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Teacher Retirement System of Texas

Abbott orders state agencies to obey the law

Better late than never.

Droppin’ dimes, droppin’ dimes

Gov. Greg Abbott and Comptroller Glenn Hegar on Wednesday ordered state agencies to stop paying departing employees by placing them on “emergency leave.”

“Pursuant to this directive, the use of emergency leave, administrative leave or other mechanisms to continue paying state employees who have ceased to work will be prohibited,” the directive from Abbott and Hegar stated. The directive will remain in place until the Legislature takes up the issue during next year’s legislative session, Abbott’s office said.

The Dallas Morning News and other media outlets have recently reported on the growing practice by agencies to keep departing employees on the payroll by placing them on “emergency leave,” often as a form of severance.

The practice first came to light after reports that Texas Attorney General Ken Paxton paid his first assistant attorney and communications director for months after they left the agency. Subsequent stories revealed the General Land Office continued to pay departing employees without using the emergency leave designation.

Representatives of both agencies said they will follow the governor’s new order.

“We appreciate Governor Abbott’s leadership,” said Marc Rylander, spokesman for the attorney general’s office. “We do not disagree with the Governor’s new policy for all agencies subject to the direction of the governor, and we will concur with it moving forward.”

Brittany Eck, GLO spokeswoman, said the agency will suspend the use of separation agreements until lawmakers decide how to proceed.

“We look forward to continuing our work with the Governor, Comptroller, and members of the Texas Legislature to not only clarify the law on this issue but also discuss how state agencies should manage its workforce in an efficient and cost-effective manner,” Eck said.

See here and here for the background. The Lone Star Project requested an investigation into this a couple of days ago. I guess it had finally gotten to the point where Abbott could no longer ignore the issue. Trail Blazers and the Chron have more.

Lone Star Project requests investigation of severance packages

From the inbox:

BagOfMoney

Today, Lone Star Project Director Matt Angle sent letters to the Texas Rangers, the State Auditor and the Travis County District Attorney requesting formal investigations into a series of questionable payments made by Attorney General Ken Paxton, State Agriculture Commissioner Sid Miller, State Land Commissioner George P. Bush and other state officials.

Improper Payments Detailed in Investigative News Reports

Widespread abuse of state employee compensation has been detailed in a series of investigative news reports by the Houston Chronicle, the Dallas Morning News and other Texas publications over recent weeks.  The reports point to the systematic use of “emergency leave” as well as document manipulation to allow some state employees to quit or be removed from their state jobs but continue receiving thousands of dollars in state pay.   In some cases, the payments appear intended to provide special treatment to politically connected or otherwise favored employees.  In other instances, the payments may be a form of hush money to keep specific employees from criticizing state officials or disclosing information that might prove incriminating or embarrassing.

Angle’s letter to the Texas Rangers can be seen here and reads in part:

“These reports confirm that, contrary to the intent of law, multiple statewide officeholders have provided certain employees with emergency leave packages as a form of severance pay or even settlement agreements.”

“The intentional misuse of state funds violates both the spirit and the letter of the emergency leave provision of state law and could be viewed by Texas taxpayers as the equivalent of tax-payer funded hush money.”

“Specifically, the facts outlined by state news media and Texas state law merit a full investigation of the Attorney General, Agriculture Commissioner, Land Commissioner, Teacher Retirement System, Water Development Board and potentially other agencies for violations of Texas Penal Code 39.02 (Abuse of Official Capacity), Section 36.02 (Bribery), and Section 37.10 (Tampering with a Government Record).”

See here and here for the background. I had assumed someone would file a complaint over this sooner or later. The Rangers and the State Auditor can add it to their growing to-do list. The Chron has more.

Teacher health insurance costs

Another thing on the list of things the Legislature needs to deal with but won’t.

Health care insurance costs for hundreds of thousands of Texas teachers and other public school employees are scheduled to go up again this fall, prompting renewed calls from educator groups for the state to pick up more of the cost of employee premiums.

