The Texas legislature passed a bill Thursday aimed at shoring up the state teachers’ pension fund and giving its retired members a standalone bonus.
The bill would increase state contributions to the $154.3 billion Texas Teachers Retirement System by 2% over the next five years and give the retirees a one-time “13th check” of a maximum $2,400 by September 2020 in addition to their monthly checks of the same amount.
The original version of the bill, passed in March, would have increased contributions from the state, school districts, and current school employees, while shrinking check 13 down to a $500 cap. The money would have come from $542 million in Texas’ savings account.
The House-approved version prefers spending $684 million in general revenue to raise the state contribution and another $658 million from Texas’ rainy-day fund for the bonus checks, which state Rep. Greg Bonnen, a Friendswood Republican and sponsor of the bill, said is cheaper.
Bonnen, the brother of House Speaker Dennis Bonnen, determined it is a “wise way to increase Trust Fund revenues to accomplish actuarial soundness because it a) does not burden active employees with higher costs; and , b) does not burden districts with higher costs to themselves or property tax payers,” according to Justin Till, his spokesman. “Furthermore, this approach pays for both contribution increases and 13th check costs outright, rather than financing those costs as has been done in the past—dramatically increasing the total cost of the endeavor.” Till told CIO both the Senate and House versions “agree on that point.”
The additional check is essentially a singular cost-of-living increase, something the fund cannot currently raise as it is not “actuarily sound.” Both versions of the bill would make the fund financially healthy, allowing for lawmakers to increase the cost-of-living adjustments, which have not happened in more than a decade.
Thursday’s vote only had one naysayer, state Rep. Jonathan Stickland, a Bedford Republican, who said via Twitter that retired teachers “aren’t political pawns.”
“I refuse to act like it’s more than a one-time fix,” Stickland said. “Retired teachers deserve a permanent fix to their retirement, not another Band Aid.”
The new bill now returns to the Senate to either agree with these changes or send it to a conference group tasked with negotiating a final version.
“We want to ensure actuarial soundness of the pension fund and also help those educators who are already retired, many of whom receive little or no Social Security benefits, to have more income at their disposal,” Jennifer J. Mitchell, the governmental relations director of the Association of Texas Professional Educators told CIO. “With both the House and Senate versions of SB 12 passing their chambers with overwhelming support (unanimously in the Senate and with only one vote against the bill in the House), we are optimistic that some version of the TRS bill will pass this session.”
Texas Teachers is 76.9% funded. The institution declined to comment.
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Tags: Funded Status, Greg Bonnan, Pension, State Contributions, Teacher Retirement System of Texas, Texas