House and Senate committees hear retiree benefits bills; Senate version advances

The Senate Finance Committee and the House Pensions, Investments and Financial Services Committee heard bills that would provide significant enhancements to school retiree benefits.

SB 10 by Senate Finance Chair Joan Huffman was heard and passed out of that committee today. SB 10 includes the following major components.

• Provides a cost-of-living adjustment to TRS retirees whose retirement date is on or before Dec. 31, 2021, in the amount of:
  • 4% if the employee retired before Sep. 1, 2013, or
  • 2% if the employee retired on or after Sep. 1, 2013, but before Jan. 1, 2022.

• Provides a one-time supplemental check for $7,500 to retirees who are at least 75 years old as of the month immediately preceding the month in which TRS issues the checks. The payment must be made no later than February 2024, and is dependent on full funding by the legislature of the supplemental payment.

TCTA registered support for SB 10.

HB 600 was heard and left pending in the House Pensions, Investments and Financial Services Committee. Its provisions include:

• A cost-of-living adjustment beginning January 2024 as follows:
  • 2% if the member retired before Jan. 1, 2021, but on or after Jan. 1, 2014
  • 4% if the member retired before Jan. 1, 2014, but on or after Jan. 1, 2004
  • 6% if the member retired before Jan. 1, 2004

• The possibility of ongoing cost-of-living adjustments in the future, beginning in 2028, ranging between 1% and 2% depending on the 5-year average of the pension fund's investment performance.
• A one-time supplemental check for $5,000 to retirees who are at least 70 years old as of the month immediately preceding the month in which TRS issues the checks. The payment must be made no later than February 2024, and is dependent on full funding by the legislature of the supplemental payment.
• Increases in the current contribution rates by the state and active members from the current 8% to 9%.

It is noteworthy that HB 600 requires passage of a constitutional amendment by the legislature and by voters. The language would require that the legislature directly fund retiree benefit increases, rather than paying for them through the pension fund as is current practice.

TCTA testified neutrally on HB 600, noting our support for the benefit increases but concern about the requirement that active members increase their contributions to help pay for the enhancements at a time when we cannot be certain that teachers and other school personnel will be provided with a significant across-the-board pay raise.

The fact that the Senate version was approved before the House bill reflects the difference in procedures between the House and Senate rather than an indication that SB 10 is more likely to pass. House committees often leave bills pending for at least a week before voting on them. We anticipate that both bills will continue moving for now and will eventually merge in some form.