Under bill, teachers to pay more to prop up retirement fund

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Under bill, teachers to pay more

to prop up retirement fund

By Dave Harmon, American Statesman

May 26, 2003

Texas - The House tentatively approved a bill Monday that would double the amount Texas teachers pay into the Teacher Retirement System and for the first time would require school districts to pay into the system.

Its sponsors say Senate Bill 1369 is a prescription to save an insolvent health insurance program for retired teachers and ensure its long-term survival. Opponents have complained that the bill's requirements put an unnecessary burden on teachers who can't afford to spend more for health insurance.

The bill is part of a legislative package designed to reduce the state's cost for health plans benefiting teachers, state employees and higher education employees. The plans cover more than 1 million Texans.

A related bill, Senate Bill 1370, would set the retirement age for all three groups at either 65 or a combination of age and years of service adding up to 80. It also would require employees covered by the Employees Retirement System to wait 90 days before their health benefits start. That bill also received tentative approval Monday.

Rep. Dianne White Delisi, R-Temple, said the Teacher Retirement System needed an extra $400 million to stay afloat during the current two-year budget cycle and had requested $1.1 billion above its current funding for the upcoming budget.

Senate Bill 1369, which must receive a final vote in the House before it returns to the Senate, would increase what active teachers pay from 0.25 percent to 0.5 percent of their income, the first rate increase since the program's creation in 1985. The increase would require a teacher earning $25,000 a year to pay $10.42 a month, up from $5.21 a month. That would add about $110 million to the fund, Delisi said.

The bill also would require retired teachers to pay up to 33 percent of their health care costs, depending on which health plan they choose.

The state's contribution would double from 0.5 percent to 1 percent of the employee's income, a change that would add an estimated $220 million to the fund over the next two years.

And school districts would chip in for the first time, to the tune of about $200 million over two years.

House Bill 3459, a separate bill by Rep. Jim Pitts, R-Waxahachie, would set the rate districts must pay at four-tenths of a percent of their payrolls.

"That's appropriate, because the school district is the employer," Delisi said.