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Posted on: Wednesday, May 30, 2007

We've made adjustments to our previous reporting to reflect additional information on how TRS will approach the timing of the 13th check for retirees and whether an increase in active member contributions will be needed.

SB 1846, which has been sent to the governor's desk, raises the state's TRS contribution rate to 6.58% beginning in September 2007.

It authorizes the TRS Board to also increase the contribution from active members to 6.58% if needed to fund the 13th check benefit increase for retirees.

Although the language of the bill states that the 13th check should be paid no later than September 2007, it also authorizes TRS to delay that payment if needed to make the determination of whether the benefit increase is affordable.

TRS is working on interpreting the language of SB 1846 to determine whether to wait until the August 2007 valuation of the fund has been released, in order to use the most current information before making the financial determinations. Under this scenario, the Board will determine (a) whether a thirteenth check is affordable, and (b) whether the active member contribution must be increased (no higher than 6.58%) in order to help pay for the retiree benefit increase.

Because the results of the valuation are not available until November, we would not know for a few months whether the 13th check will be paid or whether active members will pay a higher TRS contribution. If the 13th check is authorized, it would likely be paid in December 2007 or January 2008.

Under an alternative scenario, TRS could use current figures, under which the active member contribution would definitely be raised and the thirteenth check would be paid in September 2007.

We will update our members as soon as TRS has made a final determination.

Posted on: Tuesday, May 29, 2007

12:15 a.m. - By midnight Monday night, the House and Senate had both adjourned sine die – without another day. Teachers had several victories that highlighted the positive impact of teacher involvement in the elections and legislative process, and a few disappointments that illuminated the work we still have before us.

At this time we do not expect a special session, and TCTA’s work over the next several days will be compiling and summarizing the bills that passed. Keep checking the TCTA website for the best information available on the issues that affect you – and have a great summer!

Posted on: Monday, May 28, 2007

2:00 a.m. - Sunday's House session ended abruptly well after midnight with more turmoil related to the movement to oust Speaker Tom Craddick. Though several pieces of major legislation remained unconsidered, Craddick opponents walked out in protest after continued rulings indicating the speaker's claim to absolute authority over the right to recognize any member, even on highly privileged motions.

A personal privilege speech by Rep. Pat Haggerty (R-El Paso) turned into a roll call vote when Haggerty attempted to force the issue by calling on members individually to vote for or against Craddick. When Haggerty was not allowed to finish, he asked other members to join him in leaving; enough House members left to break a quorum and the House was unable to finish business.

Several major bills (most unrelated to education) were left on the calendar, and House rules dictate that the final day of session is devoted solely to technical corrections of bills. This means that rules will have to be suspended by a 2/3 vote in order to bring some of that major legislation up for consideration on Monday. Such a vote may be difficult in the current political environment. However, the only bill that must be passed in order to avoid a special session is the budget, and that bill is headed to the governor's desk after passing both chambers Sunday.

Posted on: Monday, May 28, 2007

1:00 a.m. - HB 1, the state budget, and SB 1846, the TRS bill, have finally passed both the House and Senate. Both chambers worked past midnight to complete as much work as possible prior to the end of the session Monday.

We have described the salary and TRS provisions in previous updates; to recap:

- The budget provides funding for increased educator salaries averaging around $425 per teacher, counselor, nurse and librarian; however, there is no pass-through requirement, no specificity on the categories of employees eligible for the increase, and no requirement that the raise be distributed equally.

- The budget includes $342 million for teacher incentive pay, providing nearly $200 million for the current incentive program (limited to schools with a high percentage of educationally disadvantaged students) and implementing the next phase of incentives (similar to the current program, but expanded to include all districts) in 2009 with the remaining funds.

- The budget increases the state TRS contribution rate to 6.58%.

- SB 1846 allows the TRS Board of Directors to increase active member contributions from the current 6.4% to 6.58% if needed to pay for a 13th check for retirees (it is not known yet whether the increase will be necessary).

- SB 1846 includes the 13th check for retirees, to be paid no later than September 2007, with the amount capped at no more than $2,400. However, TRS has indicated that another provision allowing for a delay in that payment may result in waiting for the results of the August 31, 2007, valuation of the fund. Since the results of that valuation are expected in November, the 13th check, if affordable under the newer figures, would likely come in December 2007 or January 2008.

- SB 1846 includes a provision that grandfathers the return-to-work surcharge for all employees who retired on or before August 31, 2005. Those employees can now return to work and districts will not be required to pay the TRS and TRS-Care contributions that are required for most retire/rehires under current law.

Both bills have passed both chambers and will now be sent to the governor for his consideration. The governor has 20 days to sign or veto a bill, or the bill will become law if no action is taken.

The session ends Monday but that day is devoted to technical corrections, so for all practical purposes Sunday marks the last day for passing legislation. TCTA will be compiling lists of the major legislation that did and didn’t pass, and we will update our members as those analyses are completed.

Posted on: Saturday, May 26, 2007

8:00 p.m. - The legislature took one more step in determining how to address TRS funding and a benefit increase for current retirees. As we reported previously, the conference committee on HB 1 (the state budget) had adopted a state contribution rate of 6.58%. This is higher than the current contribution of 6.0%, but lower than the rate needed to fully fund the system and pay for a 13th check for current retirees.

Budget writers contemplated an equal contribution from active members, raising current school employees’ TRS contribution from 6.4% of payroll to 6.58%. However, such an increase could not be authorized in HB 1, and would instead have to be included in separate legislation – in this case, SB 1846. SB 1846 also includes the authorization for the 13th check, as well as a provision that grandfathers the return-to-work surcharge for retirees whose retirement date was on or before August 31, 2005. As it passed the Senate, the bill also included some provisions that concerned education advocates, such as a requirement that benefit increases must be approved through the appropriations process (such a requirement would likely make it much more difficult to enhance retirement benefits in the future).

The author of SB 1846, Sen. Robert Duncan (R-Lubbock), had included the possibility of an active member increase in that bill, but when SB 1846 came through the House it was revised to require the state to contribute the full 6.7%. The bill was sent to a conference committee, and House conferees (unofficially working on the bill for the last couple of days) had held firm for a time on that 6.7% contribution.

When the conferees were officially appointed Saturday evening, a motion was made to “instruct” the conferees – a procedure that expresses the House’s wish for the conference committee members representing the House to take a certain position. The proposed instruction was to hold out for the 6.7% state contribution rate. After considerable discussion, however, the motion failed on a 58-85 vote, with several members expressing concern over potentially risking the 13th check by “playing chicken” with the Senate. At least one legislator asserted that a vast majority of active teachers supported the increase in order to take care of retirees.

Failure of this motion increases the likelihood that the conference committee report will include a rise in the contribution rate for active employees. This will reduce the net effect of any pay raise that might be adopted this session, and of course will reduce take-home pay for any employees who do not receive a raise next year.

TCTA strongly supports an increase in benefits for retirees, but is equally adamant about the state’s responsibility to pay for such an increase. We will continue to advocate for a 6.7% state contribution rate until SB 1846 and HB 1 are finalized. Both conference committee reports will be taken up by the House and Senate on Sunday. The negotiated language of SB 1846 is not yet available, and we will report on other provisions included in that bill when we have those details.

Special thanks are owed to Rep. Mike Villarreal (D-San Antonio), who made the motion to instruct the conferees and argued that active members should not be required to make additional sacrifices; and to Rep. Pat Haggerty (R-El Paso) who steadfastly maintained that the budget should be revised to include the higher contribution.

 

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