The biggest increase will be experienced by those seeking basic coverage for themselves and family members. Their monthly premiums will jump $85 to a high of $1,145 a month, nearly two and a half times the national average of $472 a month. Similar coverage in the private sector would cost around $407 a month, according to a recent Bush Institute study on teacher health care costs.

“The current policy of imposing ever-greater costs on employees is not sustainable,” said Ted Melina Raab, spokesman for the Texas chapter of the American Federation of Teachers. “It is putting decent, affordable coverage out of reach for growing numbers of school personnel.”

More than 280,000 public school employees – roughly three in four teachers, principals, administrators and other staff – receive health insurance through the Teacher Retirement System of Texas. The insurance program, called TRS-ActiveCare, was created to provide a health care option to working teachers whose districts did not offer their own plans.

Last Friday, the TRS board agreed to increase monthly premiums across most TRS-ActiveCare plans.

Since 2002, the state’s share of premiums has remained at $75 a month. During that same period, some educators seeking coverage for just themselves have seen their premiums increase 238 percent.

Even with the state’s monthly contribution of $75 and a $150 base contribution required from school districts, some employees still will pay upwards of $920 a month for basic family coverage.

“These increases amount to pay cuts,” Clay Robison of the Texas State Teachers Association said, noting the average teacher in the Lone Star State makes under $50,000 a year. “It really has become a burden for some of these teachers.”

This is a feature and a bug of the employer-subsidized insurance model. As we know, employers that provide health insurance plans for their employees pay a significant fraction of the cost of the premiums. This makes health insurance a lot more affordable for many people, but it means many of them have no idea how much their insurance really costs, and it means that an ever-increasing percentage of their total compensation is going to health insurance and not to, you know, salary. But that’s the world we live in, and Robison is exactly right – if the state is not upping its share of the payments, then it is like a pay cut for the teachers, since they’re bearing the full brunt of it. That’s just not right.

The solution, educator groups and districts agree, lies with the legislature. Teacher groups point to the fact that lawmakers and other state employees are covered by the Employees Retirement System of Texas health insurance plan, which pays 100 percent of monthly premiums for individuals and half of dependent coverage.

“School district employees are conveniently thought of as state employees for some things, not thought of as state employees for other things,” said Texas AFT President Linda Bridges, citing increasing performance benchmarks placed on public teachers by state officials. “We think school employees should have health care as good as the governor.”

[…]

State Rep. Mike Villarreal, D-San Antonio, said state lawmakers have a clear role to play in reducing health care costs for teachers.

“Here is an area where clearly the state has a role to play,” said Villarreal. “Clearly, the legislature can take actions to reduce the costs for our teachers in a way that doesn’t interfere with the authority of superintendents and principals.”

State Sen. Bob Deuell, the Greenville Republican ousted by tea party candidate Bob Hall, thinks this will be a hard sell in a legislature keen on budget cuts.

“If you increase the premiums, you have essentially cut the salaries of teachers at a time when they’re not being paid enough already,” said Deuell. “I doubt very seriously the teachers are successful in getting this issue – or any other issue – through next year.”

This is where I point out that Texas’ revenue collections are going gangbusters, meaning the Legislature will have plenty of money to work with. The combination we have of unmet needs, neglected infrastructure, and available cash is one you’d think would be amenable to actually finding solutions to the problems we face. Unfortunately, that requires a level of rationality in the Legislature that doesn’t exist. Can’t do much about the Legislature but we can change direction at the top of the state. It’s the best hope we have.

Modified teacher retirement bill passes Senate

Modified again, this time enough to garner support from the teachers.

Teachers, the state of Texas and school districts all would pay more to help support the Teacher Retirement System of Texas under a bill passed by the Texas Senate Wednesday.

