The Teacher Retirement System of Texas Board of Trustees met Nov. 19-20 in Austin, considering several noteworthy issues and actions. Also, click here for important information about your TRS annual statement.


Annual valuation: The annual analysis of the TRS pension fund shows that while investment returns for the year were dismal, the fund remains relatively stable.

Salary fix: The board adopted a rule to address a problem raised by TCTA, affecting retiring employees in districts that pay the first paycheck in September.

Aetna struggles: Board members continued to chastise Aetna and one of its subcontractors for a cluster of problems affecting ActiveCare enrollees.

TCTA members appointed to advisory committee: Three TCTA members will help advise the board on TRS-Care issues.

Annual report reflects poor investment performance, but optimism for pension fund future

Each year on Aug. 31, an independent actuarial firm takes a “snapshot” of the Teacher Retirement System of Texas pension fund and evaluates the status of the fund over the long term, comparing anticipated revenue (contributions and investment returns) to anticipated liabilities (benefits earned/paid).

At a briefing this week, the actuary reported that based on the August figures the TRS pension fund remains relatively stable despite a year of negative investment returns. Not only did the fund not reach its goal of 8 percent in investment returns, but it actually lost money, ending the fiscal year with a 0.3 percent loss. The actual market value of the fund, which stood at $132.7 billion in August 2014, was $128.5 billion a year later.

However, the overall picture could be worse. Texas law provides a 31-year benchmark as a measure of the fund’s health — given the anticipated revenues and liabilities projected into the future, the fund should be able to pay off those liabilities in under 31 years. If the funding period is above 31 years, a benefit increase cannot be approved. Currently, the fund is not in a position to pay for any increases in benefits to retirees, but with a funding period of 33.3 years it is only slightly over that 31-year benchmark. The funded ratio, another indicator of fund well-being, remains just above the target 80 percent. The larger problem is that for the near future, the funding period is unlikely to dip below 31 years, which would by law prohibit the legislature from approving any benefit increase that was not fully funded. The actuary believes that if TRS meets its investment return benchmark in future years, it will slowly but surely move toward actuarial soundness. However, the actuary has noted that it is his professional opinion that contributions into the fund will eventually need to be raised.

TRS Board adopts fix to major salary problem raised by TCTA

When the legislature and TRS created a standardized school year of Sept. 1 through Aug. 31, the change created some unexpected issues for educators in certain districts. One major issue, raised by TCTA, affected educators in districts that pay the first paycheck for the year in August, rather than September. Since TRS only counts salary received from September through August for the purpose of calculating benefits, a person retiring in an August-paying district would receive the last paycheck for their final year in July, and their TRS statement would only reflect 11 months of salary, typically removing that year from the highest years of salary.

The resolution required a legislative change, which TCTA successfully advocated for in the 2015 session, and a rule change at TRS, which was adopted at this meeting. The fix will allow a retiring employee to count the top 12 consecutive months of salary out of the previous 14 months, which will ensure that these affected employees will be able to count 12 months worth of salary for their final year. The rule change does not help those who have already retired, but will go into effect for the current school year. TCTA will seek legislative help to ensure that those employees whose pensions were negatively affected by the law will be addressed.

Aetna and subcontractor continue to experience enrollment problems

TCTA reported last month about ActiveCare enrollment issues that have plagued several school districts since the beginning of the school year. The TRS Board of Trustees has been very concerned about the problems and their worries were not eased at this meeting when Fort Worth ISD Superintendent Dr. Kent Paredes Scribner testified that the problems have continued, despite the assurances of Aetna officials. The board has scheduled a special meeting for Dec. 7 in Dallas to address the issue; potential actions could include putting the ActiveCare contract up for bid in January, providing an opportunity for Blue Cross/Blue Shield or another provider to take over the plan beginning in 2016-17.

TCTA members appointed to advisory committee

Three members of TCTA were appointed to the TRS-Care Retirees Advisory Committee, which advises the TRS Board on issues related to the TRS-Care retiree insurance program. Current TCTA State President Teresa Koehler of Clear Creek ISD will represent active employees on the committee, as will TCTA member Celeste Cardenas of South Texas ISD. Former TCTA President Grace Mueller of San Marcos, who had previously served on the committee as an active employee representative, was selected to return as a retiree representative following her retirement earlier this year.