Retiree benefit hikes: split decision

By Robert Elder
Austin American-Statesman
Monday, May 28, 2007

Retired teachers are all but assured of their first benefit increase since 2001. The timing isn’t certain, however.

Lawmakers will close up shop this evening having raised the state’s contribution to the Teacher Retirement System to 6.58 percent of payroll, up from the 6 percent rate the state has contributed since 1995. That level may be enough to make the fund financially sound enough to pay for an extra monthly check in the fall. (Over a year, an extra monthly check amounts to a 8.3 percent raise, but remember, the extra money is a one-time deal.)

First the TRS has to complete its actuarial analysis for the fiscal year that ends Aug. 31. If the money is there, the extra check gets issued. If the fund is short, then active teachers and other public school employees will have to contribute more money to the system, possibly as high as 6.58 percent to match the state contribution level. Teachers currently pay 6.4 percent.

Sen. Robert Duncan, R-Lubbock, also passed legislation that says the state can never contribute less than active teachers. That bill, awaiting Gov. Perry’s signature, is intended to help fix the chronic underfunding of the system, mostly by the state.

Retired state employees didn’t fare as well. The state and employee contribution levels remain the same — 6.45 percent for the state and 6 percent for employees.

Like retired teachers, retired state workers haven’t received a benefit increase since 2001.

Sen. Duncan and employee groups worked on a deal that would have increased the state and active worker contributions to the Employees Retirement System, provided state workers received an across-the-board pay raise.

Employees got their pay raise, but legislation to trigger increases in state and employee contributions died last week. That makes the odds of a state retiree benefit hike very unlikely this year.

“I had hoped to walk away having fixed both systems,” Duncan said today.

Andy Homer of the Texas Public Employees Association said he had hoped lawmakers, out of a sense of fairness and parity, would make it possible for both TRS and ERS retirees to get a benefit increase.

By accepting an increase in their own contributions, Homer said, “state employees stood up to try and work with the Legislature to improve the long term status of the fund and help our retirees.”

The state, though, didn’t raise its own contribution level, dooming an extra check in the near term.