Under Senate Bill 1458, the $117 billion TRS fund would get a boost from members, whose contributions would increase from 6.4 percent of their salaries to 7.7 percent over four years. Meanwhile, the state’s contribution would increase from 6.4 percent to 6.8 percent, and school districts that do not pay into Social Security would contribute 1.5 percent. Additionally, about 102,000 teachers who have retired since 1999 would receive a 3 percent cost of living adjustment under the new bill.

See here and here for the background. The main points of objection from the teachers had to do with the size of the state’s contribution, and with increasing the teachers’ contribution all at once instead of phasing it in. While this story has no details, the Texas AFT spells out the changes since the last time:

The combination of grass-roots pressure and hard negotiating by our legislative allies has led to this substantial improvement in the TRS bill. Sens. Kirk Watson (D-Austin), Wendy Davis (D-Fort Worth), and Royce West (D-Dallas) played crucial roles in winning the Senate-passed improvements. Sen. Robert Duncan (R-Lubbock) too gets credit for leaving his door open to negotiations to modify his bill.

As this legislation now moves over to the House and ultimately to a House-Senate conference committee, the same combination of grass-roots communication and tough negotiations in the capitol could bring further improvements sought by Texas AFT for retired and active school employees, such as an immediate benefit increase for all rather than just one-third of retirees, as well as prospective-only application of a new minimum retirement age for full pension benefits. (As it now stands under SB 1458, school employees who do not have five years of service credit by September 1, 2014, would be subject to the new minimum age of 62 for full, unreduced retirement benefits). So be prepared to launch another wave of messages to members of the Texas House!

To review: Under SB 1458 as amended on the Senate floor today, employee contributions would remain at 6.4 percent in fiscal 2014 (starting September 2013), while the state contribution would rise to 6.8 percent. In fiscal 2015, the employee contribution would be 6.7 percent, while the state continues to contribute 6.8 percent, plus school districts that do not contribute to Social Security would kick in another 1.5 percent. In fiscal 2016, the employee contribution would go to 7.2 percent, while the state and district contributions would hold at 6.8 percent and 1.5 percent; in fiscal 2017, the employee contribution would rise to 7.7 percent, which still would be less than the combined state/district total of 8.3 percent.

If the state were to reduce its contribution below 6.8 percent, employee and district contributions would fall by an equal percentage.

They released a statement thanking Sen. Duncan and the Democrats that worked to improve the bill and called on their members to support it. There are still issues to be settled, so don’t file this one away just yet. The Morning News has more.

On a related note, things were happening for the bill to modify the Employee Retirement System, but it didn’t get to a vote in time on Thursday, so whatever happens there will come from the Senate bill. At last report, labor had dropped its opposition to the ERS bill after some changes had been made. We’ll see what happens from here.

Modified teacher retirement bill put forth

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.

Senate examines pensions

This sort of thing always makes me nervous.

Legislative proposals to shore up Texas’ two largest public pension funds could require teachers and state employees to work years longer than they must today to get full retirement benefits.

For example, a teacher who started in the classroom at age 23 may now take full retirement at age 52; that would increase to age 62 under House and Senate bills that are set for committee votes Monday.

Workers nearing retirement, such as those 50 or older, would not be subject to the new rules. But the changes would apply to about half of the active school employees, including everyone from cafeteria workers to superintendents, and about 64 percent of state employees.

Such major changes are necessary to protect the pension funds for the long term, given rumblings that taxpayers can no longer afford them, said Senate State Affairs Committee Chairman Robert Duncan, R-Lubbock.

Under Texas’ pension plans, the state and active members contribute a portion of pay to the funds, the Teacher Retirement System of Texas and the Employees Retirement System of Texas. That money is invested over time and guarantees a monthly check to a retiree until death.

“There is real hostility toward pensions. Even though we’ve done a better job in Texas, other states haven’t,” Duncan said, and that is fueling a national effort to convert public pensions to 401(k)-type retirement plans in which the employee bears all the risk of saving enough money for retirement.

