Been Down So Long

Piecemeal Relief Is Recommended for Retired Teachers


illustration by Nathan Jensen

Karen Worley used to be an English and journalism teacher, and a pretty good one. At 23, her energy and devotion at one of Ft. Worth's inner city public schools won her several commendations, and helped her 10th grade students regularly meet or beat the honors classes in TAAS scores. But like many young teachers in Texas' public school system, she saw her future, and it didn't look good. "My salary and retirement package was a farce," she says. "I thrive on problem-solving, and I went in thinking I could do something about it, but after only the first year, it was evident that was not going to happen."

After only three years of teaching, Worley reluctantly quit and went back to school to get a higher paying job with better benefits as a paralegal. That's the kind of story Senator Gonzalo Barrientos (D-Austin) hates to hear -- the loss to the private sector of talented, young public school teachers who are discouraged by the prospect of low salaries while they're teaching, and minimal retirement benefits at the end of the road. Barrientos filed a bill last Friday to provide an incentive for teachers to keep teaching; it's a college tuition exemption for the children of active Texas public school teachers with at least ten years experience. It's a start, certainly. But public school teacher advocates want more, a lot more, from the Legislature, particularly when it comes to retirement benefits. Jeri Stone with the Texas Classroom Teachers Association (TCTA), a group that is 30,000 members strong, points out that other states with a similar retirement system structure "provide much better benefits than ours." In fact, according to teacher advocates like Stone and representatives from the Texas Federation of Teachers (TFT), a union organization with 26,000 members, Texas ranks at or near the bottom in the U.S. when it comes to compensating teachers after a lifetime of service.

Studies confirm their assertions: Comparative figures from 1994 and 1995 provided by the State of Wisconsin Retirement Research Committee and KPMG Peat Marwick show Texas is one of the worst states in which to be a teacher. Texas is one of only 13 states in which social security benefits are not available -- 80% of Texas school districts opted out of social security to avoid higher taxation for their employees. Most of those 13 states compensate retired teachers for the lack of federal benefits by contributing to their pension funds at a higher rate, and paying out at a higher rate, than the national average. For instance, while the average state contribution rate across all 50 states is 10.41%, states without social security benefits offer 13.07% on average. Texas doesn't even come close, at only 6%. Our payout for teachers at retirement is also below national standards; Texas offers only a 2% multiplier --compared to an average of 2.23% among the 13 states -- on this formula which determines the amount of their retirement checks; the average retired teacher on a 2% multiplier receives approximately 60% of his salary in his retirement years. Texas also offers minimal health care benefits, no automatic cost of living adjustment (unlike 48 other states), and no credit for unused sick leave. Adding insult to injury, Texas teachers have the lowest average salary nationwide according to National Education Association figures -- the national average is $36,874, the 13 states average $37,021, yet Texas limps in at only $32,001 per year.

"Teachers earning below the national averages suffer a severe hardship," says Eric Hartman, a lobbyist for TFT. His group, along with several other teachers' groups, wants the legislature to increase the contribution rate to 7.31% and the multiplier to 2.25%, to at least get Texas benefits in the ballpark with other states. But Hartman is not naïve about his chances on the increases. "The governor's priority is to reduce taxes -- that preempts the surplus in the budget being used for anything but that," he laments. It's not just the governor's fault -- teachers' groups are having a hard time finding support for the rate and multiplier increases with any of the legislators.

