The TRS Board of Trustees met remotely for its December 2020 meeting. Former TCTA State President Nanette Sissney, one of the employee representatives on the board, was reelected as vice-chair.
Highlights from the meeting:
The board was briefed on the results of the actuarial valuation of the pension fund. This is a comprehensive analysis of the long-term fiscal condition of the fund that takes place every fall, based on information gathered on Aug. 31. Although TRS investment returns were slightly under the benchmark, the overall status of the fund improved, in part due to the increased contributions approved by the legislature in 2019. The actuarial firm conducting the valuation informed the board that this was the strongest valuation of the fund in several years. The fact that the fund is meeting the expected trajectory was described as “kind of amazing” given the problems with the economy during the pandemic.
Most figures changed only a little from last year, but the trends are positive. For example, the funding period (the amount of time it would take to pay off obligations) decreased from 29 to 27 years. Texas law only allows the legislature to approve benefit increases if the cost would not take the fund above a 31-year funding period, so the lower that number gets, the more likely it is that retiree benefits could be increased (though it would need to be considerably lower than 27 years to afford a significant increase). So while the fund is considered actuarially sound, it is not yet in good enough condition to afford a benefit increase for retirees.
The actuary presenting the valuation noted that despite the increased contributions from the state, Texas still has by far the lowest contribution rates among peer public public retirement systems. California, for example, contributed more than 19% of payroll this year, compared to Texas’s 7.5%, and several systems are in states that contribute 25% or more.
There were more deaths than anticipated during the year, which was attributed to COVID-19. Fewer employees than usual retired through August (possibly due to economic uncertainty) but it is notable that retirement rates, as well as requests for retirement estimates, have increased significantly this fall. The number of people retiring from September through November this year was more than 30% higher than last year’s figure for that same period.
The three plans offered through TRS — ActiveCare, TRS-Care Medicare Advantage, and TRS-Care Standard (for retirees not eligible for Medicare) — will extend current benefits related to COVID-19 costs. Benefits under the Medicare Advantage plan include no copays for diagnostic testing, and no cost sharing for telemedicine and COVID-related treatment. For ActiveCare and TRS-Care Standard, there will continue to be no member cost sharing for telemedicine, COVID-related testing or COVID-related inpatient treatment.
Although the TRS staff and board had hoped to make a decision on TRS’s long-term office planning options (such as whether to build or buy new office space outside of the downtown area), no such action was taken at this meeting, and the staff will continue to investigate options, largely due to the uncertainty of the current market. Staff have made clear that remaining in the current building would be the most expensive option because of the amount of updating and restructuring that would be needed for the building to accommodate expected growth. The most likely alternative is to either build a new facility or occupy an existing facility in an area near downtown Austin.
The investment division, once slated to move to a pricey new downtown office building (the Indeed Tower), is now expected to remain at its current location until the rest of the agency makes its move to a new place. Executive Director Brian Guthrie’s goal is to have all staff under the same roof by 2025. Because of the increased number of people working from home in Austin, and the subsequent decrease in the need for office space, TRS has not yet been able to sublease the new office space in the Indeed Tower.
Nominations and petitions for those interested in running for an active member representative position on the TRS Board are due by Jan. 25. Any current employee of a school district, charter school or regional service center is eligible.