New accounting rules could soon make the pensions’ funding gaps look a lot bigger, which, in turn, would expose the pensions to the political attacks that so far haven’t gotten traction in Texas.

“We can survive this if we make fundamental changes,” said Duncan, who has been an ally of public employees and carries a lot of weight on pension issues in the Capitol. “You just can’t throw money at it. You’ve got to make fundamental changes.”

But people who would be affected by those changes say the state is reneging on its promise to public servants.

“There is no excuse for defaulting on the framework of expectations that we have been working under for all these years,” said Hart Murphy, a high school social studies teacher in Austin.

Sen. Duncan’s bill is SB13. It has changed since that story was written. The TCTA has an update:

The TRS bills imposing a minimum age of 62 for full retirement on about half of current school employees passed out of committee Monday. SB 1458 passed the Senate State Affairs Committee on a vote of 6-3, and HB 1884 passed out of House Pensions on a 5-2 vote.

Both bills continue to include these major provisions:

  • a new minimum age of 62 for full retirement benefits for those not meeting the grandfather provision
  • a grandfather provision that exempts employees who, as of Aug. 31, 2014, are at least age 50, or meet a Rule of 70, or have at least 25 years of experience
  • a requirement that the employee meet the Rule of 80/age 62 criteria in order to be eligible for levels 2 or 3 of TRS-Care health insurance (A retiree under age 62 would be eligible only for the catastrophic coverage of level 1.)
  • an increase in active member contributions to TRS to match an increased state contribution
  • a benefit increase of 3 percent for retirees who retired prior to Sept. 1, 1994, capped at $100 per month

The bills were both amended to reduce the penalty for retiring under age 62 from 5 percent per year to 2 percent. This change would apply to employees who have at least five years in the system as of Aug. 31, 2014; anyone with fewer years, and future hires, would still be subject to the 5 percent reduction.

So, for example, a person not included in the grandfather provision, but who has at least five years of service credit by Aug. 31, 2014, who met the Rule of 80 but was only age 57 at retirement, would have had their benefit reduced by 25 percent (five years times 5 percent) under the previous version; under the new version, the penalty would be 10 percent (five years times 2 percent).

The minimum age of 62 is favored by some because of the large positive actuarial impact it has on the TRS pension fund. TCTA and other groups have met extensively with the bill authors (committee chairs Robert Duncan and Bill Callegari) and other legislators, and we can report that these lawmakers are working with members of the budget conference committee to try to get a higher state TRS contribution, which would help further improve the bill (such as extending the grandfather and/or providing an increase to more retirees).

At the very least, the state can kick in more to TRS. If the employees are being asked to sacrifice, the state can give up something as well, to minimize the impact. It’s only fair. The state made a promise and it needs to do everything it can to keep that promise.

House debates its budget

As you know, yesterday was Budgetpalooza in the House.

The House budget puts more money into public education and less into health and human services than a Senate proposal that passed the upper chamber last month.

“No one is or will be entirely happy with this bill, but there is something for everyone this year,” House Appropriations Chairman Jim Pitts, R-Waxahachie, said two weeks ago after his committee approved its version of Senate Bill 1.

[…]

It will be a strikingly different scene from the Senate, which passed its budget proposal last month after about four hours of discussion. Traditionally, senators do not amend their budget plan from the Senate floor. State Sen. Wendy Davis, D-Fort Worth, offered an amendment on the bill related to school finance but then withdrew it.

After the House passes a budget bill, both the House and Senate will appoint conference committees to resolve differences between the two proposals.

Neither budget completely reverses last session’s $5.4 billion in cuts to public schools, a goal many Democrats have said is a priority. Several House members have filed amendments attempting to put more money into schools.

Other legislators hope to amend the budget to put more money for uninsured care or specific types of care.

An amendment from state Rep. Donna Howard, D-Austin, aimed at increasing payments to health care providers serving Medicaid patients could spark a protracted discussion over whether Texas should accept federal dollars made available through the Affordable Care Act and expand Medicaid.

