85(R) - 2017
Senate State Affairs
Senate State Affairs
Relating to the administration of and benefits payable under the Texas Public School Retired Employees Group Benefits Act.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3976, Committee Report 2nd House, Substituted: a negative impact of ($162,112,477) through the biennium ending August 31, 2019.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
HB 3976 would:
- eliminate the requirement for the Teacher Retirement System (TRS) to provide a premium-free health plan to retirees;
- instead require eligible retirees, surviving spouses, and dependents participating in the plan to pay a monthly contribution (premium) to TRS-Care;
- require TRS to establish three plans to be offered to retirees, surviving spouses, and dependents participating in the program;
- require TRS to establish a Medicare Advantage plan and a Medicare prescription drug plan for participants eligible to enroll in Medicare;
- allow the retiree, along with other options, to select for themselves and their eligible dependents any coverage during a period beginning on the date the retiree reaches 65 years of age and ending on a date set by the trustee by rule
- apply certain exemptions to disability retirees until the 2022 plan year; and
- change the contribution of the state from one percent to 1.25 percent, allowing the trustee to set premium contribution rates and modify benefit plans to maintain solvency of the fund
Vote Recommendation Notes
TRS-Care is a system in crisis which is quickly spiraling out of control. The current path of continuing to underfund the program is unsustainable - on this trajectory the program will collapse under its own weight in the not-too-distant future. To fully fund the program in its current form would be a far too costly burden to place on the taxpayers of this state. The only path forward to save the system then is to enact reform. This bill is an attempt at that needed reform.
While some provisions of this bill would be an improvement over the status quo, we are unable to determine whether this legislation would fix the program in the long term or simply delay the inevitable. For this reason we remain neutral.
On an additional note, we encourage the legislature to pursue reforms that transform public employee retirement systems to defined contribution plans for newer workers while keeping promises made to existing retirees, ensure full transparency, and prioritize local control.