Rainy day fund might help re­tired teach­ers

House’s tap­ping of $213M is at odds with Se­nate’s ap­proach.

Austin American-Statesman - - FRONT PAGE - By Julie Chang jchang@states­man.com

The Texas House on Tues­day ten­ta­tively ap­proved with­draw­ing $213 mil­lion over the next two years from the state’s rainy day fund to lower health in­sur­ance costs for re­tired teach­ers.

The mea­sure, which is await­ing fi­nal ap­proval after a 130-10 vote Tues­day, sets up a show­down with the Se­nate over how to pay for a boost to the be­lea­guered Teacher Re­tire­ment Sys­tem.

In Jan­uary, many re­tired teach­ers, par­tic­u­larly those un­der age 65, will see pre­mi­ums and de­ductibles that are 10 times higher than what they’re pay­ing now. The Leg­is­la­ture dur­ing the reg­u­lar ses­sion that ended in May ap­proved the cost hikes and in­jected more money into the

re­tire­ment sys­tem to par­tially fill a $1 bil­lion fund­ing hole.

After re­tirees flooded law­mak­ers’ phone lines over the past month or so, Gov. Greg Ab­bott asked law­mak­ers to ad­dress the Teacher Re­tire­ment Sys­tem, an is­sue that wasn’t in­cluded in Ab­bott’s list of spe­cial ses­sion pri­or­i­ties in June.

“This vote was a smart and ap­pro­pri­ate use of about 2 per­cent of the $11 bil­lion that is pro­jected to be in the state’s rainy day fund in the next bud­get cy­cle,” House Speaker Joe Straus, R-SanAn­to­nio, said in a state­ment Tues­day. “It will keep the rainy day fund bal­ance at a his­tor­i­cally high level while help­ing Tex­ans who have com­mit­ted their lives to the ed­u­ca­tion of our chil­dren.”

House Bill 20 by Rep. Trent Ashby, R-Lufkin, would lower pre­mi­ums and

de­ductibles that are slated to go into ef­fect in Jan­uary. For re­tirees un­der 65, an­nual de­ductibles for in­di­vid­u­als would be cut in half to $1,500. Pre­mi­ums for re­tir- ees with spouses on their plans would de­crease by $100 a month. The bill also would re­duce out-of-pocket ex­penses and pre­mi­ums for re­tirees with de­pen­dent chil- dren, in­clud­ing those who are dis­abled.

The Se­nate has passed Sen- ate Bill 19, which would in­ject $212 mil­lion into the re­tire­ment sys­tem over the next two years.

The main dif­fer­ence in both pieces of leg­is­la­tion — and what could de­rail HB 20 — is the method of fi­nanc­ing. The Se­nate, which is less in­clined to use the state’s $10 bil­lion rainy day fund, would pay for SB 19 by de­lay­ing pay­ments to Med­i­caid man­aged-care or­ga­ni­za­tions in the up­com­ing bud­get cy­cle to the fol­low­ing bud­get cy­cle. Se­nate Fi­nance Com­mit­tee Chair­woman Jane Nel­son, R-Flower Mound, has said us­ing the fund would not be a per­ma­nent so­lu­tion.

Rep. Bill Zedler, R-Arlington, said Tues­day that he sup­ports the Se­nate’s method and that use of the rainy day fund, also called the Eco­nomic Sta­bi­liza­tion Fund, should be for bud­get short­falls.

“It should be done for one­time ex­penses,” said Zedler, a mem­ber of the con­ser­va­tive Free­dom Cau­cus. Eight other mem­bers of the cau­cus voted against the bill Tues­day.

Rep. Mike Schofield, R-Katy, who ul­ti­mately voted for the bill, at­tempted to file an amend­ment to use the Med­i­caid de­fer­ral to pay for the bill, say­ing that the Se­nate would not ap­prove tap­ping the rainy day fund.

Ashby said that the fund is grow­ing and us­ing it in this in­stance is more fis­cally responsible.

“Let’s pay cash out of the ESF rather than in­cur more debt ... by de­lay­ing a pay­ment,” Ashby said. “Again, maybe it’s just my coun­try com­mon sense: If we have money in the bank, let’s pay for it.”

Ashby added that Med­i­caid is al­ready un­der­funded by $1 bil­lion and that de­lay­ing pay­ments to providers could hurt pa­tient care.

Ashby said that he would be will­ing to con­sider other meth­ods of fi­nanc­ing the bill and wants a per­ma­nent so­lu­tion in the long run.

Even with the in­fu­sion of money en­vi­sioned in the House and Se­nate ver­sions, the sys­tem is still ex­pected to face a $500 mil­lion to $700 mil­lion short­fall in the 202021 bi­en­nium.

“We have this one mo­ment in time that we can try to get some­thing done right now, but it’s go­ing to lead us into a big­ger dis­cus­sion in the next Leg­is­la­ture that this health care pro­gram needs an im­proved fund­ing source,” said Tim Lee, ex­ec­u­tive di­rec­tor of the Texas Re­tired Teach­ers As­so­ci­a­tion.

Also Tues­day, the House in a 139-2 vote ten­ta­tively ap­proved HB 80, which would in­crease pen­sions by up to $100 a month for teach­ers who re­tired be­tween Aug. 31, 2004, and Aug. 31, 2015. The last pen­sion cost-of-living in­crease was in 2013 when only teach­ers who re­tired be­fore Aug. 31, 2004, qual­i­fied. Most Texas teach­ers don’t re­ceive So­cial Se­cu­rity ben­e­fits be­cause most school districts don’t pay into So­cial Se­cu­rity.

State law, how­ever, pro­hibits pen­sion in­creases un­til the re­tire­ment sys­tem pays off some of its li­a­bil­i­ties and be­comes ac­tu­ar­i­ally sound.

DEB­O­RAH CAN­NON / AMER­I­CAN-STATES­MAN

Rep. Trent Ashby, R-Lufkin, dis­cusses his House Bill 20 on Tues­day in the House cham­ber at the Capi­tol. The bill, which was ten­ta­tively ap­proved, draws $213 mil­lion from the state’s rainy day fund to lower health in­sur­ance costs for re­tired teach­ers. House Speaker Joe Straus ap­plauded the vote.

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