House members could also see themselves drawn into debates on hot-button cultural issues. State Rep. Jessica Farrar, D-Houston, has several amendments aimed at reducing state funding earmarked for “alternatives to abortion” and putting it toward other women’s health services. An amendment from state Rep. Bill Zedler, R-Arlington, would block funding for “gender and sexuality centers” at higher-education institutions.

A group of Republican freshmen have filed more than three dozen amendments that would take money away from various state programs and agencies and putting the funds into TRS-Care, the group health insurance program for the Teacher Retirement System, which is projected to have a shortfall by 2016.

TRS-Care has since said that they did not support the freshlings’ effort to de-fund various things on their behalf. A number of those hot-button amendments concerning abortion and women’s health were subsequently withdrawn in a bit of bipartisan detente, which if nothing else should make the whole thing go by a bit more quickly. There are still a lot of other issues to be debated, not all of which get much attention but all of which matter a lot to the people affected by them, and a few messages to be sent. One of the messages sent was about vouchers.

About eight hours into the House’s debate on the state budget Thursday, lawmakers in the lower chamber sent a clear signal about their position on private school vouchers.

An amendment from state Rep. Abel Herrero, D-Corpus Christi, that would ban the use of public dollars for private schools, passed 103-43 with bipartisan support.

“What this amendment basically does is say that you cannot use public money to support private institutions with vouchers,” said state Rep. John Otto, a Dayton Republican who is the House’s head education budget writer.

As they say, this is a big deal. Even Tom Craddick voted against vouchers, amazingly enough. If you listen carefully, you can hear Dan Patrick grinding his teeth. The Observer, Trail Blazers, and Texas Politics, which notes that despite this vote vouchers aren’t quite most sincerely dead yet, have more.

In the end, the House debated the budget well into the night, until almost 10 PM according to Rep. Gene Wu, who heroically live-tweeted the whole thing; BOR liveblogged it as well. Given the big vote in favor, it’s likely that nothing too horrible happened, but we’ll assess the damage later. It’s on to conference committee from here.

Texas’ public pension funds are solvent through 2075

There was a hearing in the Lege this week about the state’s pension plans, and the good news is that they’re in pretty good shape. The better news is that the members of the Lege’s pension committee recognize that fact.

State Rep. Rob Orr, R-Burleson, who is said to be in the running to be chairman of the committee in the next legislative session, said state pension funds are in good financial shape and should not be lumped into the discussion about poorly run plans. Both plans have more than 80 percent of the assets they need to cover long-term benefits, which experts deem a critical threshold.

“It appears to me that the state is doing a superior job compared to a lot of the other pension plans, and the focus should be on the plans that are in trouble,” Orr said, adding that some of the municipal plans, in particular, are out of whack.

[…]

“Here in the Austin echo chamber you’re starting to hear it’s going to be a priority,” said state Rep. Rafael Anchía, D-Dallas, who is a member of the committee and opposes doing away with the guaranteed pensions.

Committee Chairwoman Vicki Truitt, R-Keller, who lost her bid for re-election in the primary, urged her returning colleagues not to get caught up in the national tumult around public pensions and instead keep the focus on Texas, where the statewide funds are in good financial shape.

“That is who we need to keep in mind the taxpaying public and the state employees and the welfare of the state in general,” Truitt said during a two-day hearing last week on pensions.

The state has avoided the mistakes that other pension plans have made because of constitutional and statutory provisions that require annual contributions from both the state and the members and that limit benefit increases. Members of both the teacher and employee retirement systems in Texas have not received an ongoing cost-of-living boost since 2001.

Even so, there is a lot of chatter that some powerful political forces will push the issue.

Forrest Wilder wrote about the plans and the reports that documented their good condition a couple of weeks ago.

