Posted on 03/10/2020 4:27:47 AM PDT by The Houston Courant
The Teacher Retirement System of Texas has a big problem on its hands. A few weeks ago, it was discovered that TRS—the state agency responsible for overseeing teacher pensions—had signed a multi-year lease for luxurious office space in downtown Austin costing more than $326,000 per month. That handsome sum secured 100,000 sq. ft. spanning three floors at the not-yet-open Indeed Tower, a stunning high-rise featuring “extensive office amenities, including a fitness center, dedicated conference center and outdoor terraces.”
Not surprisingly, news of the luxury lease didn’t sit well. Even the Texas Retired Teachers Association, a special interest not known for urging agency constraint, let fly, saying: “People are just mad, and they don’t understand how (the retirement system) could be spending this much money on a lease.”
While TRS has since reconsidered its lease with Indeed Tower, the matter created a real PR nightmare for the agency. But truth be told, that was never TRS’ real problem. Its true crisis is its pension plan.
New data reveals that teacher pension plans are massively overpromised and underfunded. According to the Pension Review Board (PRB), TRS’ unfunded liabilities grew to $49.5 billion this month. That is, by far, the largest amount owed by any single plan and it’s more than half of all pension debt in Texas.
Other signals are flashing red too. The plan’s funded ratio, or the measure of current assets as a share of its obligations, hovered near 76 percent—well below the ideal 100 percent benchmark. And its amortization period, or the length of time needed to pay off the unfunded liability, is 29 years which is outside the PRB’s “recommended” guideline of between 15 – 25 years.
The data is clear: TRS’ pension plan is in trouble. If not addressed, future taxpayers and retirees face the possibility of paying higher taxes, receiving fewer services, seeing reduced benefits, or some combination of the three.
To keep this from happening, TRS must address the root issue: its dependence on the fundamentally flawed defined benefit (DB) system.
Defined benefit systems promise retirees a lifetime of guaranteed income, usually based on years of service and salary, but do so without knowing whether the fund can make good. Funding issues are common to DB systems because of their susceptibility to underperforming investments, rosy actuarial assumptions, and political chicanery. These systems—and the unfunded promises they make—are driving countless crises in communities nationwide.
The inherent flaws of the DB system forced most private sector employers to abandon it long ago. Today, it’s really only the public sector that still offers it.
Rather than rely on a broken system and continue to incur massive debts in the process, Texas policymakers need to find a more sustainable and reliable retirement option for public employees—much like the defined contribution (DC) model offers.
Defined contribution plans require the employee, the employer, or both parties to make contributions into an individual account, like an IRA. At the time of distribution, the amount in the account is made up of contributions and investment gains or losses. It’s that simple.
This type of plan is attractive on many levels. It is portable, allowing participants to switch jobs as opportunities arise. It is sustainable, with fixed costs and known variables. And it is trustworthy, avoiding the major funding questions that plague DB systems.
In virtually every way, the DC model is superior to the DB system. Knowing this, it’s time to transition teachers—and all public employees—out of the current mode and into this better option.
Modernizing TRS’ retirement system should be a top priority in the next legislative session, especially considering the fund’s gargantuan pension debt and subpar measures. Once lawmakers have guaranteed the solvency of the system, then we can tackle the agency’s other problems.
Teachers’ unions must go. They are the driving force behind destroying America. Much curriculum is authored by their favorite demigod, Bill Ayers.
There is only one way to kill a leviathan—starve it.
School choice is the solution.
You STILL pay taxes under school choice.
ALL organizations seem to have an progression arc. I wont call it an evolution, because the arc usually results in an organizations demise or restructuring. Even non profits, because bloat typically happens at the managerial level. Too many people, all used to putting their hands in the till.
Somewhere in that arc, almost all organizations become political. Again, it’s virtually inevitable, and the result of the sum of individuals getting greedy, not just for money, but for power.
Waste like this is always just a symptom.
Not to worry. It’s covered under the PBGC (Pension Benefit Gusrantee Collective) under the “too big to fail” clause.
It’s in the Constitution...er “Charter of Negative Liberties” according to that CONstitutional scholar, Barry. His credentials are impeccable. He won The Nobel POS Prize one year.
Public school K12 system is beyond repair other than giving it a total overhaul. Furthermore, the requirements to be a teacher continued to be dumbed-down (example: PRAXIS, etc.) which invariably allows those who would otherwise not be qualified teachers to teach. GG Unions and libtard educators, great work. /s
When I read comments like yours, I think of how schools simply served communities, particularly when my great-uncle and his younger brother (my grandfather) were youngsters growing up in a small rural hamlet in Ontario over a century ago. And actually, my great-uncle married a woman who was the local school teacher and she ended up keeping a large collection of letters, papers, books, and other things pertaining to school and teaching back then, giving that good bit of insight into what all of that was like at that time.
There is a nearby thread with an article by Salena Zito mourning the decline of big department stores (the loss of public shopping and the spirit of community that came with it).
I don’t imagine it would happen, but I would love to see a resurgence of small town living all across the country. Local shops, local businesses, local school systems that are not beholden to national teachers unions or state-sponsored curriculum plans. I think a lot of families would like to slow down and re-connect with neighbors.
But I think our national culture still has a lot of momentum toward high speed, high consumption life styles. People think they want that and so that is what they pursue. I suspect people would be happier if they decided to live differently, but no one can make that choice for them.
Whereas I agree with you, there is no real teacher union in Texas. It's against the law for teachers to do collective bargaining. No, the problem here is one that has been coming for decades. It's public school, and no one questions them when they hold out their hand.
The retired may face horrible challenges in the coming years. Social Security is drained by the theft of its funds by the political class. The stock market is ALWAYS one crash away from total disaster. States may go broke - literally.
Because the market goes up forever. No one will notice as long as the balance goes up.
“Teachers’ unions must go.”
If all teachers’ unions were dissolved tomorrow, it would not change a thing. Teachers’ unions are not the main source of the anti-Americanism that pervades public education. The source is the Leftism that has taken over education — took it over seventy years ago, at least.
Google and read the Humanist Manifesto.
When I realized that MOST of the money from the taxpayers for education went to retirement bennies, I decided that government schools were all evil
This is so absolutely absurd on the surface. Teacher retirement funds are underfunded, yet the teacher’s union leases an overpriced building.....?? What in the world are these people thinking about? Never went to college, let alone as a math major, but I can surely understand how wrong this looks. This union definitely needs to fall by the wayside.
While many comments here concern many issues with teachers unions and such, they are diversions from the main topic - defined benefit retirement plans.
That main topic has less directly to do with “teachers” than it does as the favored type of retirement plans by nearly all governmental units across the country, whether they be teachers or any other kind of government worker. That - defined benefit retirement plans - is the issue, not merely “teachers” or their unions (which comprise only a portion of all governmental employees nationwide covered by government organized defined benefit retirement plans).
The teachers unions provide the militancy & the “soldiers” to fight the political warfare that keeps real reforms from happening.
“.....what all of that was like at that time.”
Glad you could find the letters and logs, back in those days people could spell without the spell check as it didn’t exist.
rwood
“.....what all of that was like at that time.”
Glad you could find the letters and logs, back in those days people could spell without the spell check as it didn’t exist.
rwood
$ 3.26 a square foot? Pretty pricey.
As My Dad used to say: “At that price, it better come with hot & cold running blondes”.
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