Raise for retired teachers debated
House, Senate want to provide more money but can’t decide on a one-time or permanent bump
The Texas House and Senate want to send more money to retired teachers this session to help with inflation. But lawmakers are still figuring out whether it will be a one-time infusion or a permanent adjustment to their monthly checks.
The budgets introduced in both chambers include language about sending extra money to retired teachers, said Brian Guthrie, executive director of the Teacher Retirement
System of Texas. The retirement system is the largest public pension fund in the state and one of the largest in the country, with roughly 2 million members.
“It does speak to the Legislature’s commitment to provide something in regards to this, this session,” Guthrie said to the members of the House Pensions, Investments & Financial Services Committee. “We are working with the leadership offices, we’re working with all of you to see what we can do to help in that process.”
While the House is more open to an ongoing cost-of-living adjustment, or COLA, the Senate is leaning more toward a one-time supplemental payment, often called “13th checks.”
The Legislature has provided 13th checks to retired teachers during each of the last two sessions, as well as in 2007. Those allotments are typically capped, meaning not every retiree receives an additional, full monthly benefit check.
In 2013, the Legislature enacted a monthly cost-of-living adjustment of 3 percent, capped at $100, but only for teachers who retired before Sept. 1, 2004. Before then, there were adjustments every two years from 1993 through 2001. The vast majority of Texas teachers do not pay into Social Security during their careers, making their TRS checks their primary income.
Although Social Security checks fluctuate with inflation trends, TRS benefits do not, meaning the recent high levels of inflation have hit retired teachers especially hard. Adjusted for inflation, the payment for a 2004 retiree earning $3,000 a month would now be $4,728.08, but the actual amount remains unchanged.
Members of the House Pensions, Investments & Financial Services Committee unanimously recommended “meaningful” cost-of-living adjustment for retired teachers in a report this January. That report was drafted under the former committee chair, Dallas Democrat Rafael Anchía. The new chair of the committee was also a member at that time, and
signed the report.
“I think we have a broad bipartisan consensus,” Anchia said. “We have the money to do this. Which if we front-loaded the entire amount, would be about $5-6 billion, something in that ballpark. And that would pay for the entirety of the cost-of-living increase in perpetuity.”
As a rule of thumb, Guthrie said, a 1 percent, across-the-board adjustment for all retired teachers would cost the state about $1.1 billion, if paid for up-front.
That number could change dramatically if, for instance, an adjustment was weighted for those receiving more or less in benefits, for those who are older, for those with more years of service or for those who have been retired the longest. Past adjustments have been financed over several years, sometimes even
decades, which drives up the cost.
“There are a thousand different ways that we can construct this to achieve the ultimate goal of increasing benefits to these retirees,” Guthrie
said.
Guthrie noted that, by law, the Legislature can only consider a benefit increase if the Teacher Retirement System is on sound financial footing. In 2019 that was not the
case, but this year it is.
This session, the Legislature has access to a massive budget surplus. Many different groups or lawmakers have staked claims for their preferred policies or programs, and retired teachers have been no different.
The Texas Retired Teacher Association has had talks with members of the House, including leadership, Executive Director Tim Lee said. But it’s been much quieter from the Senate, Lee said, where Lt. Gov. Dan Patrick has prioritized a 13th check over a cost-of-living adjustment.
“The need of retirees is so big that it would be difficult to leave this session without a cost-of-living increase,” Lee said. His group is advocating strongly for a permanent adjustment, rather than supplemental checks.
“Unless the Legislature passes those every session, retirees have a hard time planning their bills, not knowing they might have some extra money in their check,” Lee said.
“If the stars don’t align, then retirees have lost their ability to pay the bills.”