You may recall that there is a campaign afoot to “reform” (i.e. radically change) Texas’ public pensions for teachers and other public employees. Basically, the reformers want to abandon the defined-benefit model, which guarantees certain retirement benefits, and replace it with a defined-contribution system built potentially on self-managed accounts such as 401(k)s. There’s also talk of raising the retirement age and other cuts to benefits.

The problem, though, is that Texas’ public pension systems are in pretty good shape, popular with workers and the alternative is risky. Still, the interests pushing for change are powerful and persistent. So, the Legislature ordered the Teacher Retirement System and the Employees Retirement System to take a closer look at their funds. The TRS report was released this week.

The study found that switching to a defined-contribution model would be more expensive, result in reduced benefits to retirees and is unnecessary.

As it is, the pension fund is solvent through 2075—a good sight better than, say, Social Security—and could be solvent indefinitely if the state would modestly increase its share from the current 6.4 percent to 8 percent, comparable to other states. Teachers could pay a slightly larger share too to help solve the problem.

If teachers were to invest their retirement benefits, TRS estimates that 92 percent would do worse than the current system. A typical 62-year-old retiree who made his or her own investments could expect to have income of just 28 percent of their teacher salary, about $12,500 a year. The federal poverty level for a household of one is $11,700.

The reason is simple: Professionally-managed investment pools perform significantly better than individual investors—8.6 percent vs. 5.3 percent, according to the TRS report.

2075 is a long way off. I’ll be 109 years old in 2075 if I live that long. Do we not have some more immediate priorities to talk about in this state? I mean seriously, TxDOT will run out of money in 2014 for new road construction. Texas’ long term water needs are woefully under-addressed. By comparison, the pension fund is the Rock of Gibraltor. Yet that’s what we’re talking about because the ideological visigoths that are calling the shots don’t like the pension fund and don’t like teachers. When I talk about a matter of priorities, this is the sort of thing I’m talking about. We’re never going to deal with the real problems of this state as long as the current crew is in charge.

UPDATE: The Statesman urges the Lege to leave the public pension plans alone.

On targeting public pension plans

I have three things to say about this.

Texas could be gearing up for its own Wisconsin-style grudge match over public employee benefits.

A group of high-powered Houston business leaders is starting a statewide campaign to overhaul retirement for future teachers, firefighters, police officers, judges and other state and local government workers.

“I think the state needs to get the hell out of this (pension) business completely,” said lawyer Bill King, who is forming Texans for Public Pension Reform with others from the Greater Houston Partnership, an über-chamber of commerce with business members representing $1.5 trillion in assets.

Taxpayers bear too much risk on behalf of public employees by providing them a guaranteed retirement that most private sector workers don’t get, King said.

But advocates of the public pension system say there are ways to eliminate or reduce risk without doing away with the program.

“They don’t have to destroy a system that works,” said Keith Brainard, research director of the National Association of State Retirement Administrators.

He said government pensions provide retirement security for millions of Texans in a cost-effective manner for taxpayers. Research by the Center for Retirement Research at Boston College shows that professionally managed pension funds produce better investment returns than 401(k)s and cost less to administer.

King said the campaign is in its infancy, and its specific goals are still being developed. It’s not clear how the campaign will get involved in next year’s elections or the 2013 legislative session, but King said he is confident the campaign will soon make pensions an issue for lawmakers.

King said he would support a constitutional amendment eliminating public pensions in the state and moving all government employees to retirement accounts akin to 401(k)s. Legislators would have to approve such an amendment on the ballot when they convene in 2013.

[…]

King, the son of a union pipefitter, said he was disappointed with the anti-worker tenor of the Wisconsin battle over collective bargaining rights. This campaign, he added, is not intended to bully public employees.

Well, that’s nice to hear, and I don’t have any particular reason to doubt King’s sincerity on this, but let’s be honest: It’s highly likely that if this campaign gains any traction, it will pick up support from people who will be happy to demonize and bully public employees. To think that won’t happen is naive. It’s also the case that no matter how good King believes his own intentions are, once the employees whose pensions are threatened by this become engaged, they’re likely to play rough, too. It will be easy to blame them for any shift in rhetoric that King’s campaign will feel the need to make down the line.

