Sounds like progress, though we’ll have to see how it goes from here.
Members of the Teacher Retirement System of Texas objected strongly last week to a legislative proposal that would have required about half of current employees to work until age 62 to receive full retirement benefits. They now have no minimum retirement age but must achieve the “Rule of 80,” in which their years of service and age equal 80.
The latest counteroffer, released Thursday by state Sen. Robert Duncan, R-Lubbock, would apply the higher retirement age only to employees with less than five years on the job, about 20 percent of Teacher Retirement System members. They were hired under a different set of rules and already have a minimum retirement age of 60.
But everyone, in turn, would have to contribute more from their paychecks: 7.7 percent beginning in 2015, up from the current 6.4 percent. And school districts, most of which aren’t part of Social Security, for the first time would have to chip in 1.5 percent for their workers’ retirement to supplement the state’s 6.8 percent contribution.
The compromise addresses concerns that the state was changing the retirement rules in the middle of the game, said Duncan, who chairs the State Affairs Committee and authored Senate Bill 1458. And it provides long-term funding sources that don’t depend on the vagaries of the investment markets or the Legislature, which have taken their toll on the pension funds over the years.
The combined effect would significantly improve the financial health of the $112 billion pension fund and allow a 3 percent cost-of-living adjustment this year for members who have been retired for at least 15 years, about 102,000 people.
See here for the background. Reaction from teacher groups was mixed but more positive than negative, but there were no quotes from any school district superintendents about the proposed contribution from them. They may make the loudest objections, since that could be a significant hit to their budgets. The state is upping its contribution from 6.4% to 6.8%, and one could reasonably argue that it could do a little bit more. There is a cost of living increase built in for existing retirees, the first in a number of years, and this bill ought to help keep the jackals that want to do away with the defined benefit plan and convert it all to a 401(k) plan, so there is definitely reason to keep working on this. Time is running short, though, so it needs to happen soon. Texas Politics has more.