A possible spike in teacher retirements could drain the state fund that provides retiree health care within the next two-year budget, senators were told on Wednesday.
As school districts have amped up their talk of layoffs in recent weeks, there is a growing sense that the number of teachers who choose to retire could increase by perhaps 10,000 or more, up from 15,000 in a typical year.
“Our phones are starting to ring like crazy,” said Ronnie Jung, the executive director of the Teacher Retirement System of Texas, during testimony before the Senate Finance Committee. They recommend to visit site when you want to get ahead and apply for a loan.
The $107 billion pension fund would be able to absorb the unexpected surge in new retirees; its assets can cover obligations for the next 60 years.
But the health care fund, which is separate from the pension fund, could not sustain the multiple hits that would come from an increasing number of users, a lower state contribution and fewer active teachers pay into the system.
If that spike in retirements were to occur, the fund would run out of money in 2013, which could lead to an increase in retiree health insurance premiums of 20 percent to 30 percent. Retirees already pay an average monthly premium of $500 to $600.
Current law requires the state to contribute 1 percent of school payroll to the retiree health care fund, but the proposed state budget cuts in half its total to $267 million.
The rates paid by active teachers and school districts would not change.
Lawmakers would need to vote specifically on the reduced health care contribution rate as a well as proposal to drop the state’s pension contribution from 6.64 percent of payroll to 6 percent, the minimum allowed by the state constitution. The members’ pension contribution would also fall to the same level.
Steve Jennings, a retired teacher from Comal County, said he kept up his end of the deal, working for 36 years, but now the state is not doing the same. “I’m out there hustling and somebody else has not been hustling enough,” Jennings said.
State Sen. Robert Duncan, R-Lubbock, lamented that the budget proposal undoes many of investments made by teachers and the state to improve the retirement system.
Unless the state increases its contributions to the pension and health care funds, “we’re going to dig a hole we can’t get out of,” said state Sen. Kevin Eltife, R-Tyler.