Whatever the eventual decision on rate of return may be, there is no question about the need for higher state pension contributions. The state held its contribution down to the constitutional minimum for many years, while employees paid more. Texas has the lowest state contribution rate by far of any non-Social Security state.
Even more urgently needed are higher state contributions for the separate health-care plans administered by TRS for active and retired school employees. Faced with stagnant state contributions for TRS-ActiveCare that have not budged since 2002 despite soaring health-care costs, the TRS board has been forced to raise premiums and curtail benefits repeatedly. At this week’s board meeting, it happened again, as TRS trustees raised the costs to be borne by employees (or their districts, if willing) by as much as 9.5 percent for the top ActiveCare plan, while reducing benefits. Other ActiveCare options also saw cost increases and benefit shrinkage.
Trustees also heard from the TRS staff that the TRS-Care plan for retirees will require an infusion of $400 to $600 million for the 2020-2021 biennium when the Legislature meets next year–just to maintain the plan with the reduced benefits and increased costs imposed on retirees in 2017.
An upcoming Hotline will provide fuller coverage of the changes in health plans adopted this week.