Both the Employee Retirement System of Texas and the Teacher Retirement System of Texas have more than 80 cents for every dollar needed to pay their long-term obligations, a level considered to be a benchmark of a strong fund. The state funds also have tight restrictions on contributions and benefits.

There are about 1,800 public retirement systems in Texas, the vast majority of which are small cities and counties that pool their resources for investment purposes. The big cities, however, have mostly set up shop on their own and have separate plans for police, firefighters and other municipal workers.

Given the large number of plans in Texas, Brainard said, the state “has been striking in the relative absence of abuse and pension problems.”

Where there have been problems, Brainard said, they have been in the big-city pensions. Those plans have fewer constraints on increasing benefits than do the state systems.

The sentiment that pensions are unsustainable gained traction across the country after the 2008 financial market collapse sank the value of funds everywhere. State and local governments failed to cover $660 billion of their $2.94 trillion in pension liabilities last year, according to the Pew Center on the States.

There’s nothing in this story to indicate how big a problem King is talking about. We know Houston has some pension issues, and the story gets into that, but its problems mostly stem from a change to pension benefits that was made a few years ago. If the state or other cities have similar issues, you wouldn’t know it from this story. How much money are we talking about, and how much of it is attributable to the economic downturn? If you’re going to claim there’s a crisis, then show me some numbers.

By the way, on the matter of Houston’s pension problems, one of the issues the city faces is that its options for taking action to deal with it are constrained by state laws. If King and the Greater Houston Partnership have done anything to help persuade the Legislature to give Houston more tools for taking care of this, I am not aware of it and the story does not discuss it.

The problem is that states can’t save money anytime soon by doing away with pensions.

In fact, it costs more in the midterm because taxpayers must contribute more to cover the benefits accrued by retirees and current workers because new workers would no longer be chipping in to the pension, [Stephen Fehr, a researcher with the Pew Center on the States] said.

When a Texas Senate committee looked in 2008 at a similar pension conversion, the committee found no compelling reason to do so.

The state’s Pension Review Board at the time estimated the combined contribution from the state and employees to the Employees Retirement System of Texas would have to rise from around 17 percent of payroll to as much as 30 percent if the pension were closed to new people.

In 30 years, the contribution rate would climb beyond 80 percent .

Nevertheless, King argues that finally wiping clean the public pension liabilities is worth the higher costs now.

“It will require sacrifices in city services and higher taxes than would otherwise be necessary,” King wrote. “But at least the number will be finite, unlike in our current predicament.”

Again, if you believe in this environment that there would be any kind of tax increase to help cover the cost of shifting to a 401(k) plan, you are naive in the extreme. The cost would be covered by general revenue, which would either mean further cuts to things like public education, or more budgetary flimflam like what we saw this session with deliberately underfunding Medicaid. That’s not acceptable, especially for a problem whose scope is not clear, but it’s what we’ll get for as long as we have a Lege that resembles the current one. When we get these mostly Republican-created problems that are affecting us right now under control – that is to say, when we get a different Legislature, one that really is fiscally responsible – then maybe we can talk about this. Texans for Public Pension Reform, you let me know when you’re willing to help with that effort. EoW has more.

The job market for teachers

There are still some jobs available for new teachers and teachers looking for a new gig, but not nearly as many as there have been in the past.

Because of the Legislature’s initial $4 billion cut from public school funding, districts are slicing at least 6 percent from their budgets for the first year of the biennium. Options for grads trying to get their foot in the teaching door look bleak. But as districts work out budgets for the coming school year, many are finding a little more room than expected to hire new teachers because of resignations, retirements and pre-emptive cuts.

