News from the Texas Teacher Retirement System

Pension Fund:  Texas AFT today urged the Texas Teacher Retirement System board of trustees to review its policies and standards and make any and all changes necessary to bar political interference in TRS investment decisions. Texas AFT spokesman Ted Melina Raab noted the recently disclosed allegations by a top TRS investment-staff insider of politically influenced decision-making, and he said TRS members must have full confidence that board-approved TRS policy leaves no room for such improprieties. In addition, Texas AFT has called on the legislature to launch its own independent investigation of the allegations.  (We encourage you to add your voice to the call for a legislative inquiry by sending an e-mail to your area legislators and to the legislative leadership via the Texas AFT Web site, Just click on the link to the letter from our home page.)

Texas AFT’s Melina Raab also reiterated our support for the retirement system’s budget request for full funding of the state’s statutory commitments to both the pension fund and TRS-Care, the retiree health plan. Texas AFT also strongly support s the retirement system’s additional request for an increase in the state contribution rate to the TRS pension fund in each of the next two fiscal years. Melina Raab urged TRS to stand firm on these requests.

TRS-Care:  Melina Raab added that Texas AFT will actively pursue financial relief for retirees at the legislature. One avenue we will explore, he said, would be a reduction in retirees’ out-of-pocket costs for their TRS-Care health insurance. Our efforts to reduce retirees’ health-care outlays could not be timelier, as today we heard from TRS staff that a premium increase for those covered by TRS-Care is likely next year.

TRS-ActiveCare:  For the many current school employees covered by the TRS-ActiveCare health plan, meanwhile, there was other notable news today. TRS staff said they are likely to recommend next year the elimination of the top-tier plan currently offered, TRS-ActiveCare 3.

This plan has become a case study in adverse selection. TRS has been steadily increasing the premiums for this plan, and it has become too costly for most employees unless they have expensive health-care problems. As the numbers enrolled dwindle and their per-capita health-care claims soar, premiums climb even higher. It’s a vicious circle.

The ActiveCare 3 plan was originally created because the legislature mandated that at least one TRS plan equal the generous benefits provided under the Employees Retirement System’s HealthSelect plan for workers at state agencies. However, the HealthSelect plan’s benefits have been pared and are likely to be pared back further, so that by next year the closest equivalent plan offered by TRS could well be its ActiveCare 2 option. At that point, TRS staff say, ActiveCare 3 can be abolished.