TRS Board of Trustees Convenes for Quarterly Meeting

This Thursday and Friday, the TRS Board of Trustees convened for its quarterly meeting at its headquarters in Austin.

Texas AFT Retiree Plus President Rita Runnels chats with TRS Chairman Jarvis Hollingsworth after the meeting adjourned.

Texas AFT Retiree Plus executive members Rita Runnels and Phyllis Ruffin provided public comment at the meeting early Friday morning. Rita and Phyllis drove over 150 miles to testify in favor of a cost-of-living adjustment (COLA) for TRS annuitants.

Rita shared with the board her perspective as a teacher who retired in 2008 but has never received a COLA. When she retired, she told the board, a financial planner created her retirement plan with the assumption that TRS retirees would receive a COLA, but that COLA never came. No TRS member who has retired since 2004 has received a COLA.

Phyllis, a Texas AFT organizer in the Houston Area, shared stories of financial hardships that she has heard from TRS retirees in her area. Phyllis told the board about a retiree in her area who had to take out 10 high-interest payday loans to make ends meet because the purchasing power of their pension had shrunk significantly due to inflation. 

While the TRS Board of Trustees cannot implement a COLA on its own, TRS communicates regularly with the Texas Legislature, and legislators rely on the advice and perspective of TRS to make important decisions for the system. 

AFT Retiree Plus Executive Board Member Phyllis Ruffin, who is running to represent teachers on the TRS Board of Trustees, provides the board with her prepared comments in support of a COLA.

Phyllis is running to represent retirees and active members on the TRS board. Phyllis needs about 100 more signatures before Jan. 24 to ensure that her name will be on the ballot for TRS trustee. Both retired and active members can vote for Phyllis and sign her online petition.

On the subject of a COLA, TRS received an update from its actuaries on the health of the fund and the feasibility of a COLA. Actuaries stressed the importance of funding any potential COLA in a responsible way. TRS could theoretically fund a COLA out of existing TRS investment funds, but that would put undue stress on the fund and would not be financially responsible. 

To responsibly provide TRS members with the substantial COLA they deserve, the state of Texas must appropriate funds to TRS for the purpose of funding a COLA. The least expensive way to fund a COLA is for the Legislature to provide TRS with one-time seed funding. A portion of the state’s projected $27 billion surplus could be used to fund a COLA.

TRS actuaries explained that TRS is one of only two systems across the country in which retirees are not provided with an automatic COLA and negatively affected by federal Social Security provisions, like the Windfall Elimination Provision and the Government Pension Offset. Retirees in other states can at least rely on yearly Social Security COLAs, even if they don’t have a COLA for their pensions. Texas and Louisiana are the only states with the dishonor of having reduced Social Security benefits while also failing to provide an automatic COLA.

Actuaries explained that a major factor in TRS’ inability to provide regular COLAs is that the state of Texas funds TRS at a lower proportional level than any other state. A total of about 20% of employee payroll is contributed to TRS each month by the state of Texas, school districts, and employees themselves. Every single other state funds their teacher pensions at a higher proportional level than Texas. While TRS is efficient in its use of contributed funds, the system is hampered by the state’s comparatively low contribution level of 8% of employee payroll.

The TRS Board also voted to adjust its internal policies to adhere to Senate Bill 321, which changes the Employee Retirement System of Texas (ERS) from a defined-benefit plan to a cash-balance plan for all employees hired after September of this year. A defined-benefit plan guarantees a set monthly annuity amount for the rest of a retiree’s life, while the benefits in a cash-balance plan are more volatile. Benefits can go up or down depending on the performance of the system’s investment portfolio.

While SB321 does not directly affect most TRS members, it does affect members who are vested in both TRS and ERS. When both ERS and TRS were defined-benefit plans, employees could transfer service credit between the two systems in order to maximize their annuity. Now that ERS is a cash-balance plan, service credit can no longer be transferred, so TRS had to adjust its policies to reflect this new reality.