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Legislative Updates

Legislative Update No. 22, Session 81
By Tim Lee, Executive DirectorPrinter Friendly ||| Print as PDF

April 10, 2009

Texas Senate Bill Raises Some Concerns

SB 1548 May Create New Hurdles for TRS Trustees

Senator Steve Ogden has proposed legislation to create additional accountability measures for Texas public pension plans to the Texas Pension Review Board (PRB). While this may sound reasonable, TRTA is concerned that the measure diminishes the ability of the TRS Trustees to act as the sole fiduciaries for your pension trust fund.

The Texas Retired Teachers Association strongly believes in the system that was established to manage, invest and protect your pension trust fund assets. This system provides for a group of trustees to act as the fund's fiduciaries, i.e., the people who are responsible for acting in the best interests of the fund and its members. These trustees are supposed to make decisions free of any political influence.

The fund fiduciaries for the TRS pension trust fund are the TRS Trustees -- not the governor and not the legislature. Establishing an authoritative role for a separate state agency or board is simply bad public policy.

If there is any area ripe for improvement in terms of how the fund fiduciaries are managing the fund, TRTA would suggest that it can be found in the flawed system of selecting those trustees. Presently, the governor appoints ALL of the TRS Trustees. Why? In light of the fact that TRS has stakeholder trustees, and even goes so far as to allow the stakeholders to vote for trustee candidates, why does the governor still have final selection authority?

The legislature should take definitive action this session to abolish this backwards policy and allow the stakeholders to have direct elections rather than making all the trustees accountable to one state-elected official.

The idea of additional public pension fund oversight is a good one; the legislature should know what is going on at the system. TRS fund fiduciaries have helped grow the Texas TRS into the world's 17th largest public pension fund. It started with $2 million in 1937 and today is worth over $70 billion; the long-term fund performance has been considerably above average. This has allowed the State to have a low-cost alternative to the more expensive and less beneficial Social Security program. Our public education employees and the state of Texas have enjoyed a relative bargain when it comes to providing retirement security for more than 1.2 million employees and retirees. These funds have grown considerably over the last 70 years, and the TRS Trustees are serious about protecting them and making them last in perpetuity.

One would only need to attend a TRS Board of Trustees meeting and listen to the trustees discuss risk management, fund management, asset allocation, and more to know that these trustees are acting on the best information they have and with the best interests of retired and active public education employees in mind. TRTA attends each and every one of these meetings in an ongoing effort to stay abreast of what is happening with the fund on a constant basis.

Placing additional barriers or filters on how this fund manages its assets does NOT seem the most prudent course. TRTA invites legislative action this session that would enhance the long-term health of the fund, including increased funding to the system, additional stakeholder input on the Board of Trustees and direct elections of those stakeholder trustees.

TRS is already one of the most professionally managed funds in the world. It continues to work on additional measures to protect the assets held in trust for its retired and active education employees.

Chairman Ogden's sincerity in finding ways to ensure these funds are managed in a way that does not jeopardize the long-term health of the fund and its members is commendable. TRTA is always eager to partner with all legislative members to find more ways to protect the pension fund assets, to promote the field of public education, to enhance our retirement benefits for future retirees, and to provide additional benefits to those who are now retired and need more help.

The original drafting of SB 1548 was concerning to TRTA. At today’s hearing, Chairman Ogden offered a substitute modifying many aspects of the original bill. TRTA is analyzing this committee substitute and will keep you informed on how this measure develops further as it moves through the legislative process.

Media Reports on House Appropriations Recommendations

A number of Texas newspapers are reporting on the House Appropriations recommendation to provide retired public education employees a supplemental payment of $1,000 this session. TRTA reported on this House recommendation on March 30th. A copy of that TRTA Inside Line can be seen by clicking here.

It is true that the House Appropriations Committee has allocated about $217 million for the purpose of providing a direct supplemental payment to retired public education employees for as much as $1,000. TRTA is working diligently to ensure that these dollars are maintained in the budgeting process and also to increase the amount of this appropriation so that retirees may be able to receive a supplemental payment equal to their monthly annuity amount.

TRTA members should continue to send emails to their legislators thanking them for their efforts and to encourage them to find a way to fund a full 13th check for TRS retirees.

TRTA members can utilize the "Contact Your Legislator Hotline" at 1.888.674.3788 or you can use the special TRTA email service to send your personal message directly to your state legislators.

TRTA is stressing an even larger membership effort focused on the Texas Senate. The Senate did NOT include any increase in pension benefits for TRS retirees. TRTA members will need to make their voices heard on this issue and communicate with their state senator on how important it is to help retirees this session!

TRS Board of Trustees Meeting

The TRS Board of Trustees met this week and discussed a number of items relevant to the funds recovery in this down market. The good news is that the fund continues to spend a considerable amount of time talking about “risk management” and taking a very conservative approach to protecting your pension fund assets.

The pension fund trustees did discuss the ongoing search for new fiduciary counsel. This process has also been quite challenging for the trustees as the many candidates they discuss all seem to have some potential conflict of interest. Many of the firms qualified to advise TRS trustees on their legal concerns typically work with a fund or other organization or business that TRS may have had, or could have dealings with, thus creating the potential conflict of interest. The trustees will review this situation again in June.

TRS trustees also discussed the legislature’s progress this session on a number of issues pertaining to the retirement system. A lengthy discussion focused on the legislature’s budget recommendations for TRS and on issues pertaining to their ability to manage the fund. A number of trustees seemed concerned that the legislature’s actions may diminish the trustees ability to manage the fund as new oversight measures are being proposed by the Texas Senate (as was mentioned already in this update). These issues and the legislature’s budget recommendations are still being developed and TRS is closely following the legislature’s progress.

Bill Barnes, TRTA State Legislative Committee Chair, attended the TRS meeting and said the bottom line he heard in the meeting is that though the economic recovery process is likely to be long and hard, TRS retiree pensions are secure and the TRS Trustees and staff DO have you and all the fund members as their first priority.

TRTA Day at the Capitol

The news from all the TRTA districts and local units is VERY positive about the upcoming TRTA Day at the Capitol! In just a few days time, hundreds of TRTA members are mobilizing to come to this big event. We are hearing that busses from all over Texas will arrive in Austin on April 22nd!

The word is just not circulating with TRTA members, though, as legislators are already calling the TRTA office wanting to know more about the event.

The TRTA Day at the Capitol WILL BE WORTH YOUR TIME! If you are thinking about coming, please contact your local TRTA representatives, or call the TRTA office at 1.800.880.1650 for more information.

With just a little less than two weeks before the event, PLEASE CALL YOUR LEGISLATORS AND LET THEM KNOW WE ARE COMING! THE MORE WE CALL AND EMAIL NOW, THE BIGGER THE IMPACT WILL BE ON APRIL 22nd!

Conclusion

This has been a good week for TRTA. Our issues are moving and legislators are talking about YOU and how YOU are making a difference. Let’s keep this momentum going all the way through the end of session. I know it takes a lot of effort, but TRTA is determined to get you a benefit increase and to advance our very important legislative agenda.

THANK YOU!

Tim Lee
TRTA Executive Director

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