And it may be that the state has gotten in the habit of seeing the teachers' pension account as a sort of multi-purpose slush fund. Up until the 1995 legislative session, the Teachers Retirement System (TRS) agency was paid for by teachers and school administrators. The TRS managed the pension fund -- made up of payments from active teachers and contributions from the state -- which in the last 20 years normally ranged between 7.1% and 8.5%. By 1995, the fund was flush with over $30 billion in assets and low liabilities that were to be used for "benefit improvements," such as an increased multiplier, or more comprehensive medical insurance. TRS was seen, at the time, as "overfunded," and in need of overhaul; SB9 by Sen. Ken Armbrister (D-Victoria) did just that. The bill made TRS an agency of the state, and that year, the state's contribution rate was reduced from 7.31% to 6%, a savings to the state of nearly $400 million. The reduction was signed off by State Comptroller John Sharp and passed by the Lege as a temporary budget maneuver; angry teachers' groups were somewhat mollified by the promise that the rate would be returned to 7.31% this session. But the reduction was a particular slap in the face for teachers, both active and retired, who believed Governor George Bush during his campaign against Ann Richards when he not only criticized Richards for reducing the rate from 7.65% to 7.31%, but also stated in campaign literature that he would "oppose any effort to reduce contributions to [TRS] or decrease the state's contribution rate."

Hartman calls the reduction in 1995 a "raid" on teachers, and faults the TRS for not transferring the funds into benefit improvements in a timely manner. "The fund became a tantalizing target for the legislature," he explains. Any recompense this session will be hard-won; with legislators focusing on the governor's tax cut plan and education funding reform, increases of any kind are being met with fierce resistance. Even Rep. Sherri Greenberg (D-Austin), a leader among her peers on education issues, says that for her, the issue is not whether anyone agrees with the teachers' organizations, but where the money is going to come from. "There is no money to pay for improvements," she says. "With this whole tax discussion up in the air, there are so many competing demands, and we have only one pie with only so many pieces."

The harshest words on the subject come from the very legislator the teachers' groups need the most, Rep. Robert Junell (D-San Angelo), chair of House Appropriations, who calls this a "hot-button deal" that appears controversial at the outset. "But once you start looking at it," he points out, "you realize it's a lie: We have not been dipping into the TRS system," he argues. "They [TFT] are not being truthful."

Junell also denies that the contribution rate has anything to do with teachers' retirement checks -- "Their benefit plan is based on their earnings, not on the state's contributions," he claims. It is true that, unlike the federal social security system, TRS has a comfortable ratio of over four active teachers paying 6.4% of their annual salary into the pension fund for every retired teacher taking out at an average rate of 60% of their former salary; but without the state contribution, the TRS would be never be able to make improvements in the rate to bring Texas up to national averages. Nevertheless, Junell says that the state has "done a lot for teachers in the last several years -- we funded a catch-up increase for those retired teachers who are falling behind. We took care of them."

Junell is referring to increases for the oldest of the state's 140,000 retired teachers, some of whom were living below the poverty level at around $200-300 per month (without social security, remember). Last session's allotment totaled $1.6 billion, bringing the lowest paid of those retirees' up to about $1,000 per month. Another catch-up could be funded this year -- but not by the state. Last Friday, the House Appropriations Committee decided to determine this year's catch-up by using the Consumer Price Index as a way to formulate a cost-of-living adjustment. The increase comes to about $1.3 million, according to the Texas Retired Teachers Association, and will be paid for out of the TRS pension fund.

The danger, says Hartman, is that TRS is under statutory limits on how much liability they can carry, and the $1.6 billion could be the last big investment TRS can make for as long as 23 years until the debt is paid off. "It would not soak up all they could do, but they would be limited in the future," he points out. For instance, Rep. Glen Maxey (D-Austin) is sponsoring a bill based on a recommendation by comptroller Sharp to give retired teachers the same bonus annuity check each year that state employees get. That "13th" annual check over the next biennium would cost a total of $338 million, and could still be funded by TRS.

Certainly $2.9 billion to help the oldest retired teachers get some much-needed relief is a significant investment by the state and TRS, but there's a reason they call that kind of relief "ad hoc." It's not a permanent solution for active or retired teachers -- anything permanent would have to come in the form of a higher state contribution and higher multiplier rate, an unlikely prospect this year. All of which means there could be a lot of teachers feeling the way Karen Worley did just before she quit. "If I'm fighting the battle for the kids," she remembers thinking, "then who's fighting the battle for me?" Good question.

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