the legislature’s intent to fund the $544 million increase in state contributions into the retiree trust fund.

The LAR also covers the TRS administrative budget. At 7.8%, the increase to the agency’s administrative budget is the smallest requested increase in the past decade. Unlike most other state functions that pay for administrative budgets out of either agency fees or state general revenue (tax dollars), TRS administrative costs are covered by the pension trust fund and make up less than 0.2% of the total pension trust fund balance. TRS will seek one exceptional item, a funding request outside of the base budget. That item is to seek blanket authority to cover costs associated with implementing sunset recommendations and bills related to those recommendations next year. One of the sunset commission recommendations relates to improved customer service, and if approved, this rider could allow TRS to hire more staff to handle increased call volume and decrease its on-hold times.

Video of the full TRS meeting and related board materials can be found here. The final TRS board meeting of 2020 is scheduled for December 9-11, 2020.

Wrapping up the July TRS board meeting

The Teacher Retirement System (TRS) of Texas Board of Trustees met virtually last week on Wednesday through Friday, July 15-17, for its regular board meeting. In addition to other items, the board discussed the current financial market, TRS-Care and ActiveCare, the fiscal year 2021 budget and highlights of the preliminary legislative appropriations request, and updated considerations on TRS office space.

The official numbers for the trust fund through March 31 were presented to the board, but it was noted that those numbers are at this point significantly out of date. Staff went on to report that the market (as gauged by the S&P 500) has rebounded to approximately January 2020 levels, and they indicated that the TRS fund has tracked the market similarly. The benefit of the quick recovery of fund assets is that only a relatively small amount of assets had to be sold while prices were down to cover the cost of pension benefits paid out over that time frame. Longer recovery periods are by comparison much more detrimental to the fund because the period in which assets have to be sold at a reduced price, effectively locking in losses, is much longer.

TRS Board Presentation: S&P 500 chart

While the stock market and the TRS pension fund are relatively unscathed by the coronavirus pandemic for the moment, the state budget that relies largely on sales tax receipts and oil and gas severance taxes is in much worse shape. Due to this reality, state leaders called on all state agencies to cut their fiscal year 2021 budgets. Although the retirement system’s operational expenses are paid out of the pension fund itself and not out of the state’s general revenue, TRS still undertook the budget trimming exercise.

TRS staff presented the board with a proposed operational budget of $211 million for fiscal year (FY) 2021. This represents a 9% decrease from the FY21 target budget and a 6% decrease from the FY20 operational budget, which was $225 million. As part of the cost saving measures, TRS has instituted a hiring freeze through 2020 and a salary freeze through FY21. The agency has also cut the majority of outsourced funding going to vendors previously working on the data systems project dubbed TEAMS. The project will continue with the current number of in-house employees. TRS is also abandoning the effort to set completion dates on TEAMS benchmarks, as those dates have proven to be unrealistic and problematic.

In addition to next year’s budget, TRS staff also updated the board on the draft legislative appropriations request (LAR) the agency will present to lawmakers during the next legislative session. The agency’s request will cover fiscal years 2022 and 2023. The request will ask for specific funding to cover the state’s share of healthcare and pension costs, in addition to approval of the agency’s projected operational budget. TRS plans to ask for funding in the agency’s LAR based on the increased state contributions to pensions and retiree healthcare that legislators ordered during the last session and considering standard payroll growth assumptions for teacher salaries.

The agency’s LAR will also include a request for funding for 25 additional employees, or what are referred to as “Full-Time Equivalents” (FTEs). TRS staff had internally requested an additional 167 FTEs: 57 for the Investment Management Division (IMD) and 110 for the Benefits division. The 25 new FTEs in the agency’s LAR will go to IMD as a part of a “growing the fleet” initiative. This initiative aims to save the pension fund money by reducing outsourced costs in a greater amount than the cost of the new salaries. The Benefits division will have no new FTEs included in the upcoming LAR.

Over the last 18 months, space planning has become a constant conversation at the TRS board level as issues over the short term plans to lease space for housing the IMD staff have transitioned into a broader conversation on longer-term space needs for all staff. TRS continues to move forward with the goal of having a solution for its long-term office space needs in place by 2025. A major priority of that push is to house all TRS employees in the same location and discontinue the practice of housing the IMD staff in separate leased space.

