The TRS Board of Trustees held its final board meeting of 2019 on Dec. 12-13 in Austin. 

The board received a briefing on the actuarial report of the pension fund that was conducted this fall. Each year, the actuaries retained by TRS review the financial health of the fund based on a snapshot of conditions as of Aug. 31. While investment returns of 5% for the year did not meet the benchmark of 7.25%, the actuaries noted the beneficial effect of Senate Bill 12, which increased contributions from the state, districts and active members while providing retirees with a one-time bonus of up to $2,000. House Bill 3 also affected projections by virtue of its required raises for teachers and other employees. Overall, the valuation reflected the long-term beneficial effect of the state’s decision to increase contributions.

TCTA spoke to the board about a proposal under consideration to move TRS out of its current downtown Austin building. Staff have suggested leasing out the building and moving to a new facility in a different area of Austin. TCTA cautioned the board about the move, noting that members are already concerned about past decisions regarding facilities, such as holding investment offices overseas and leasing prime downtown office space for its investment division. TCTA asked the board to hold open discussions on the issue and clearly articulate the need for and benefits of such a move, to ensure that the plan will not have an adverse impact on the fund, and to keep in mind primarily whether and how members will benefit.

Executive Director Brian Guthrie made a comprehensive presentation explaining the need for change (e.g., staff has grown from around 200 employees to well over 700 since the current headquarters was built, and TRS membership from 345,000 to 1.6 million during that same time). He also noted that the downtown location is very desirable in the current market and that leasing the current headquarters building out should be financially advantageous. The board voted to continue working with developers to investigate options, and the issue will come back before the board in several months when plans are near-final. The expectation is that the proposal will include leasing out the current building and building a new facility outside of downtown Austin.

The board also discussed a proposed funding policy that had generated some concerns. New legislation requires the TRS Board to adopt a written policy that details its plan for achieving full funding of the pension fund, ensuring that its unfunded liabilities are on a trajectory to steadily decrease over time. The proposed language appeared to conflict with any consideration of a benefit increase in the future that could be afforded within the assets of the fund, as has been done in the past. (If the fiscal health of the fund is robust, a benefit increase can be afforded through the existing assets of the fund, without additional appropriations from the Texas Legislature. This can make an increase easier to approve since lawmakers would not have to come up with additional funds.) The proposal could have been interpreted to only allow a benefit increase if the legislature fully paid for it. The board chose to remove this provision.

The meeting included a presentation on health insurance issues. TRS staff members continue to look for ways to implement cost savings for the retiree and active member health insurance programs in ways that are not detrimental to participants. Two Texas doctors, joined by Dr. Greg Bonnen, a state representative from Friendswood, discussed their belief that a system that encourages strong relationships between patients and an established primary care doctor and that provides incentives for members to make well-care visits, will result in better outcomes and lower costs to patients. 

Trustee Nanette Sissney, who is a former TCTA state president and is in her second term representing employees on the TRS Board, was appointed as vice-chair. She also serves as chair of the TRS Budget Committee.