Teacher Retirement System of Texas

Teacher Retirement System of Texas

Teacher Retirement System of Texas in Austin
Agency overview
Formed 1937 (1937)
Type State Retirement System
Jurisdiction Texas
Headquarters 1000 Red River Street
Austin, Texas
Employees 567
Annual budget $4.2 billion USD
(2014-15 biennium)
Agency executives
  • Brian Guthrie, Executive Director
  • Ken Welch, Deputy Director
Key document
Website www.trs.texas.gov
The entrance to the T.R.S. Building on Red River Street in Austin

Teacher Retirement System of Texas (TRS) is a public pension plan of the State of Texas. Established in 1937, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas and manages a $132 billion trust fund established to finance member benefits. Nearly 1.4 million public education and higher education employees and retirees participate in the system. TRS is the largest public retirement system in Texas in both membership and assets and the sixth largest public pension fund in the U.S. The agency is headquartered at 1000 Red River Street in the capital city of Austin.[1]

A Board of Trustees governs the retirement system.[2] The Board is composed of nine trustees who are appointed to staggered terms of six years. Three trustees are direct appointments of the Governor. Two trustees are appointed by the governor from a list prepared by the State Board of Education. Two trustees are appointed by the governor from the three public school district active member candidates who have been nominated for each position by employees of public school districts. One trustee is appointed by the governor from the three higher education active member candidates nominated by employees of institutions of higher education. One trustee is appointed by the governor from the three retired member candidates who are nominated by retired TRS members.

The Executive Director of TRS is Brian Guthrie.[3] The budget requested for the 2014-15 biennieum was $4.2 billion USD.[4]:Administrator's Statement-p2 The 82nd Texas Legislature passed new legislation in 2011 that will impact the composition of the TRS Board of Trustees beginning in 2017. The current higher education trustee position on the board will become an “open” seat at that time. Beginning with the 2017 board election, TRS retirees, members in public school districts, and members in higher education institutions may run for nomination to this trustee position. The top three vote recipients’ names will then be submitted to the governor for appointment.

History

The effort to establish the Teacher Retirement System of Texas was a 20-year process which began in 1916, with leadership provided by the Texas State Teachers Association (TSTA). TSTA was the only major organization for Texas teachers in that era. The struggle culminated in three final steps: (1) Passage by the 1935 Legislature of a joint resolution which put a proposed constitutional amendment on the ballot for voters in November 1936; (2) voter approval of the constitutional amendment authorizing the Legislature to pass a law setting up the system; and (3) legislative enactment in 1937 of the "enabling legislation" which put the constitutional amendment into action. Governor James V. Allred signed the bill into law on June 9, 1937 and the Teacher Retirement System of Texas was in effect as of July 1, 1937.[5] The system is established and operates under Section 67, Article XVI of the Texas Constitution.[6]

While its mission to provide retirement benefits remains essentially unchanged, the breadth of its responsibility has increased considerably. Originally applicable only to teachers and public school administrators, the system now provides service and disability benefits for employees of public schools, educational service centers, charter schools, community and junior colleges, universities, and medical schools. A number of events and legislative actions have affected TRS since its inception, including the following:[5]

Timeline

Member, beneficiary, and fiduciary services

Primary Functions

TRS serves active and retired public and higher education employees of the state through its four core competencies.

Benefit Delivery - TRS administers an array of benefits, including service and disability retirement benefits, death and survivor benefits, health benefit programs, and long-term care insurance.

Investment Management - TRS manages a pension trust fund for the benefit of its members. The trust fund is presently the largest public pension fund in the state and the sixth largest overall in the nation, based on asset size. The fund is established through contributions from the State of Texas, TRS members, TRS reporting entities (employers), and investment returns. Over the last 10 years investment returns have provided nearly 47 percent of TRS' revenues.

Benefit Programs

Health Care for Public Education Employees

On September 1, 2002, TRS introduced TRS-ActiveCare, a new statewide health coverage program for public education employees established by the 77th Texas Legislature. Today, participation in that program has grown to over 445,969 employees and dependents. Of the 1,246 districts/entities eligible to participate in TRS-ActiveCare, over 88.9 percent, or 1,108 now do so.

Along with the four PPO plan options administered by Blue Cross Blue Shield of Texas, a part of Health Care Service Corporation, and Medco, there are three health maintenance organization (HMO) options offered under TRS-ActiveCare for the 2011-2012 plan year: FirstCare Health Plans, Scott & White Health Plan, and Valley Baptist Health Plans. These HMO options will provide additional plan choices to the employees of participating entities in areas served by these HMOs. These employees will be able to select TRS-ActiveCare coverage under one of the PPO plans or through the authorized HMO serving their part of the state.

Health Care for Retirees

TRS-Care is the group retiree health benefits program administered by TRS. TRS retirees who are not eligible for ERS, UT, or Texas A&M system health benefit coverage may be eligible for TRS-Care. More than 233,000 retirees and their dependents participate in this plan. Aetna administers the medical benefits; Express Scripts administers the pharmacy benefits.