As with everything, the current coronavirus has impacted the discussion around TRS space planning. With declining real estate prices and new potential spaces opening up in downtown Austin, the agency has paused its negotiations to renew its lease at 816 Congress so as to assess if there are better options available. Unfortunately, while the current market may present an opportunity for savings as a tenant, it is creating a more challenging environment in which to sublet the TRS space in Austin’s new Indeed Tower. The COVID-19 pandemic also has forced the agency to utilize remote working for a significant number of its staff for an extended time frame. Due to this change, TRS has revised its assumptions going forward on the percentage of staff who can work from home on a daily basis from 5% up to 25%. This change decreases TRS’s overall space requirements but also highlights a need for more collaborative space for staff who may usually work outside the office to come in and use. This also opens up the possibility that, with significant renovations, the agency’s current Red River location could house all TRS employees on a longer-term basis. Such renovations might not be any less expensive than simply relocating the agency to a new location outside of downtown Austin.

Finally, nominations for an active member seat on the TRS board of trustees are currently underway. The nomination period began June 15 and will continue through January 25, 2021. Assuming there are more than three successful nominees, an election will be held from March 15 to May 5, 2021. The top three vote-earners from that election will be reported to the governor, who will appoint the new board member from among those three candidates. ATPE members interested in running for this TRS board position can contact the ATPE Government Relations team for more information.

Access board documents and archived video of the July meeting here on the TRS website. The next TRS board meeting will be held in September.

Healthcare and office space discussions dominate February 2020 TRS meeting

The Teacher Retirement System of Texas (TRS) Board of Trustees held its first meeting of 2020 in Austin this week. In addition to receiving typical reports on market trends and internal processes, such as the agency’s new diversity program, the board took action on two major issues regarding TRS space planning and healthcare for both the active and retired educator population.

TRS office space plans

The first day of the board’s two-day meeting was dominated by a discussion of TRS’s space planning needs, including issues surrounding the immediate future location of the TRS Investment Division, which has been in the news as of late. After a lengthy discussion of the history of the agency’s housing over the last two-plus decades, TRS staff recommended the Investment Management Division renew its current lease at 816 Congress Avenue in Austin (an option that was not previously available due to insufficiency of available space in the building). This would be a seven-year lease with a one-time right to terminate the lease if a new headquarters is found to house all of TRS. The recommendation also calls for TRS to sublet space it recently contracted to lease at the new Indeed Tower in downtown Austin. After the board’s vote to accept the recommendation, TRS Board Chairman Jarvis Hollingsworth released the following statement:

“Today, the board considered additional options that recently became available and approved a solution that meets the space needs of our growing investment division, while also demonstrating sensitivity to member concerns.”

The agency will also move forward with consideration of building a new main campus outside of downtown Austin to house at least the staff currently located at the current main campus on Red River Street, potentially bringing all TRS staff back under the same roof.

Healthcare

During Friday’s meeting, TRS staff presented a recommendation, which the board approved, on the network providers for all of the major heath insurance funds managed by the board. TRS released the following press release about the changes, which they say could save the combined health insurance programs of TRS as much as $754 million  over the next three to five years.

Staff also updated the board on the TRS-ActiveCare listening tour that is designed to get feedback from the field on the healthcare program for active educators. TRS will use the information it receives to focus their efforts on what are determined to be priority improvements to the system. These discussions include consideration of creating more regional options in addition to the statewide plan.

ATPE will continue to monitor TRS developments and actively engage with the TRS staff and board on the policies impacting active and retired teachers in Texas.

 

Teach the Vote’s Week in Review: Dec. 13, 2019

Gearing up for the holidays? Take a break from shopping to catch up on this week’s education news from the ATPE Governmental Relations team.


ELECTION UPDATE: The candidate filing period has ended, bringing us one step closer to the Texas primary elections on March 3, 2020. The deadline to register to vote in one of the primaries is Feb. 3, 2020! Check your voter registration status here. Read more of the latest election news in this week’s election roundup blog post from ATPE Lobbyist Mark Wiggins here.

