Don't change teacher retirement

By MARY SUE RIBARDO

Special to The Eagle

Funding of public pensions is an explosive topic today. Teacher unions in some states have made news because members demand excessive retirement pensions. This is not true in Texas.

Texas is a right-to-work state. Education retirees receive an annuity determined by a formula established by law. It is administrated by the Teacher Retirement System of Texas.

The Teacher Retirement System is a state agency created in 1937 to deliver retirement and related member benefits authorized by the Legislature and to manage the trust fund that finances those benefits. The retirement system serves a vital role to 1.3 million public school and state university active and retired personnel. One out of 20 Texans either pays into or receives a benefit from the Teacher Retirement System.

About 60 percent of yearly benefits paid to retirees is from investment returns, with 20 percent from state and employer contributions and 20 percent from active personnel contributions. Teacher Retirement System Texas is at 82.9 percent funding level, which is above the standard 80 percent for a healthy fund.

There are two types of retirement plans: defined benefit and defined contribution. The Texas Teacher Retirement System is a defined benefit plan. Retirees are guaranteed only the amount they retired with as their annuity. This plan allows employers to recruit and retain high quality educators and help reduce teacher turnover.

The fund is managed by investment professionals. The defined contribution plan shifts investments by members into a system such as private sector 401(k)s. The private sector model is based on individual commissions and personal profit for investment management. Few private investment money managers would be able to provide the level of services, professional management, pooling of resources and delivery of benefits like the Teacher Retirement System pension fund does.

When lawyer Bill King looked at the city of Houston's books to prepare for a possible run for mayor in 2009, he said he was shocked and started writing a series of columns in the Houston Chronicle about three underfunded city pension plans.

King formed Texans for Public Pension Reform with others from the Greater Houston partnership, an über-chamber of commerce with business members representing billions in assets. King supports a constitutional amendment eliminating public pensions in the state and moving all government employees to retirement accounts akin to 40l(k)s.

This would eliminate the Texas Teacher Retirement System. Private industry contributes to Social Security for employees and pays matching dollars for employees' 401(k) plans.

If the Teacher Retirement System fund were to be eliminated and members moved to a 401(k)-type plan, would the state of Texas have to pay members' Social Security and contribute matching dollars for the 401(k) type plan? If so, the state would pay more than it is paying for Teacher Retirement System. Thus, taxpayers would pay dearly to be like private industry.

Talmadge Heflin, director of the Center for Fiscal Policy in the Texas Public Policy Foundation, supports King's position and has made presentations to Texas legislators to change the state's traditional retirement system. Speakers for this group say retirement funds serving 2 million firefighters, teachers and other public employees in Texas are not sustainable.

Opponents, such as Larry Reed, a trustee for the San Antonio Fire and Police Pension Fund, say King and Heflin unfairly lump well-managed funds with the few that have fumbled to justify major change to public employee pension plans.,

Texans for Secure Retirement Political Action Committee was formed in August to defend and secure the continuation of public employee defined pension plans in Texas. A spokesman says a common question received at the office is whether someone can end public employee pensions. The group answers, "Yes!" and says that public employees who rely on others to fight the battle will have no one to blame but themselves if King with his wealthy friends and other groups succeed in ending public pensions in Texas.

Texas Teacher Retirement System members have little financial assets, but if 1.3 million public school and state university active and retired personnel work to educate fellow Texans, especially state legislators, about the proven track record of the Teacher Retirement System and the defined benefit plan, we can prevail against the attack on the system. We can use "people power" to persuade the public to back us.

Will Teacher Retirement System members fight and win? Time will tell.

* Mary Sue Ribardo of Bryan is District 6 president of the Retired Teachers Association.