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Legislative Updates

Legislative Update No. 44, Session 81
By Tim Lee, Executive DirectorPrinter Friendly ||| Print as PDF

May 21, 2009

Dear TRTA Members and Friends:

It has been an up-and-down week to say the least. Tonight I am filled with numerous emotions, as I am sure many of you are at the news of the contingent supplemental payment of up to $500. At the same time, I am sure you are also filled with questions about tonight’s action and want to know why this situation has played out this way. I will do my best to answer as many of the questions as I think you may have, and I will do it in a format that allows for a more personal exchange than the normal Inside Line text you are accustom to.

First, Thank YOU!

Before I get into the many issues that have been argued over during the last 48 hours or more, I do want to thank all of you that have supported the many TRTA communications efforts. In just the last 3 days, TRTA members sent over 9,000 emails to their elected officials, made thousands of phone calls, and have sent numerous reports to me about what you were hearing so that our TRTA legislative team could more effectively represent you. The work done by TRTA members is nothing less than amazing. I cannot thank you enough for doing what does matter in the legislative process, which is to make our collective voice and presence known in the process.

When TRTA chronicles its review of this legislative session in the upcoming TRTA Action Newsletter, we will spend a considerable time talking about the outstanding effort made by TRTA members and supporters.

Again, thank you for your efforts.

$500??!

The first aspect of this deal you are likely to question is why a $500 supplemental payment? After all, TRTA members have been calling and writing their legislators to increase the originally proposed amount of $1,000. The idea of receiving less than last session was difficult for many TRTA members to accept, but getting half of the original House recommendation of $1,000 seems a bit disappointing.

I cannot say anything other than I completely understand how the news of a capped $500 supplemental payment seems rather underwhelming. No question, TRTA believes it should have been more. As a matter of fact, TRTA has argued that supplemental payments should have a floor and not a cap so that those who really need some extra financial help received a minimum level of supplemental distribution.

The ultimate decision of why a $500 cap instead of a $1,000 cap is likely a mixture of factors including the actual budget dollars that may have been available through state general revenue, a negotiated position by some that $1,000 was simply too much money, philosophical differences on the public policy aspect of providing any retirement supplemental payment to public education or state employee retirees, as well as many other opinions or excuses.

TRTA believes that the House budget negotiators did all they could to maintain the proposed $1,000 cap. The Texas Senate, which originally provided $0 in their budget proposal for TRS and ERS retirees, wanted a negotiated compromise of less than the $1,000. TRTA can only speculate as to how the $500 amount was derived, but the most significant reason may simply be the amount of general revenue the negotiators thought they had available.

No question that it is very discouraging to have gone from a $2,400 cap to a $500 cap. The bottom line is that many retirees do need some extra financial help, and $500 is better than $0 when economic times are as difficult as they are. I do not say this as a justification for the reduction, or as an insult to anyone who cannot understand why the Texas Legislature does not seem to value the service of its long-time professionally dedicated public servants, I am merely saying that many people really could use an extra $500 and this money will be used to meet a financial need.

TRTA wanted the final decision to be more, and we know you all worked so hard to keep this issue moving forward. At the end of the night, the final answer in the Texas budget process only allowed for the $500 cap. While we are happy to know retirees will get something, it is far less than what we believed possible.

Why is the Attorney General Involved in This?

The Senate budget conferees argued that paying public employee retirees a supplemental payment with state general revenue dollars presents a far different circumstance than paying retirees a supplemental payment directly out of their respective pension funds. You see, last time (also the only time) TRS retirees received a supplemental payment, your pension fund absorbed this cost. The state did not write checks to TRS retirees out of the general revenue fund, but those payments were made from the pension trust fund.

The Senate conferees (Senators Steve Ogden, Juan “Chuy” Hinojosa, Florence Shapiro, Royce West, and Tommy Williams) contend that certain sections of the Texas Constitution prohibit compensation to former Texas public employees based on Article III Section 44 of the Texas Constitution that states:

SEC. 44. The Legislature… shall not grant extra compensation to any officer, agent, servant, or public contractors, after such public service shall have been performed or contract entered into for the performance of the same

TRTA has a far different interpretation of this situation. TRTA legal counsel was called in to help present our position and we worked diligently over the last two days offering this opinion to anyone who would listen.

The House conferees (Reps. Jim Pitts, Richard Raymond, John Otto, Ruth Jones McClendon, and John Zerwas) did take heart, and so did several other House members who have long supported TRTA and its efforts, including: Representative Vicki Truitt; Representative Lois Kolkhorst; and Representative Craig Eiland who all made an effort to ensure your best interests’ were being considered. I want to say a very special “thank you” to Vicki Truitt and Lois Kolkhorst who, at 11:00 PM on Tuesday night talked with me about finding a way to help retired public education employees. Their desire to find a way to help all their retired public education employees was very genuine and very encouraging at a time when many doors seemed to be closing.

That said, the legislative budget conferees believe there is enough uncertainty about using these state general revenue dollars to pay for a supplemental payment at a time when neither TRS nor ERS are actuarially sound that only the Attorney General can have final authority on this issue. TRTA will pursue this issue in whatever way we are able, which is likely to mean the use of our legal assets to help determine the answer to this question.

The proposal tonight said that an answer needed to be forthcoming as the supplemental payment is to be made by December 31, 2009.

What if AG Says Supplemental Payment is a “No-Go?”

The allocated general revenue for this supplemental payment is just around $120.5 million. If the Attorney General does not rule in favor of providing retirees a supplemental payment, the money is then deposited in the TRS pension trust fund. This extra cash in the fund would raise the state’s contribution to TRS from the proposed budget allocation of 6.4% to 6.644% for the coming 2010-2011 biennium. Keep in mind that the market losses have made the TRS trust fund not actuarially sound, and that a state contribution of 11.25% is needed to make the fund sound this coming biennium.

So What Now?

There are still some procedural components left to on this issue. The budget must be adopted, an enacting bill must be adopted to allow for the supplemental payment, and the AG must finalize his ruling before we will know for sure if retirees can expect to receive an additional $500 before December 31.

TRTA will follow all these developments and take action as necessary to see that you receive the payment or that the money is placed in the fund.

Concluding Thoughts

Session is over in 11 days. TRTA will continue to represent you and your interests’ till the end. We know how many of you feel hearing this news. I want you to know that these decisions have been made after hours and hours of intense negotiations with budget conferees and many other interested parties. The TRTA legislative team (Bill Barnes, TRTA State Legislative Coordinator; Barry Telford, TRTA Legislative Consultant; and I) all empathize with the mixture of emotions you may have in hearing about tonight’s decisions. There were many times today that we thought this issue simply died. It did not turn out exactly the way we pictured, or the way you may have expected/wanted/needed. But I assure you, we are working as hard as possible to get you as much as possible.

Many of you have already sent very kind emails expressing your gratitude for these efforts. I promise you, it is our privilege to be your representatives in Austin on these issues.

We are not giving up, we are not going away; we are in this to the end. Please know that we will continue to update you on this situation. For now, feel free to send me any comments or questions you may have about this or any other TRTA legislative issue.

Thank you,

Tim Lee
Executive Director
Texas Retired Teachers Association

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