If you live in House District 28, 100, or 148, don’t forget that you’ve also got a special election runoff coming up on Jan. 28, 2020. Early voting begins Tuesday, Jan. 21. If you are registered to vote in one of these districts, you may vote in the runoff regardless of whether you voted in the original special election in November. The deadline to register to vote in that special election runoff is Dec. 29, 2019.

Visit TexasEducatorsVote.com to get involved, find activities you can do to drive more participation in elections, and sign up for voting updates. Also, be sure to check out your state legislators’ profiles on our Teach the Vote website to find out how they voted on education bills in 2019. Read our recent blog posts to learn more about which education bills are featured and takeaways for using the record votes featured on our site. Teach the Vote will soon include profiles of all the candidates vying for seats in the Texas Legislature and State Board of Education.


Reps. Steve Allison and Ernest Bailes chat with ATPE’s Shannon Holmes on Dec. 12, 2019

A group of educators gathered near Austin this week at the Texas Association of Midsized Schools (TAMS) annual conference. Attendees heard from legislators and education advocates on a number of important topics including school funding, accountability, and educator retirement issues.

ATPE Executive Director Shannon Holmes moderated a conversation about teacher pay in the wake of this year’s passage of House Bill 3. The teacher compensation panel featured state representatives Steve Allison (R-Alamo Heights) and Ernest Bailes (R-Shepard). House Public Education Committee chairman Rep. Dan Huberty (R-Kingwood) and Senate Education Committee chairman Sen. Larry Taylor (R-Friendswood) also participated in a panel during the conference.


The preliminary results of ATPE’s “Your Voice” survey are starting to take shape. Our members are telling us that standardized testing is their number one policy priority. Want to chime in? You still have time to participate in this short, three-question survey, which is meant to gather ATPE members’ opinions on education issues, including results of the last legislative session. ATPE members are encouraged to take our “Your Voice” survey on ATPE’s Advocacy Central. Call the ATPE Member Services department at (800) 777-2873 if you need help logging into Advocacy Central.


The Teacher Retirement System (TRS) Board of Trustees met in Austin for the last time this year on Thursday and Friday of this week. The board contemplated space planning needs for the TRS agency, reviewed a recent actuarial valuation of the TRS Pension Trust Fund, and discussed a funding policy. For more detail, check out this teaser post from ATPE Senior Lobbyist Monty Exter and check back on Teach the Vote next week for a full summary of this week’s TRS meetings.


Last Friday, Dec. 6, 2019, the State Board for Educator Certification (SBEC) held its final meeting of the year. The board discussed several items, including new teacher and principal surveys, enabling high school students to become certified as educational aides, and other changes to implement bills from recent legislative sessions. ATPE Lobbyist Andrea Chevalier testified at the meeting asking the board to help Master Reading Teachers retain their teaching assignments once their Legacy Master Teacher certificates expire under HB 3. Read a full meeting summary in this blog post and watch video of ATPE’s testimony here (located at the 41:00 mark on the archived broadcast).


A new report by the Center for American Progress describes the nationwide trend of declining enrollment and completion in educator preparation programs. The authors dive into Texas and California specifically to explain two different approaches to this issue. In Texas, enrollment has increased due to the proliferation of alternative certification programs, while completion has declined. Read an analysis of the report by ATPE Lobbyist Andrea Chevalier here.

TRS is coming to town

The board of trustees of the Teacher Retirement System (TRS) will convene in Austin for its last board meeting of the year starting Thursday morning, Dec. 12, 2019, and wrapping up Friday afternoon, Dec. 13.

The proceedings will begin at 8 a.m. Thursday with meetings of the following board committees: the Strategic Planning Committee; the Benefits Committee; the Budget Committee; the Investment Management Committee (IMD); the Policy Committee; and the Audit, Compliance, and Ethics Committee. Committee agendas can be found at the links above. After the committee meetings conclude, the full board will convene briefly before going into executive session for the rest of the afternoon. On Friday morning, the full board will reconvene and take up its public agenda.

