The Teacher Retirement System (TRS) Board of Trustees held its final meeting of the year this the week. The meeting was held virtually from Wednesday, December 9, to Friday, December 11, 2020. ATPE Senior Lobbyist Monty Exter monitored and tweeted updates throughout the meetings.

As with nearly every facet of present day life, the impact of COVID-19 was a topic of discussion. The board was presented with some harsh realities by TRS staff. TRS Chief Benefit Officer Barbie Pearson reported a significant uptick in retirements and retirement inquiries so far this fiscal year. The increase in retirements only captures members who have begun drawing a pension, and it is therefore likely an undercount of the total number of teachers who have already fled their classrooms. Additionally, the recent increase in inquires may signal a wave of mid-year retirements on the horizon.

Even more startling than the increase in retirements, TRS Chief Health Care Officer Katrina Daniel reported that the agency has seen record mortality rates (number of deaths of TRS members) during 2020. Daniel also reported that approximately 11% of the total TRS-ActiveCare population has been infected with COVID-19 since the beginning of the pandemic. In response, TRS has added no-cost coverage of many healthcare benefits and resources related to COVID-19. The board approved extending this additional benefit into 2021.

Thankfully, not all of the news coming out of this week’s board meeting was negative. The board received positive reports on the fiscal health of the TRS pension fund and the TRS healthcare fund. Despite receiving the lowest state contribution rate, by far, of any teacher retirement fund in the nation, the TRS pension fund has grown to $167.4 billion, up from about $80 billion just 20 years ago. The time until the pension fund is fully funded has continued to decrease, now sitting at 27 years. Also, the fund brought in approximately $20 billion (roughly $9 billion in contributions and $11 billion in investment gains) and paid out $11 billion in retirement benefits last year.

The fiscal news for the TRS-Care trust fund was similarly rosy, a drastic turn around from the situation in the recent past. Based on current projections, TRS-Care funding will exceed its anticipated expenses through approximately 2026. During that time frame, TRS-Care will accumulate a fund balance of over $3 billion dollars. Around the year 2026, expenses are projected to again exceed funding and the fund balance will begin to decrease. This means that TRS-Care is effectively funded under the current system through approximately nine more years. This is a dramatically better position than the fund has been in over the last several years. According to TRS staff and external consultants, were the Legislature to increase the state’s contribution into the program by just 1.63% of active member payroll, Texas could “prefund” TRS-Care. Prefunding would mean the combination of contributions and investment income could keep TRS-Care expenses paid indefinitely — with no more costly supplemental appropriations or future funding crises.

Access board materials and archived video of this week’s TRS meetings here.