TEXAS AFT LEGISLATIVE HOTLINE--THURSDAY, JULY 30, 2009
(copyright 2009 Texas AFT)

Notable Bills of the 2009 Session Relating to the Teacher Retirement System

In the 2009 regular legislative session a number of significant measures passed relating to the Texas Teacher Retirement System. Here are capsule descriptions of the most notable enactments, culled from the full Texas AFT report on key bills of the session available at www.texasaft.org online.  

TRS budget items
The $4 billion appropriation to the Teacher Retirement System enacted in SB 1 is an increase of $243 million (6.5 percent).  However, that amount actually includes a reduction in the state's contribution to the TRS pension fund from the current 6.58 percent to 6.4 percent.
 
The appropriation for TRS also includes $523 million to the TRS-Care health plan for public-education retirees. That represents 1 percent of estimated public-education employee payroll and is the minimum amount the state is obligated by statute to contribute.
 
SB 1 also makes a separate appropriation of $120 million for a one-time "13th check" to TRS retirees. The amount for each retiree is capped at $500. Payment of this and a similar benefit for ERS retirees is contingent on "issuance of an Attorney General opinion that indicates the above one-time payments are constitutionally and statutorily permissible." Absent such a determination by the attorney general, the amount will be transferred to the TRS pension fund, which would increase the state contribution rate from 6.4 percent to 6.644 percent. (Note: Texas AFT on July 17 filed a legal brief with the AG's office making the case for approval of the $500 payments.) 

TRS amendments, including "13th check"
HB 3347 makes several largely technical changes to TRS programs designed to maintain the plan's tax-exempt status or to address recent changes in federal laws. However, late in the session, the bill also became the vehicle to provide the necessary statutory authority for the supplemental "13th check" payment to TRS retirees.
 
Investment products for school employees
HB 3480 amends various statutes relating to optional investment products for public school employees. The bill expands available 403(b) products to include 403(b)(7) mutual funds. It also requires the Texas Department of Insurance, the Department of Banking, and the Securities Board to investigate complaints received by TRS about any company that violates 403(b) certification requirements and authorizes the attorney general to enforce related civil penalties. HB 3480 additionally requires third-party administrators of optional retirement plans for education employees to be appropriately licensed.
 
TRS-Care sign-up period
Currently retiring school employees must elect to participate in TRS-Care health-insurance coverage on or before their retirement date. HB 1191 amends the Insurance Code to allow retirees to select coverage any time during the first 90 days after retirement.
 
TRS Active-Care coverage of pre-existing conditions
HB 1364 provides greater coverage for pre-existing conditions under the TRS Active-Care health-insurance program.

Rules for hiring TRS fiduciary counsel
HB 1259 amends the Government Code to clarify that TRS must obtain approval from the state attorney general in hiring outside counsel, as required in statute, regardless of the source of funds used, including legal counsel in the areas of ethics and fiduciary responsibilities. Under a previous chairman, the board had attempted to hire outside fiduciary counsel without approval from the attorney general on the theory that the pension fund, rather than state general revenue, was being used to pay for that position. HB 1259 also requires the AG to to take timely action on any proposed contract for legal counsel and to specify the reasons for any denial.