“Some districts, like those in San Antonio, may have skewed things when they offered incentives or people decided to retire,” said Linda Bridges, president of Texas American Federation of Teachers. “So districts will have to hire, but not in the large numbers they were before.”

Based on a general survey of most districts, the number of new teachers hired is down by 74 percent from last year. Though districts are hiring, open positions are limited. Many are shuffling employees to fill newly consolidated positions. Chalkley said she hit many such walls — notices stamped “For internal applicants only” — when applying in the Austin Independent School District.

In addition to the lower hiring and recruiting numbers, teachers are being hired later in the year. Jobs typically available in April or May might not appear until August, if at all, and graduates are starting to panic, said Denise Staudt, dean of the Dreeben School of Education at the University of the Incarnate Word.

[…]

The schools are emphasizing the long-term outlook.

“We’re telling them that this isn’t going to last forever, people will start retiring and things will turn around a little bit,” said Blanche Desjean-Perrotta, associate dean for teacher education at UTSA.

When positions open, districts are likely to hire those on probationary leave or already within the district. Such was the case with Judson ISD, where officials cut teaching positions in April, but in the wake of retirements and resignations hired back 60 who had been put on leave.

The Teacher Retirement System of Texas has seen a 25 percent increase in retirements since 2006, climbing to 16,706 in 2010. If those numbers continue to rise, districts will have to hire more than they planned, Bridges said.

“If people are reading the economic forecast and looking at some of the job statistics, we have an aging workforce across the country,” [Shari Albright, chairwoman of Trinity’s department of education] said. “Consequently, statistics would tell us we need new cadres of teachers.”

Prospects are still pretty good for the long term. Texas still has a young and growing population, and that means teachers will be needed. The short term is going to be hard, and the bargain newer teachers will be getting won’t be as good as those who came before them got. There’s a danger that the best and brightest will leave to find jobs elsewhere, and that fewer people will be encouraged to pursue education as a career, which may leave districts in the lurch when they need to start hiring again. To use a word that Republicans seem to favor these days, there’s a lot of uncertainty out there.

Perry meddles again

All of his shenanigans with the Texas Forensic Science Commission have kept Governor Perry busy lately, but not so busy that he can’t mess with other things, too.

Gov. Rick Perry plans to reshuffle the board leadership of the state’s $88 billion teacher retirement system, an unexpected move that has reignited concerns among the members that Perry is meddling with their pension fund.

Linus Wright, a retired school superintendent who was appointed in January to lead the Board of Trustees of the Teacher Retirement System of Texas, said he has been notified by the governor’s office that he will soon be replaced as chairman. Wright said he was given no reason for the change.

He will be succeeded by Dallas real estate investor R. David Kelly, a board trustee since 2007, Perry spokeswoman Allison Castle said.

Kelly is also a member of the finance team for Perry’s re-election campaign, according to a June news release.

In the past, Perry has looked to the teachers’ fund as a potential source of investment dollars for state transportation infrastructure and the Emerging Technology Fund, which invests in startup companies in fields such as biotechnology. The board, which sets the investment strategy for one of the country’s largest public pension funds, has not yet backed an investment policy to do so.

[…]

[T]he change comes on the heels of Perry’s veto in June of a bill that would have added another retiree voice to the nine-member board. The governor appoints all of the members of the board, which is made up of five financial professionals and four retired or active Teacher Retirement System members who are nominated by the membership.

Together, these moves have retirees worried that politics is the real motivation, said Tim Lee of the Texas Retired Teachers Association.

“It’s a concern to us that the governor is developing a pattern that really is minimizing the voice of retirees in their own pension fund,” Lee said.

There may well be nothing to be concerned about here. The story does note that nobody has any particular issue with David Kelly. It’s the timing of the move, and the removal of the first former teacher to lead the Board in 15 years, that has people anxious. But if people see politics every time Rick Perry does something, it’s because politics plays a role in just about everything he does, especially lately. Who can blame the retirees for having a bad feeling about this? Burka sounds the alarm as well.