Bill would fulfill state’s commitment to retired teachers

Retired Texas educators dedicated their lives to educating our children. Now many face a financial crisis, since most have not seen any cost-of-living increase to their monthly pension in more than a decade, while their health care premiums are eating away at what little money they do get.

The Texas Legislature has made clear this session that it wants to address this crisis by strengthening the Teacher Retirement System of Texas (TRS), the 17th-largest pension system in the world. A bill in the Texas House by Rep. Greg Bonnen, R-Friendswood, is a thoughtful approach that sends an important message to Texas educators — our work matters.

Pension math is surprisingly simple. Public pensions depend on worker contributions, employer contributions, state contributions and investment returns to generate promised pensions to retirees. Teachers ontribute 7.7 percent of their modest salaries to their pensions. After taxes, insurance, rent and utilities, there isn’t much left to give.

TRS’s investment managers take great pains to ensure the pension system remains resilient and is among the bestmanaged pension systems in the world. But the gap between the state contribution and member contributions simply does not reflect Texas values. The bill changes that by ending the commitment gap between the state and the educator.

Currently, the state contributes only 6.8 percent of the employee’s payroll to TRS. This is far below the constitutional cap of 10 percent , and in fact, the state contributed the legal minimum of 6 percent for years and years. Texas’ contribution also is less than half the amount contributed by any of the other states that provide pensions for teachers instead of Social Security. Because most teachers in Texas can’t meaningfully tap into Social Security benefits, the state has an added obligation to do more. Since the vast majority of teachers in Texas pay into their pensions as a replacement for Social Security, it also frees the state from having to pay the employer share of Social Security taxes.

Due to two excessive federal regulations, those retirees who do receive Social Security payments for work they have done outside of public education are subject to severe offsets and face steep financial penalties for any spousal or survivor benefits for which they would otherwise be eligible. For many Texas teachers, their TRS pension has to make ends meet, because it’s all they have.

Until the TRS fund is actuarially sound, it cannot enact a cost-of-living increase for retirees. Increasing the state’s contribution rate has become particularly crucial after the TRS Board of Trustees reduced its assumed rate of returns last summer. The board made a prudent reassessment of its long-term investments — but the decision also pushed the system into actuarial unsoundness. The fairest way to adjust for that recalculation and return TRS to a healthy condition is for the state to improve its share of contributions.

The other promising feature of the bill is what it offers current retired teachers in the near term — a one-time supplemental payment, a “13th check,” of up to $2,400. Though other pension bills this session also offer supplemental payments, this is the only one to provide something that genuinely resembles an extra monthly payment. That’s why it’s the only bill that offers retirees considerable relief.

The average TRS retiree receives a little less than $2,100 per month in pension payments. A 13th payment would give many retirees room to breathe for the first time in years. It might mean being able to afford medications and food or being able to fully cover utilities and rent. Retirees saw their health care costs skyrocket this year, and this payment would bring relief.

Lasting change for retired teachers comes, of course, from a true cost-of-living adjustment, something that has never happened for anyone who retired before the summer of 2004. Annuities that paid the bills 15 years ago can’t cover retirees’ needs in 2019, particularly in our state’s fastest-growing areas.

Teachers are central to the health of our communities, and a resilient pension system is a strong tool for recruiting educators to Texas schools. The Legislature knows this, which is why senators and representatives are working hard to solve TRS’s problems. The proposed legislation is the best shot this term for relieving the pressures retirees face, ensuring the pension system remains strong for active teachers and encouraging future educators to embark on a career in our state.