On Monday, Texas AFT Staff Researcher Eli Melendrez and Texas AFT Retiree Plus member Lydia Carrillo-Valdez testified in front of the Texas House Pensions, Investments, and Financial Services (PIFS) Committee in favor of a significant cost-of-living adjustment (COLA) for TRS retirees.
Melendrez testified that due to high inflation over the past several years, the purchasing power of the average TRS monthly annuity payment has dipped to shockingly low levels compared to previous years. Melendrez also presented the committee with a chart showing where the average TRS annuity would have been had the legislature linked a COLA to inflation.
Carillo-Valdez shared personal and emotional stories of the conditions she and her fellow retirees are facing and explained that the stagnation of TRS benefits is making teaching a less enticing career choice. Melendrez also asked the committee to attempt making a monthly budget based on the average TRS monthly annuity of $2,145.
The PIFS committee reacted positively to the public testimony and promised to take action in the coming legislative session. The PIFS members passed a bill out of committee in 2021 that would have provided teachers a mere 6% COLA, capped at $100 per month. A majority of the House signed on to the bill, but it died due to inaction by the House Calendars Committee.
The PIFS Committee also looked at two interim charges related to the TRS that included testimony. HB 1585 provides annuity recipients advanced warning before their monthly annuity is paused due to returning to work at a TRS-Covered employer. SB 1444 locks employers into either participating in TRS ActiveCare or opting out for a five-year period. TRS Executive Director Brian Guthrie testified that both bills had been implemented smoothly and that SB 1444 has provided more long-term stability for TRS ActiveCare. Public testimony regarding HB 1585 called for further changes to make it easier for TRS retirees to return to work.
Regarding the fund’s actuarial soundness, Guthrie told lawmakers that, within the past 10 years, the fund had its highest return on investment at 24.98% last year. Despite this exceptionally high rate of return, TRS anticipates some fiscal insecurity for the fund in the coming months due to market volatility. Guthrie explained that TRS will soon be voting to lower its investment return assumption (IRA) from 7.25% to 7%. TRS uses the IRA to set budgetary limits for future years in which the fund’s return on investment is unknown. Over the past ten years, TRS has had a 9.8% average rate of return on investment. A lower, more conservative IRA is intended to protect the long-term health of the TRS pension fund.