My time working in the Texas public school system as a junior high school math teacher was one of the most rewarding of my adult life. It provided me the opportunity to help educate young minds and watch them blossom into future leaders in fields such as education, medicine, technology and business that are integral and vital parts of our lives. While public education wasn’t the highest-paying field for me to pursue, it provided me with the joy of working with students and the promise of a secure retirement.
Lately, I have been more and more concerned about that promise of a secure retirement for current and future retirees. During the 30 years I worked and diligently paid into the Teacher Retirement System of Texas (TRS), I never worried or thought twice about my contributions and the security they were going to afford me. Now, 96 percent of Texas school districts eschew paying into Social Security, instead paying exclusively into TRS, which in turn, saves Texas taxpayers upwards of $6 billion per year.
TRS has done a wonderful job over its 82-year history of managing the pension fund. In fact, TRS has never missed a payment to its annuitants and recently released a study that found that the majority of its members would do significantly worse investing on their own as opposed to participating in the TRS defined benefit plan. Additionally, the study revealed that the current defined benefit plan provides benefits at a lower cost than alternative plans.
While all of this is good news for the Texas taxpayers, my concern is this: The combined employer and employee contribution rates to TRS are the lowest in the nation. These low contribution rates have prevented many TRS retirees from ever receiving a cost-of-living increase, or COLA. Then, last July, TRS lowered its assumed rate of return to 7.25 percent from 8 percent. The rate-of-return assumption refers to how much TRS expects to make in its investments each year. This change now pushes out any possible consideration of a COLA in our lifetimes.
For our current and future retirees, that outlook is unacceptable. In the last legislative session, retirees assumed more than $300 million in health care expenses due to changes in TRS-Care, the health care program for the state’s retired educators. According to TRS, active education employees have borne approximately 70 percent of plan changes since 2005 by way of lowered benefits and increased payroll deductions for health care premiums.
If the Texas is going to keep its school system full of the best and brightest teachers, it must provide adequate funding for the TRS retirement and health care programs. The TRS defined-benefit pension and health care programs provide a competitive advantage to school districts as employers when compared to the private sector. The viability of the TRS system is essential to providing excellent teachers for our students and our state’s future.
The Legislature should increase state contributions to the TRS Pension Trust Fund to 8.6 percent from 6.8 percent. This would increase the base funding and open the door for retirees (95 percent of whom have no Social Security) to receive a desperately needed cost-of-living increase.
Already, we’ve seen Senate Bill 393 by Sen. Joan Huffman, R–Houston) move in this direction; it proposes to increase the state, district and member contributions to the TRS pension fund.
My time in the classroom may be over, but I will continue to work so that our current retirees as well as the next generation of Texas public school educators can look forward to a secure retirement in which they can be proud to participate.
Disclosure: The Texas Retired Teachers Association has been a financial supporter 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.