TRS pension bill passes: Finally some relief for retirees, and a brighter future; but ugly provisions dampen the victory

We did it! Thanks to your dogged advocacy the Legislature has provided much-needed relief for retirees and a brighter future for the TRS Pension fund and all school employees by passing $1.1 billion in new money with Senate Bill 12. We still have work to do for a secure pension and adequate payments to retirees, but this is an important first step.

SB 12 does the following (The Good):

  • Provides a one-time supplemental pension payment (a 13th check) to TRS members who retired before December 31, 2018, capped at $2,000. This check must be issued by September of 2020, but if the process at TRS remains the same as previous 13th checks, it will be paid in December of this year.
  • Makes the pension fund actuarially sound, which means that it is now legally possible for the state to provide a permanent cost-of-living increase to retirees in the future. (We’ll be fighting for that in the 2021 legislative session!

“This is a huge win for all Texas school employees, a significant change in direction for our pensions,” said Cheryl Anderson, chair of the Texas AFT Retiree Committee. “Most retirees have not seen a real pension increase for 14 years, so it’s exciting and gratifying to see this progress. But we’re not done yet and we will not go away with our common-sense demands! We still need to address the harmful impacts from retiree health-care cost increases in 2017, and we need to ensure that future pension increases are enacted as soon as possible.”

Anderson thanked Texas AFT staff working tirelessly at the Capitol for the victory, but we’d like to thank her and all the members of our Retiree Plus program who have maintained a sustained campaign of letters, phone calls, legislative visits, and press conferences to help pass this legislation. (We encourage all retirees to join Retiree Plus to continue our advocacy efforts.)

What SB 12 also does (The Bad):
It’s very rare that we ever see a good bill pass that also doesn’t have some problematic provisions, and here they are:

  • Lawmakers added a surprise provision that can be detrimental to teacher pay raises in some districts and adds a new, ongoing drain of money to their budgets. Previously, the small number of districts paying into Social Security rather than the TRS fund (including San Antonio and Austin ISDs) did not contribute a percentage to the fund. SB 12 changes that and these districts must also pay the 1.5%, which will have multi-million-dollar impacts on some of these districts and affect their ability to offer pay raises. (Rates for districts will also increase over time to 2% by 2025.) This change was never discussed in either chamber, and lawmakers should have left these districts out of the system, or at least phased in the contributions over several years.
  • Texas AFT fought for a bill that would only up the state’s share of contributions to the pension fund, but in the end legislators in SB 12 increased contribution rates from the state, school districts and active employees for a “share-the-pain” approach. That means active school employees will be losing more scarce dollars from their paychecks. School employee contributions will rise from 7.7% to 8%, although that increase won’t go into effect until 2022. The state will finally be matching our member contributions by raising its contribution this year from 6.8% to 7.5%, and then to the full matching 8% in 2022. (Rates for both employees and the state will then rise to 8.25% in 2024.)
  • Texas continues to contribute less to its teacher retirement system than any other state in the country, by a huge margin. The next lowest contribution rate from a state also not paying into Social Security is a whopping 14%, and the median rate for those states is 18%. So the jump in the state’s funding is welcome, but should still be seen as not adequate. The state also paid just over the lowest rate allowed by law (6%) for many years.

What’s next:

  • We’ll be updating you in the future on impacts of SB 12. It’s clear that in the next legislative session we must work to re-balance the contribution amounts and ensure the state assumes its responsibility to fulfill its promise for a dignified and rewarding retirement for educators.

 

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