Senate Finance Committee Discuss Educator Raises, COLA, Community College Funding

The Senate Finance Committee, which is responsible for drafting the Senate’s version of the state budget, convened for a series of hearings this week discussing article III of SB 1, the public and higher education section of the state budget. 

Over three days, Committee Chair Joan Huffman (R-Houston), Vice Chair Juan Hinojosa (D-McAllen), and the rest of the committee heard testimony from leaders of the relevant state agencies and educational institutions, as well as other stakeholders. The committee broached several topics, including educator raises, community college funding reform, a cost-of-living adjustment (COLA) for retired educators, and school safety.

Public Education Funding

Although the current version of SB 1 is just a starting point in the budget process, the only reference to a salary increase for educators in the Texas Education Agency budget is in conjunction with the Teacher Incentive Allotment (TIA), the unpopular pay-for-performance scheme. During discussion of the $65 billion TEA budget, several senators raised concerns about rural school districts not having access to these funds.

Commissioner Mike Morath’s response was that the proposed local TIA programs must be “valid and reliable,” and that “you don’t want this to be a popularity contest.” Both of these statements translate to mean that a TIA program must be closely tied to test scores in order for Morath to approve it. Morath also stated that TIA likely would be included in the recommendations from the teacher vacancy task force. When the Legislature discussed implementing this faulty system statewide in 2019, three of our members in Dallas ISD, who had benefited from higher pay from the system on which TIA is based, provided powerful testimony to reveal the ugly side of incentive programs based on testing. Their testimony also illustrated the unfairness of some benefiting from the performance of others’ students because the STAAR only measures certain subjects.   

This is why Texas AFT’s testimony urged the committee to instead substantially increase the basic allotment to at least $7,075 (the current amount adjusted for inflation), which would allow local school districts to provide raises for all educators and support personnel.

Rather than ramping up funding for the state’s unproven and costly experiment with incentive pay, we believe the Legislature should listen to educators. The Legislature should ensure a pay raise for all teachers in the coming biennium and should ensure districts have enough additional revenue to provide corresponding pay increases to school support personnel. Failure to do this would be a disservice to our students, who will otherwise deal with a rotating cast of staff subbing in and out of schools as many leave the profession.

Retiree Benefits and Health Insurance

During discussion of the Teacher Retirement System of Texas, TRS Executive Director Brian Guthrie provided testimony relating to the TRS pension fund, TRS-Care, and TRS ActiveCare. 

Guthrie testified that the TRS pension fund is currently valued at $186 billion, making it actuarially sound and paving the way for the Legislature to pass a COLA. TRS can only provide a COLA if the fund is sound. 

Legislators discussed several ways in which a COLA could be funded and structured. Guthrie testified that in order to adhere to actuarial best practices, the COLA should be paid for over a period of less than 12 years. The overall least expensive option for funding a COLA would be to pay for it with a one-time lump sum appropriation by the Legislature this year, but that would also present the most upfront cost to the state.

While several bills have been filed in both chambers that would provide COLAs, ranging from 3% to as much as 10%, the Senate Finance Committee did not discuss a specific percentage this week. Guthrie testified that, without a cap, the cost for a COLA would be roughly proportional to the percentage, so a 2% uncapped COLA would cost roughly twice as much as a 1% capped COLA, and so on. Guthrie provided the chart below to illustrate how much each percentage of uncapped COLA would cost. 

Senate Finance Committee members discussed a variety of structures for distributing the COLA. The committee discussed plans that would provide longer-term retirees, who have seen their pensions take a greater hit due to inflation, with a greater percentage COLA than shorter-term retirees. The committee also discussed the possibility of passing a 13th check in lieu of a COLA. 

Retiree stakeholder groups and retirees who have testified at the committee have shown broad agreement that a COLA is significantly preferable to a 13th check. A 13th check presents only a one-time infusion of funds for retirees, whereas a COLA is a reliable increase in monthly income over the lifetime of a retiree. The Legislature has passed 13th checks during the previous two legislative sessions, but the possibility for a 13th check is unpredictable from session to session.

In regard to TRS ActiveCare, the statewide health care plan for active educators, Guthrie warned that if action is not taken by the Legislature this session, TRS ActiveCare premiums are projected to rise by an average of 22%. Last session, the Legislature appropriated federal COVID-19 relief dollars to TRS ActiveCare in order to prevent premiums from rising dramatically during the pandemic. 

Guthrie testified that the Legislature would need to appropriate $1.4 billion to the TRS ActiveCare fund to keep the premiums constant next year, but he also suggested other options to the Legislature that would cost the state less but would not hold the premiums at their current rates. The state currently provides only $75 per month to cover health care premiums for TRS educators, whether they are enrolled in TRS or a separate health care plan.

Guthrie testified that TRS-Care, the statewide health care plan for retired educators, has continued to offer consistent premium rates since the program was overhauled in 2017. In 2017, legislators both made special appropriations to the TRS-Care fund and changed how the program was funded. 

Higher Education Funding

The committee also received testimony from a variety of university systems from across the state, as well as representatives from community colleges and the Texas Higher Education Coordinating Board (THECB). 

In his comments to the committee, THECB Commissioner Harrison Keller testified that, “next to inflation, (the gap in educational attainment) is the most important drag on our Texas economy right now.” 

Keller stated that the growth of Texas’ economy is outpacing our state’s ability to adequately educate a workforce to fill those jobs. Keller admitted that “our higher education infrastructure was really engineered for a different time.” Furthermore, he said that one of the main actions the state can take to begin to address this issue is to increase funds to higher education institutions to allow for high-quality education at manageable tuition costs for students. 

According to analysis by the research and advocacy organization Every Texan:

“For the past 14 years, tuition and fees per full-time student at public universities has exceeded state general revenue support. In 2020, this diverging difference resulted in state support of $5,673 per state-funded student while tuition and fees averaged $9,003 per student. The community college sector is particularly impacted by the increased cost of postsecondary education for Texas families as the state has also decreased funding to community colleges since 1980. Decreased state aid to community colleges has required these colleges to rely on federal aid or local property taxes to keep tuition and fees from rising. During the 2022-2023 academic year, state contributions to community colleges accounted for $2.5 billion – which is only 19 percent of the funding received.”

Last year the Texas Commission on Community College Finance (CCCF) unanimously approved its recommendations to the Texas Legislature that would increase state funding to community colleges, but would ultimately tie much of that funding to community colleges’ success in graduating students or helping them transfer to four-year universities.