November 2 Elections Bring Major Changes to Texas House
The General Election on November 2 resulted in the re-election of Governor Perry, Lt. Governor David Dewhurst and all other incumbent statewide officials who were running for re-election.
The biggest news of the election was the massive change in the partisan makeup of the 150 member Texas House of Representatives. Far exceeding most projections, 22 incumbent Democratic State Representatives lost their re-election races. This will change the partisan makeup of the House from the current 77 Republicans and 73 Democrats to 99 Republicans and 51 Democrats. Democrats lost races in every area of the state where they held seats, including East and South Texas, as well as the Houston, Dallas, Austin, San Antonio and El Paso metropolitan areas.
When the Legislature convenes on January 11, nearly a quarter of Texas House members, 37 in all, will be new because of legislative retirements, a death, and primary and general election losses. Among those who lost races were eight sitting Committee chairs.
82nd Legislative Session Approaches, Budget Shortfall Worsens
The 82nd Session of the Texas Legislature will convene in less than two months, on January 11, 2011. As TPEA has stated previously, the 2011 legislature is likely to face a significant budgetary shortfall. TPEA originally estimated the size of the shortfall in the $15 to $20 billion range. During the past summer, there was a public acknowledgement that the shortfall could be $18 to $20 billion. More recently, the Dallas Morning News cited sources that the shortfall could be as much as $24 or $25 billion. This estimate is now widely cited and accepted. The estimate is based on expected revenues and maintaining current services.
It is impossible to overstate the threat that a budget shortfall of this size poses for state employees and retirees. It could potentially result in thousands of layoffs for state employees, higher education employees and even public school district employees. It threatens to cause significant reductions in the value and affordability of health care benefits for state employees and retirees, and could create pressure to change elements of the ERS retirement plan.
As shown in this article, state higher education leaders have acknowledged the threat the shortfall poses to their institutions. A shortfall of $25 billion constitutes 28 percent of the total $87 billion in general revenue in the current 2010-11 budget. While state leaders have asked agencies to prepare budgetary reductions of ten percent for the next biennium, the actual level of reductions necessary to balance the budget could be several times that level. The severity of budget cuts will depend on how widely spread they are. General revenue funding for public education, Medicaid and CHIP have, thus far, been exempted from potential budgetary reductions. Since these programs account for roughly 60 percent of state general revenue appropriations, if they remain exempt other programs would have to be cut more deeply to achieve specified savings.
TPEA’s Legislative Agenda for the 2011 Session anticipated the state’s budget shortfall. The first plank of the Agenda is “To Support Equitable Methods to Resolve the State’s Budget Deficit,” stating specifically “TPEA recognizes that the Legislature will face significant challenges in resolving the state’s 15 to 20 billion dollar budget deficit in 2011. Efforts to close the deficit should be broad based and equitable across every area of the state budget and all state expenditures should receive equal scrutiny for efficiency and effectiveness.”
TPEA believes scrutiny of state government demonstrates that it is and has been efficiently run. The non-higher education state workforce is smaller today than it was a decade ago, in spite of significant growth in demand for services. This is in part because state agencies have been heavily scrutinized through the Texas Performance Review and Sunset Review processes. Simply stated, state government has been doing more with less, and the legislature should scrutinize all other areas of state spending to assure they are operating with comparable efficiency.
Please Ignore Retirement Eligibility Rumors
TPEA wants to dispel rumors circulating about potential changes in the laws governing retirement eligibility for ERS. Some state employees have heard rumors that the next legislature is planning to change eligibility for retirement for current employees. Out of fear, some employees are contemplating retiring before the legislative session to avoid the possibility that the current “Rule of 80” eligibility standard will be changed to the “Rule of 85”, or other similar changes.
First, there is no factual basis for these rumors. No such legislation has been introduced, and legislators who oversee these issues do not support such a change. In addition, there are provisions under federal law that protect more tenured employees from sudden changes in retirement eligibility. Finally, there is no financial reason for the legislature to make such changes, since the state retirement contribution rate is set in the Appropriations Bill and changes in retirement eligibility wouldn’t free up money to help close the projected budget shortfall.
The legislature made significant changes in retirement eligibility rules last session, in HB 2559. These changes “grandfathered” current employees at that time. TPEA will oppose additional changes this session in order to give the changes under HB 2559 time to work.
Health Care Benefit Threat Is Real
While rumors of changes in retirement eligibility are unfounded, the ongoing threat to our health care benefits is unfortunately all too real. Legislative leaders just announced that they will request state agencies to cut an additional 2 or 3 percent of their budgets this fiscal year. If such a cut is required of ERS it could mean additional changes in our health plan after the plan year has already begun, on top of all the increased costs that began on September 1. TPEA is opposed to additional cost increases to the state health plan, especially coming in the middle of the plan year. Moreover, it does not appear employees and retirees in other state funded health plans will be subject to comparable changes, which is grossly inequitable.
As TPEA has previously written, we are extremely concerned about the impact of the budget shortfall on our health care benefits. In addition to fighting staffing reductions, TPEA’s biggest challenge this session will be maintaining our health benefits.
State Retirees Need to Get Involved
TPEA is particularly concerned about the impact of any changes to state health care benefits on state retirees and their dependents. ERS retirees have not received any ongoing increase in retirement benefits in nearly a decade. TPEA will continue to fight for a 13th check for retirees, but under current law the ERS Fund is not “actuarially sound” and cannot provide a 13th check or other supplemental payment. While there is probably a legal way for the Legislature to appropriate funds for a 13th check, the state’s budget problems make this extremely unlikely.
The net result is that many state retirees have seen the real, inflation-adjusted value of their annuity payments decline by nearly 30 percent. Since the average ERS annuity is only around $18,000 annually any significant increase in health care costs could hit retirees even harder than active employees.
State retirees should be alarmed about the potential impact of the budget shortfall. Please consider getting involved by joining TPEA if you are not already a member. All retirees should communicate with their local State Representative and State Senator to educate them on these issues and ask for their support in maintaining our health care benefits.
Watch TPEA’s website www.tpea.org for special event announcements and to read about TPEA’s future schedule.