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.
$3,912,000 per year.
OUTRAGEOUS
Here’s the genius running the Texas TRS:
Brian Guthrie
https://www.txdirectory.com/online/person/?id=27025&staff=5924
Last Friday, I interviewed for an accounting job at an investment management company. I'm retired, but I like staying active, and I'd rather do that than teach.
Their assessment test included a lot of basic math, calculators not allowed. Obviously, that gave me a great advantage over the 20-30 somethings who applied. In fact, the owner told me I scored the highest he'd ever seen.
I'm not expecting to be hired, but it felt good to know I still have it.
It's nearly fifty years since I graduated from HS, when California schools were excellent.
Living in Ohio, I was always impressed with my California cousins when we visited. This was back in the late 50s, early 60s.
“We spend so much money on education yet the schools are producing graduates who are functionally illiterate. Where does all the money go?”
When I started teaching there, there was 1 teacher for each grade K-8. An art/speech teacher, a coach, a music teacher/aide a librarian, and a special ed teacher. Administration was one superintendent/principal and the school secretary. We had a janitor, three cooks (who actually cooked) and 5 bus drivers. Classes were large—my first class was 35 seventh graders who I taught all day.
Thirty-five years later with smaller enrollment, all but two grades have two teachers each. There is a full-time school nurse, a full time bookkeeper, a superintendent and a principal, a resource officer, a curriculum director, full time music and art teachers, full-time speech teacher, two computer teachers, a counsellor, at least three full-time special ed. teachers and with aides for each, two full-time teachers for at-risk students who don’t qualify for special ed. There are at least two special needs children who require full-time aides to stay with them, maybe three janitors, and the same number of cooks (who now reheat/thaw) and bus drivers. I’m sure I’ve missed some.
And, at the end of the day, the kids now are not getting the quality of education, for the most part, that they did when I started. More kids come to school on their first day broken or severely neglected. Many parents, for whatever reason, are not interested or concerned about their children’s education or future. Asking some to even take care of feeding their kids is apparently asking too much.
It is very frustrating.
This article is really about divine contribution plan versus 401k retirement plan.
There are some people in Houston fighting to change the retirement plan for Texas teachers from the plan we now have.
In 4th grade, we had a daily vocabulary exercise where we'd write that week's 20 words five times. By the end of the year, we had 600-700 words in our vocabulary that you couldn't help but spell correctly.
That style of rote learning, like multiplication tables, is sneered at today.
No offense or anything, but you don’t have a clue.
I don’t?
Explain why I don’t !
Also your explanation can’t use the term “Secular Humanism”.
“Also your explanation can’t use the term “Secular Humanism”.”
Well, yeah, it has everything to do with it.
Look up Frankfurt School.
I have many relatives in education and have worked closely with educators. School unions are not even mentioned, and here in Louisiana are only liability insurance programs.
Bobby Jindal destroyed teaching in Louisiana and the teacher unions never said a word of protest.
The fifty state educational bureaucracies are hard Leftists in all the states and are not even unionized. Ditto the textbook companies whose writers create the anti-American textbooks. Nor the Leftists testing companies who write the tests that are given in all the schools.
In WV the teachers union has taken its cue form the UMW.
They’ll even turn the kids out that are in college out to strike\demonstrate if they have an issue they really want the PR optics. Bills to allow engineers\scientists to change careers and enter teaching, Ed School colleges kids strike! Bills to tighten requirements, union jumps on it. I could go on. Benefits & pay (already more then the average WV family!), any bills to reign that in, teachers unions get to work. In the southern part of the state where UMW militancy is the strongest, the teachers union use UMW tactics property damage, physical threats, etc.
yeah I don’t know nuthin!
“yeah I don’t know nuthin!”
That is about the size of it. In Texas, and especially, here in Louisiana, where teacher unions are toothless, we have the same Leftist anti-American propaganda taught in the public schools here as they do in the North where the unions are much stronger.
I talked with a teacher in Texas who was lamenting the powerlessness of the teachers’ unions in Texas. She said the administration in Illinois where she use to teach hated her because she was a union representative and could force her will. There controversies were never about the curriculum. They couldn’t care less.
maybe where you are!
Where I am I have family & friends in education also.
That’s not their complaint, it’s the union. Fro example the union controls the school boards because only union approved candidates win.
THE CYCLE OF PUBLIC UNION CORRUPTION
1. Unions charge dues and set aside part for political causes (lobbying for benefits and pay.)
2. Legislators and governors have to approve and negotiate contracts with public unions.
3. The union bribes (contributes to campaigns and does separate TV ads) the officials (legislatures and governor), who supposedly are management and represent the taxpayers.
4. The legislature and governors approve higher pay and benefits.
5. Unions increase dues because members who will make an extra 400 a month don’t mind a extra 50 a month to the union.
6. The unions increase the bribes to get more pay and benefits..
RINSE AND REPEAT.
“maybe where you are!”
That is my point. The original discussion was the cause of the pathetic state of public education. My point is that where unions are powerless, we still have the same anti-American textbooks, the same anti-American propaganda in all sources of information. That is why I stated that if all teacher unions disappeared overnight, nothing would change.
In my state it would completely change!
NYS has a HUGE building: https://images.app.goo.gl/7XmFZ7f6wkADAjXc6
That is why I stated that if all teacher unions disappeared overnight, nothing would change.
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