Tag Archives: trust fund

More detail on the last TRS meeting of 2019

As we mentioned here on Teach the Vote last week, the Teacher Retirement System of Texas (TRS) board of trustees met last Thursday and Friday, Dec. 12-13, 2019. The board opened its final day of meetings for 2019 with public comments before taking up an agenda that included adoption of a new funding policy and considering where the TRS agency should be housed in the future. The TRS board heard testimony last week from ATPE and the Texas Retired Teachers Association (TRTA) as well as some individual retirees. ATPE Senior Lobbyist Monty Exter addressed the association’s concerns with language in the proposed funding policy to be considered for adoption later in the meeting.

Senate Bill (SB) 2224, as passed during the last regular session of the legislature, requires the TRS board to adopt a written funding policy detailing its plan for achieving a funded ratio equal to or greater than 100 percent for the pension trust fund. The original language proposed to the board could have been interpreted as creating a policy that was more prescriptive than current law with respect to cost of living adjustments (COLAs), potentially putting the board at odds with mandates from future legislatures. The legislature, not the TRS board, determines whether or not TRS should grant a COLA to retirees.

After considering the concerns voiced, the board struck the objectionable language before adopting the remainder of the proposed policy. The new funding policy as adopted will require TRS staff to include additional requests for funding in the agency’s legislative funding requests anytime they determine that current funding is not sufficient to keep the pension fund on track toward paying off the balance of its unfunded liability in less than 30 years.

Currently, the $160 billion TRS trust fund is on track to pay off its unfunded liabilities in 29 years. This is largely due to this year’s passage of SB 12, which phases in higher contribution rates for school districts, educators, and the state over the next five years. Prior to SB 12, the fund’s payoff date was more than 87 years into the future, cutting off the possibility of benefit enhancements for retirees for nearly six decades.

With the state of the TRS pension fund significantly shored up after the 2019 legislative session, it is likely that lawmakers will return their focus to improving TRS health insurance. In fact, the Texas House of Representatives recently appointed a new special committee to study statewide healthcare to be chaired by Rep. Greg Bonnen, a neurosurgeon from League City and the co-sponsor of SB 12. Chairman Bonnen was present at the TRS board meeting last Thursday  for a discussion by its Benefits Committee regarding primary care directed models and how to improve outcomes and costs associated with TRS-Care and TRS-Activecare. As the largest single insurer and one that covers members both during their working years and into retirement, TRS is in a unique position to influence a new round of early discussions on improving healthcare in Texas.

TRS has come a long way over the last 30 years. The fund has grown from less than $20 billion to just over $160 billion. Over that same time TRS staff has grown from around 300 employees to more than 700, at the same time that the number of TRS members has increased from around 500 thousand to more than 1.6 million. TRS has moved six times since 1937 before locating the agency in its current home in 1973. Growth in the number of members and exponential growth in the size of the trust fund has pushed TRS’s staffing needs beyond what its current physical location can accommodate.

As the TRS board and staff seek a new home for the agency, they are keeping certain priorities in mind. The space should be centrally located and user-friendly for the members; the new space should provide a long-term solution; and the move away from the current space to a new one should result in a net positive for the fund. These priorities translate into building a new space in central Texas, but outside the downtown Austin business district. Additionally, it means leasing the current TRS space in order to maximize profits for trust fund.

For more on last week’s TRS meeting, click here to view the board materials or watch archived footage.

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.