Bill Caption

Fiscal Notes

Bill Analysis

SB 12 would increase the state contribution rate to the Teacher Retirement System gradually until 2023. Teacher contributions would not change. The state contribution would increase from 7.25% to 8.8%. The employer or district contribution would not change. 

Vote Recommendation Notes

Texas has an obligation to pay its teachers their promised retirement, however TRS has consistently missed its actuarial assumptions which have led to large liabilities that will be covered by the Texas taxpayers and teachers. Texas is not the only state to do this, states around the nation are underfunded due to missed actuarial assumptions. Even the highest funded states are not 100% funded because of the structural defined benefit (DB) problem. The goal of retirement saving is to create equity yet not a single state in the US has met their assumptions. Contribution rates have been raised before and will likely be raised again if this problem is not addressed. Raising the contributions will shore up the liabilities in the short term, however the larger defined benefit pension problem will plague Texas and the rest of the country if reform isn't enacted.

Texas Action urges the legislature to lead the country in taking control of this issue. Conservative actuarial assumptions and expansion of retirement options will help keep Texas out of the developing pension crisis and protect Texas tax payers. Structurally, we need to migrate to a defined contribution plan to replace the current defined benefit plan. Unfortunately, SB 12 fails to bring TRS into solvency, continues to significantly increase costs to taxpayers, and kicks the can down the road for another legislature to address the structural deficiencies of the current system. For these reasons we oppose SB 12.