Friday, October 21, 2011

The pensions of Texas legislators and the pensions of retired Texas teachers

                 The Face book page of the Texas Retired teachers Association www.face -Association/126989714019649 recently posted an article from USA Today describing how state legislators pass laws to give themselves lucrative pensions. In the case of the Texas Legislature, the House and Senate passed a law tieing their pensions to the salary of state judges, and then in the intervening years raised judges salaries from $42,000 to $125000, and thus  have now guaranteed themselves a retirement pension of $125,000 per year. By way of contrast the average retired Texas teacher receives a pension of  $ 30,000.

              This obviously reflects poorly on the legislatures' sense of equity and openness. Perhaps the old joke is true that" no man's life or property is safe as long as the Texas Legislature is in session". Should something be done to correct this accumulative abuse of power? Absolutely! Would this make us feel better? Probably! However this would do little to improve the problems of retired teachers in areas where  laws could ameliorate those problems. Instead we need to insure we have clear goals , and strategies  to reach those goals, in order to persuade the public and the legislature to favor our cause.


         1. Cost of Living Adjustment. As most of us are well aware retired Texas Teachers have not received a cost of living adjustment since 2001. Although, fortunately, the inflation rate has been low the past couple of years, the inflation rate has still averaged three% for the decade, meaning a teacher who retired in 2001 with an annuity of $ 30,000 now has the equivalency of $20,000 in spending power. Ten more years without a COLA and the same inflation rate would leave the same retiree with $ 10,000 in spending power. I, therefore, believe that a COLA is the most pressing problem facing retirees. However there are others that the legislature needs to adjust such as:

          2. TRS Care. The TRS Care program for retirees is currently serving 212,000 retirees, their spouses and their beneficiaries. Unfortunately the program is funded on a pay as you go basis meaning each  session of the legislature must declare the funding is available for the next biennium. The fund is currently due to run out of funds by 2014. Some form of permanent funding must be created  quickly. These two problems must be addressed at the state level but some others must be addressed at the national level, such as:

      3. WEP and the Offset  The U.S. Congress passed two laws referred to by the acronyms WEP and the offset. One of these laws limits the amount of Social Security a TRS retiree can draw by up to two-thirds, while the other prevents the spouse of the retiree from drawing any of his/her social security.

   4. Paying TRS Care premium pretax. One of the benefits enjoyed by many workers including those still employed by school districts is the premiums for health care are paid pretax ; a benefit not currently enjoyed by TRS annuitants. To illustrate, a current TRS retiree might be receiving a pension of $35,000 and paying $4,500 a month in TRS Care premiums. Under current laws the TRS annuitant must pay taxes on all $35,000. If Congress were to change the tax laws to give TRS retirees the pretax befit of most employees, the retiree in the previous example would only have to pay taxes on $30,500 of their pension, rather than on the entire $35,000. This would be a nice bit of relief for most retirees.

  5. You may be aware that Medicare has frozen their premiums the past two years because social security recipients did not receive a cost of living adjustment. Guess who did get an increase in their medicare premiums. Well, yours truly for one. When I called Medicare to inquire about my increase I was told that Congress only exempted Social Security recipients. I explained that in Texas teachers did not have a social security option and not only did we miss a cost of living  adjustment in 2010, like social security recipients, but Texas teacher retirees had not had a cost of living adjustment since 2001! After some weak attempt at sympathy I was told that nothing could be done because Congess' action only dealt with Social security; so my medicare premiums are now$110 rather than $ 96. So we are basically punished for not being part of a system we were not allowed to join.

 6. In a future blog I will suggest some strategies I believe will help reach some of these goals.

             Your Turn.  

   Please give your thoughts on the goals mentioned. Which of the goals do you consider most important ?Are there other goals you think we should push for that were not mentioned?

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