You may have read recent media reports about the $326,000 per month rent that TRS will be paying to lease three stories of prime office space in the “Indeed Building” in downtown Austin for its investment management division.

The agency is facing increasing criticism and scrutiny over its decision to lease space in the most expensive area of Austin to house its investment staff. While the agreement was reached and publicized last summer, the specific rental rates were made known earlier this month via a public information request from the Austin American-Statesman.

TRS has made a few controversial moves regarding the investment division in recent years, including implementation of a bonus plan (which continues to expand to include other staff), new offices in London and Singapore, and the initial move out of the main TRS headquarters building to new digs on Austin’s Congress Avenue. (The Congress Avenue lease will end next year, prompting the new arrangement in the Indeed Building.)

TCTA reminded the TRS Board and staff of these decisions in recent testimony, pointing out that TRS members are becoming wary of how the agency is spending pension funds at a time when retirees are struggling to make ends meet. We also communicated concerns about the agency’s planning for future office restructuring to the Sunset Advisory Commission staff, who are conducting a review of TRS efficiency and effectiveness.

Several legislators have posted letters to TRS questioning the lease arrangement (see excerpts below) and House Pensions, Investments & Financial Services Committee Chair Jim Murphy announced that the committee would hold a meeting soon specifically to address this issue.

From Rep. Dan Flynn of Van (former House Pensions Committee chairman):
“I find it quite disconcerting that the Teacher Retirement System would spend 326k per month or over 39 million in a ten year period to provide office space in one of the most expensive areas of Texas. Housing and commercial space is available in other areas of Austin, at a fraction of the cost.”

From Rep. Brooks Landgraf of Odessa:
“For the better part of the last decade, teachers and legislators have been told that the Teacher Retirement System of Texas was on the brink of financial insolvency. The 10-year lease agreement for the office space in downtown Austin for TRS’ Investment Management Division staff does not support such a claim. Furthermore, this liberal use of state resources is gravely concerning given the billions of dollars TRS is currently being trusted to wisely and prudently manage on behalf of the state’s retired public school teachers.”

From Rep. Justin Holland of Rockwall:
“During my tenure in the Legislature, elected officials and TRS members have repeatedly been told that adjustments, such as a cost of living adjustment (COLA) for beneficiaries, are implausible due to the financial condition of the pension. The recent news of the office lease seems to suggest that TRS is not being a frugal steward of TRS members’ pension funds….”

Click here for the response from TRS Executive Director Brian Guthrie.