Late last week, the Texas House voted on SB 12 but it came with House Committee substitutions, so those differences will have to be ironed out in a conference committee between the two chambers. SB 12 is labeled as “Securing Texas Teachers’ Future” and on the surface, it does sound as if it could be a start, however the bill is not without concerns.

In both the Senate and House versions of the bill there are changes in the contribution schedule. In case you didn’t know what the current contribution schedule looks like: 

 

The state contributes 6.8%

Districts that do not contribute to Social Security contribute 1.5%

Active members contribute 7.7%

It is interesting to note 96% of public educators do not participate in Social Security and Texas provides the lowest state contribution rate among U.S. pension funds. Teachers are actually getting less state contribution since 1995, when the contribution rate was 7.31%. Back then, it was lowered to the constitutional minimum at 6.0%. Today, the rate is only 0.8% over that minimum at 6.8% The State believes that a long term incremental approach to increasing the contribution is the most cost efficient way to do this. 

So let’s break down the to two different versions of this bill. 

In the original Senate bill it would have required all stakeholders to increase their contributions. Starting September 1, 2019, The breakdown would look something like this: 

Fiscal Year Active Member Contribution Rate State Contribution Rate District Employer Contribution Rate (Non-SSI)
2019 7.7% 6.8% 1.5%
2020 7.7% 7.25% 1.5%
2021 7.7% 7.50% 1.6%
2022 8.00% 7.75% 1.7%
2023 8.00% 8.0% 1.8%
2024 8.25% 8.25% 1.9%

This version did not make it into the substituted House version of the bill. The House substitute does not require districts or employees to contribute more toward the pension, putting the burden on just state taxpayers. Personally, this doesn’t seem like a sound plan for stability. It puts all the responsibility for the contribution increases with the state and allows districts to stay at a rate of just 1.5%. It also doesn’t allow for current employees to increase their contributions. This change will cause our retirement fund to be less stable in the future. This question must be, do we want it fixed the right way or the easy way?

So, how did the House set it up their version? 

Fiscal Year Active Member Contribution Rate State Contribution Rate District Employer Contribution Rate (Non-SSI)
2019 7.7% 7.8% 1.5%
2020 7.7% 8.05% 1.5%
2021 7.7% 8.3% 1.5%
2022 7.7% 8.55% 1.5%
2023 7.7% 8.88% 1.5%

I was told on a recent trip to the Capitol that there are 300-400 retired teachers over the age of 100. People are living longer and will be taking from the system for a longer period of time. It seems to me that it would be prudent to require all stakeholders to contribute more or run the risk of the system failing in the future. 

Both bill variations would also give current retirees a “13th check” sometime before September 1, 2020. The Senate version only gives $500 and the House version gives each retiree $2400. It is also important to note that neither bill give retirees a cost of living adjustment or an annual “13th check.”

Now, we must wait until the two chambers come together and work out a final version of the bill in a Conference Committee. What plan will they go with? What will be left out? I will report back as soon as we know. 

It does seem the Legislature is trying to help educators with their retirement. I am just left with the feeling that it is just smoke and mirrors and the people that will have to pay for the lack of planning will be today’s teachers.

I also want to bring awareness of a bill, S. 3526 that was introduced by Sen Ted Cruz in Washington. It is called the Equal Treatment of Public Servants Act. This bill would replace the Windfall Elimination Provision with a fairer formula so public servants receive the Social Security benefits they deserve. There is also a bi-partisan bill, H.R. 6933, that was introduced by Rep. Kevin Brady of Texas and Richard Neal of Massachusetts. This should be a good news for those teachers that came to teaching later in life and have met their 40 quarters for Social Security. 

How can you help? Please sign our petition to help improve the stability of the TRS retirement system

https://teachersfortexas.org/petition/secure-teacher-retirement/

Which bill version do you think would be the best for educators and for Texas? We want to hear from you. Reply to this email, like us on Facebook to join the discussion about teacher retirement in Texas.