Highlights:

  • ActiveCare premium rates to increase an average of 6%
  • TCTA testifies in support of retaining current TRS benefits, in response to a required study that will examine potential changes to benefits

The first two days of the three-day February meeting in Lubbock of the TRS Board of Trustees included an agenda packed with information and a meeting room packed with TRS members.

Of concern to many active members was Board action to approve premium rates for the next school year. Health care costs continue to grow nationwide, and the new rates approved by the Board reflect those growth trends. ActiveCare Tier 1 premiums will increase by 4%, Tier 2 by 6%, and Tier 3 by 9%. The new rates are posted on the TRS website. The staff noted that because of the already-high rates for Tier 3, the plan members who choose to stay in that level tend to be those with the highest medical costs, making that a very expensive program to administer. The 9% increase will not fully cover the costs of that plan.

Participants in TRS-ActiveCare should note that the actual percentage increase in their own costs will be higher than the stated percentages, because the state and local contributions toward premiums are not increasing (unless a local district chooses to increase the local contribution). For example, the premium for individual coverage in Tier 2 is increasing from $434 to $460 (6%). However, in a district where the state and local contribution totals $225 (the minimum required amount), the premium the individual pays will rise from $209 to $235, an increase of more than 12%. 

The audience, composed primarily of retired teachers from the Lubbock area, was particularly interested in Day 2 of the meeting, during which TRS staff described a controversial study required by the Texas Legislature. In the 2011 session, lawmakers included a rider on the budget bill directing TRS to conduct a study regarding the impact of various changes - ranging from creating a hybrid plan partially resembling a 401(k), to revising the Rule of 80, to changing the multiplier - on the pension fund. 

No changes are actually being proposed at this time, but TRS has begun laying the groundwork for the required study, and concerned members of the system turned out in full force to support the current system.

TCTA testified in support of retaining the current structure of TRS and current benefits. We asked the Board to include information in their report not only regarding the impact of benefit changes on the fund, but also on how such changes would affect individual members. TRS staff indicated that the report would include this information.

Throughout the meeting, comments from Board members, staff, visiting legislators (particularly Sen. Robert Duncan of Lubbock) and others were very supportive of TRS, noting that Texas has a healthy system that has been well-managed, unlike pension funds in many other states. Those who wish to make major changes to the system will need to be educated about how TRS is different, and about how in the absence of Social Security for most school employees, it is absolutely crucial to continue to fund a stable and livable retirement income for TRS members.

TCTA has been invited to participate in a "town hall" discussion of these issues in March.

TRS was also directed to study solutions for the funding problems that have the TRS-Care retiree insurance program becoming insolvent within the next three years, in the absence of major changes to the funding structure. In our testimony, TCTA expressed our desire to help in the process of finding solutions to this impending crisis.