TRS-Care is currently funded on a pay-as-you-go basis and is subject to change based on available funding. At the inception of the plan in fiscal year 1986, funding was projected to last ten years through fiscal year 1995. The original funding was sufficient to maintain the solvency of the fund through fiscal year 2000. Since that time, the appropriations and contributions have been established to be sufficient to provide benefits for the biennium. The Texas Legislature determines the funding of benefits and has no continuing obligation to provide benefits beyond each fiscal year.

Long Term Care Insurance

The Teacher Retirement System of Texas (TRS) first introduced the Group Long Term Care Insurance Program for Public School Employees in 2000, as a result of legislation that is now codified in Chapter 1576, Texas Insurance Code, and TRS Rules. The group long term care insurer is always selected by the TRS Trustees following a competitive bidding process. The current group long term care insurer is Genworth Life Insurance Co. (Genworth), a part of Genworth Financial.

Eligible persons between the ages of 18 and 80 include active Texas public school Employees who are contributing members of TRS and TRS Retirees, their spouses, parents and parents-in-law, and grandparents who are eligible may apply. Eligible persons must be legal U.S. residents. All applicants are subject to the underwriting requirements of Genworth.

TRS provides COLA to Annuitants

Unlike Social Security, which offered Cost of Living Allowances from 1975 through 2009 and again from 2013 through 2015, TRS had not been able to provide a COLA to its annuitants since 2001.[9]

In May 2013, during the regular session of the 83rd Texas Legislature, provisions in Senate Bill 1458 resulted in the pension fund being actuarially sound. That soundness and other provisions of the bill allowed legislators to direct TRS to provide a benefit enhancement—a 3% COLA (capped at $100) for members who retired before August 31, 2004. A total of 195,000 retirees received the COLA which began with the annuity payable for September 2013 (effectively paid the next month.) Language in the bill also provides that if the state contribution rate is reduced in the future, active employees’ and ISDs’ contribution rates would be reduced by an equivalent percentage.[10]

In January, 2008, TRS issued a one-time "13th" check to approximately 245,000 eligible retirees. Normally, TRS retirees receive up to 12 pension payments in a year. Eligible annuitants who retired on or before December 31, 2006 received an extra amount equal to their normal monthly pension payment (up to a maximum of $2,400). The TRS Board of Trustees approved the one-time, additional check in November 2007. TRS issued the payment without any increase to the current active member contribution rate. This was the first time that such an extra annuity payment has been issued by the System. It was made possible thanks to passage of Senate Bill 1846, sponsored by Senator Robert L. Duncan of Lubbock and Representative Vicki Truitt of Southlake. The bill, passed by the 80th Texas Legislature, required the TRS Board of Trustees to approve a supplemental annuity payment based on results of the 2007 actuarial valuation, but only if the resulting funding period to amortize liabilities would be under 31 years after payment of the additional benefit. The 80th Texas Legislature increased the state contribution rate to the Teacher Retirement System of Texas from 6.0% to 6.58% of employee payroll. This, coupled with investment returns of 14.4% in 2007, yielded an actuarial valuation that allowed the pension trust fund to pay the supplemental payment and still have a funding period under 31 years. More than $372 million was paid to eligible retirees through these supplemental checks.[11]

References

  1. ↑ "Contacts for TRS." Teacher Retirement System of Texas. Retrieved on March 23, 2009.
  2. ↑ "TRS Board of Trustees." Teacher Retirement System of Texas. Retrieved on March 23, 2009.
  3. ↑ "BRIAN GUTHRIE NEW TRS EXECUTIVE DIRECTOR" (PDF). September 1, 2011. Retrieved 2012-01-21.
  4. ↑ "Legislative Appropriation Request For Fiscal Years 2014 and 2015" (PDF). August 16, 2012. Retrieved 2013-05-22.
  5. 1 2 Stevens, Traxel (1996). Vision, Viligance, and Victory. Austin: The University of Texas Printing Division.
  6. ↑ "Bylaws" (PDF). Teacher Retirement System of Texas. Retrieved 2011-06-22.
  7. ↑ "TRS Celebrates 75 Years". Teacher Retirement System of Texas web site.
  8. ↑ "Benefit Programs". Teacher Retirement System of Texas. Retrieved 2011-06-22.
  9. ↑ "News from Texas Retired Teachers Association re: TRS Funding, January 18, 2011". tiva.org. Retrieved January 25, 2013."How Long Has Social Security Had COLAs". ssa.gov. Retrieved January 25, 2013."News Release: Social Security Announces 5.8 Percent Benefit Increase for 2009, October 16, 2008". ssa.gov. Retrieved January 25, 2013.
  10. ↑ "Summary of 2013 TRS-Related Legislation" (PDF). Teacher Retirement System of Texas.
  11. ↑ "NewsRelease" (PDF). Teacher Retirement System of Texas. Retrieved 2013-02-05.
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