After taking public comments and making some recognitions, the board will discuss TRS space planning needs, including where the agency may be housed in the future. Other items on the agenda include a review of the TRS Pension Trust Fund Actuarial Valuation for the fiscal year ending August 31, 2019, and consideration of adopting the funding policy for the TRS pension fund. The funding policy is a written plan that provides a road map for how TRS can get to 100 percent funding of its pension liabilities and includes consideration of how and when TRS might provide a cost of living adjustment (COLA) for retirees

It’s important to note that actuarial soundness and being 100% funded are not based on the same metric. The fund is considered actuarially sound under state law when its funding period is below 31 years, at which point TRS has typically been funded at around the 80 percent level. However, there is not an exact correlation between the number of years it takes to reach full funding and the percentage at which TRS is funded.

Click here to access links to the livestream of the Thursday and Friday TRS meetings.

Highlights of the September TRS Board Meeting

The Teacher Retirement System (TRS) Board of Trustees convened in Austin this week for their regular quarterly meeting. Among items discussed by the board were space planning for the agency, creating regional TRS-ActiveCare offerings, and delivery of the 13th check to retirees.

TRS has recently been in the news with regard to new lease space in downtown Austin. Approximately 10 years ago, TRS ran out of space to house all of its employees at the 11th and Red River location. As a result, the agency moved its investment staff to leased space a few blocks away. Since that time both the TRS benefits/customer service staff and the investment team have continued to grow. Both the Red River location and the leased space are at maximum capacity now. In order to accommodate the size and needs of the investment staff, TRS has taken three floors in a new building, in which TRS is a part owner, further into downtown Austin. The board must determine whether to substantially renovate or move out of TRS’s Red River office in order to accommodate non-investment staff (primarily those working in customer service). Because all TRS costs, including staffing and space, are paid for out of the pension trust fund, these moves naturally bring up questions about whether the agency’s additional staff and office space requirements will bring in more value for TRS members than it costs to accommodate. There is no definitive way to answer this question, but ATPE and other groups representing active and retired TRS members will continue to monitor and report on the value of TRS spending.

Another program in which TRS is trying to find ways to improve its value proposition is TRS-ActiveCare. The agency staff and board members have begun looking into the development of regional ActiveCare options that school districts could choose to offer their employees. The move was prompted by actions taken by El Paso ISD over several years to try to exit the TRS-ActiveCare program. When the district could not find a way to do so under existing state laws, El Paso found a novel way to migrate most of its staff out of the state’s program and onto a new local plan, which was deemed to be cheaper than the statewide plan due to regional differences in healthcare costs. In response to El Paso’s decision and with the expectation that other districts may pursue a similar course of action, TRS is now looking into the possibility of regional options for school district employees. This project is in its preliminary stages and is something ATPE will follow closely as it evolves.

Finally, the TRS board also received an update this week on the 13th check provided to retirees as a result of Senate Bill 12 that was passed by the legislature earlier this year. The additional payment equates to the lesser of the amount of a retiree’s standard monthly annuity check or $2,000. TRS annuitants who receive their TRS payments through direct deposit received the 13th payment on September 10. The remainder of TRS retirees should have received a check in the mail by September 15. ATPE encourages any retirees who did not receive a check and believe that they should have received one to contact TRS directly.

Click here to watch a video of this week’s TRS meetings or review the board materials.

TRS releases ActiveCare rates for 2020

The board of trustees for the Teacher Retirement System (TRS) of Texas met in Austin this week. Of note on their agenda was a discussion of proposed TRS-ActiveCare pricing for 2020.

Overall, the premiums for all ActiveCare plans will be increased by 3.9 percent on average, which is significantly lower than market averages, with the average increase for the ActiveCare I – High Deductible plan and ActiveCare Select at 3 percent and the increase for the ActiveCare II plan at 8.9 percent.

Note: ActiveCare II was closed to new enrollees after the 2018 plan year.

You can see the exact premium increases and benefits changes for the different coverage options on the attached rate card, or for more in-depth information, view the TRS Benefits Committee board board book at pages 16-31.

If you have questions about TRS-ActiveCare plans, visit the TRS-ActiveCare web page or call 1-800-222-9205.

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.