Without a fix, teacher healthcare fund is empty next year

FILE - Classroom photo (KXAN File Photo)
FILE - Classroom photo (KXAN File Photo)

AUSTIN (KXAN) — This session, the Texas House Committee on Pensions is trying to figure out how to dig out of a billion dollar hole. If major reforms are not made to teacher retirement benefits, the system will run out of money.

“Well first of all, when I started school it was because of a teacher. My first grade teacher Miss White,” said Kim Henry, who worked as an art teacher for 20 years. “Generally you need a second job if you’re going to be a teacher and you’re single and especially living in Austin, Texas now.”

Now retired, the state helps pay for her health insurance through the TRS-Care program. She continues to work as an independent contractor real estate agent for the western neighborhoods of Travis County.

“It’s not quite as good as what I had when I was a teacher, but it’s a good plan. The premium is affordable for me,” said Henry.

She worries the benefits for retired teachers in Texas will change. Around 260,000 Texans use TRS-Care for healthcare and it’s running out of money.

There are two major drivers of this problem. The first is healthcare costs keep increasing every year. The second is someone can retire before they qualify for Medicare. Monty Exter from the Association of Texas Professional Educators says one percent of all the state’s teacher payroll is used to pay for TRS-Care and that’s not keeping up with the costs.

“It creates this giant hole now every session between the amount of money needed to provide health insurance and the money that they have,” said Exter.

As it stands, the money runs out in 2018.  People like Kim Henry are concerned. “As you get older, this is something you worry about. How are you going to take care of yourself?” asked Henry.

Lawmakers are looking into several solutions. According to the Legislative Budget Board, retiree premiums fund 31 percent of the program. The state pays for 24 percent. School districts are in for 17 percent. Current teachers and federal government pays for most of the remainder.

Lawmakers will have to decide which side will pay more to keep the program alive by the end of May, when the 2017 session ends.

Public pension plans around the country are having trouble meeting their obligations, as medical costs rise.

State lawmakers will consider plans to solve a funding crisis for the Dallas Police and Fire pension. Right now, the pension fund is about $3.5 billion short of meeting future obligations.

The House Pension committee is looking to cut benefits, and increase contributions from both taxpayers and employees, but that would still leave the plan about $600 million short.

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