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TRS Board receives 2022 annual report on health of the educator pension fund

Teach the Vote
Teach the Vote

Retirement | TRS | Social Security

Date Posted: 12/09/2022 | Author: Monty Exter

The TRS Board met Dec. 8-9 in Austin for its last meeting of 2022. Highlighting the agenda, the board received the annual actuarial evaluation, or health checkup, of the TRS pension fund. Joe Newton, longtime TRS actuarial consultant with Gabriel, Roeder, Smith & Co., presented the following remarks based on a snapshot of the fund as of Aug. 31 (the last day of the fiscal year).

Investment returns for fiscal year 2022 were down, coming in at -6.7 percent. Thankfully this year’s market downturns were offset by the previous year’s extraordinary investment returns of approximately 25 percent. Over the last five years, the fund has earned at a rate of approximately 7.3% of the last five years; 8.1% over 10 years; and 7.8% over 20 years. Those rates all exceed the 7% target, or assumed, rate of return, used to project the fund’s future investment revenue.  

On Aug. 31, the market value of the fund was $184.2 billion, and the smoothed value was $193.3 billion. Smoothing is a process by which the highs and lows of years like 2021 and 2022 are averaged out over a five-year rolling period. The fund is currently 79% funded, just 0.1% less than in 2021. This means that TRS has on hand 79%of the dollars it would need to pay out projected benefits for all current retirees over the remainder of their lives.

The fund is projected to hit 100% funded status in 26 years, which puts TRS on target with the funding period predicted upon the passage of Senate Bill (SB) 12 during the 86th legislative session. At the end of 2021, the funding period was 23 years, significantly ahead of schedule. These projections are based on current statutory contribution and benefit rates. To date, contribution rates have moved up in accordance with SB 12, and there is one final contribution increase contemplated by SB 12 that the upcoming legislature must fund to maintain the projections. An unfunded cost-of-living adjustment (COLA) would push out the funding date and decrease the overall health of the fund.

Of course, retirees are in desperate need of a COLA, having not received one from the legislature in nearly 20 years. It is important that retirees and active educators alike press legislators to pay for a COLA using state revenue instead of the pension fund. Doing so would protect the health of the fund while also serving the needs of retirees.

The least expensive method of funding a COLA is with a one-time lump sum up front. However, the legislature could also commit to funding a COLA over a set period of time. As a lump sum, every $1.1 billion buys a COLA of approximately 1 percent. On the other hand, if you spread the payments out over a set schedule, the total cost would increase to between $1.7 billion (over 12 years) and $2.6 billion (over 25 years) per 1% of COLA. That equates to a cost of $148-247 million in the current session. The same 1% COLA fully funded through the pension fund would add $7 billion in unfunded liability.

During the December meeting, the board also heard updates on the newly opened TRS branch office in El Paso and progress on the agency’s move to its new consolidated Austin headquarters. Board materials and archived footage of the meeting can be found here. 



Crystal Woodard

I worked in the Social Security world for 23 years before going into education, which I love. Please remove the WEG and GPO. It is not fair that I paid in to SS for so many years and merely because I chose to educate our young minds I am not eligible to receive what I paid in. If I had only known how it would effect me in my retirement years I might have made different choices. Educators are always penalized…exorbitant insurance premiums, WEP/GPO, and low salary. No wonder people are not entering education and there is a huge teacher shortage. We need these problems fixed immediately. What is the incentive to be in education? An expensive four year college education that pays low, penalizes previous work years in SS, does not receive equal insurance benefits of state employees like insurance premiums, and constant stress and pressure to educate young minds. We need changes now.

Merry Creager

It is so wrong that this fund doesn''t have a COLA EVERY YEAR. Every year! Shame on our State government! Shame I say! I cannot say how wrong this is. Even SS has a COLA every year. TMRS has a COLA every year. Shame on TRS and the "great" State of Texas for treating educators like this. And the WEP and GPO are furthering retired educators poverty. This system is so wrong and ridiculous. That is my opinion! I don''t understand how our government can treat people like this and get away with it.

Carolyn Jeanette Wilson

I am a widow! My husband paid into social security for over 40 plus years ……he died at age 62! Because I chose to be a professional educator I am penalized as his widow because I taught school for 36 years and cannot receive one penny of my husband’s social security! Had I never held a job or had I been a secretary, etc. I would be able to receive his widow benefits! There is nothing fair about this! It needs to be changed so educators can receive social security benefits if they paid into it or is they are the surging spouse! Hopefully, this will change!

Brian H Gessner

Please repeal WEP and GPO. We are not seeking anything that others get without question. We are only asking not to be penalized because of our primary careers. Many of these careers gave back to society and actually made a difference each and everyday. We worked other jobs and did pay our share and we should be allowed to receive our full benefits. Right now, these monies are needed to live. Please repeal and reinstate our full benefits.


I worked in the school system for over 18 years, loving every minute! Now I’m being penalized because I paid into SS for a few short years! I’m retired now and can’t afford much of anything including paying my bills. I’m asking you to support us by repealing WEP/GPO. Times are especially tuff right now. We are only asking for what we worked for, a retirement we can enjoy. We shouldn’t be penalized when other states get their full SS when having both a pension and SS. Please repeal WEP/GPO, allow us to enjoy our retirement that we worked so hard for.


If I knew about WEP at the time I was hired, I would have thought seriously that giving up part of my Social Security was not an intelligent option. (I wonder how many new hires were actually informed in the days when I was hired? It was not required to be notified back then as it is supposed to be now. Like so many of us, I needed the job that, as a single mom, offered hours allowing me to meet my 3 children coming off the bus at the bus stop, and I was very proud to be getting an educator job not realizing that a pension penalty was involved. The pay of a para job in my Texas district provided poverty level existence for a family of 4. And now in retirement, it''s even harder to make ends meet because WEP has taken money I earned and what are the chances of getting a COLA this year? The state of Texas has a surplus, as our governor stated. Let''s see if maybe the men and women in education might see an increase this year.

Carol Mayes

I am penalized due to WEP and GPO. And I have to pay for my Medicare premiums out of my school bus operator retirement. Please repeal these and allow us to receive money we worked and paid into Social Security with second jobs during our careers to make ends meet. I only ask for what I earned. Why is hard work being penalized?

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