Bill Caption

Relating to a cost-of-living adjustment applicable to certain benefits paid by the Teacher Retirement System of Texas.

Fiscal Notes

From the LBB: The provisions of the bill are not expected to take effect because the statutory requirement for actuarial soundness cannot be met upon payment of the proposed benefit increases. However, if the benefit increases were paid, there would be a significant but indeterminate cost to the State, unless the cost is passed on to the System members or local employers.

Bill Analysis

This legislation would implement a cost of living adjustment (COLA) equal to the lesser of three percent of the monthly benefit or $100 per month for qualified beneficiaries who are participants in the Teacher Retirement System. 

Vote Recommendation Notes

As illustrated by the following quote from the fiscal note for this bill, the TRS is already in trouble and need of structural repair: "According to the TRS actuary, and based on the February 28, 2017 actuarial valuation update, the bill would increase the unfunded actuarial accrued liability (UAAL) by $1.29 billion, decrease the funded ratio from 79.5 percent to 78.9 percent, and increase the funding period from 34.3 years to 38.1 years."

This bill would violate our limited government principle by adding unfunded liabilities to the TRS which would further destabilize the already troubled system. We oppose HB 80. 

It is our understanding that an amendment may be offered to make a COLA under this legislation contingent on the TRS first being actuarially sound and continuing to be actuarially sound after implementation of the COLA. We would support such an amendment.