No, it's not, by virtually all informed accounts. However, it is highly likely there will be a major effort in the next Regular Session of the Legislature to convert the Texas Teachers Retirement System from a "defined benefit" plan to a "defined contribution" plan. The latter would resemble the 401(k) plans of most private employees (and also the Optional Retirement Program of many college and university educators).
A bill to initiate such a conversion was introduced in 2011 but failed to pass. TCCTA Lobbyist Beaman Floyd testified against the measure.
Why the breathless, crisis rhetoric? According to the Texas Retired Teachers Association, "The purported 'crisis' is nothing more than a headline fabricated to capitalize on anti-government sentiment associated with public pension plans," a recent newsletter states (membership required).
Some public pensions around the country are indeed in trouble, but these problems tend to exist in systems far more generous in awarding benefits than TRS. Also, according to TRTA, the employer contribution in Texas is way below what is required in many states. In numerous states and municipalities, governing boards have made long term promises they will be unable to keep.
The group cites data from the National Association of State Retirement Administrators. Here is a link that might be worth saving by TRS members when communicating with lawmakers while they are "at home" in the districts. Here's the TRS Web site, which also includes a great deal of pertinent information on this topic.
Most proposals to convert TRS would "grandfather" current members, allowing them to remain in the system. However, as with all public pensions, revenue provided by current participants is needed for the long term health of the fund.
Most community college employees do not participate in the Social Security system. Therefore, these individuals may have only one source of revenue to rely upon.
The TRS fund is huge and exceptionally well managed. Reportedly one in 20 Texans are either members or retirees in the system. This becomes important politically.
According to TRTA, the Fund outperforms 75 percent of other investment funds.
TRS has not achieved "actuarial soundness," which would allow trustees to consider benefits enhancements or cost-of-living adjustments for retirees. However, the fund is headed in the right direction after the financial downturn of recent years.
Comments