Legislative Update: Teacher Retirement System Issues

Several bills related to the Teacher Retirement System (TRS) were passed during the 87th Regular Session of the Texas Legislature.

This article describes changes in current law and new requirements related to TRS.

TRS-ActiveCare Opt Out (SB 1444)

Entities participating in TRS-ActiveCare will be prohibited from offering or making available another group health coverage not provided under ActiveCare to employees or dependents of employees. This provision applies to group coverage provided for a plan year beginning on or after September 1, 2022.

Entities currently participating in ActiveCare will be allowed to opt out of participation in the program, and entities currently not participating in ActiveCare will be allowed to opt in, for the plan year starting September 1, 2022. This choice will be binding for five years; however, districts that remain in ActiveCare have the option to opt out in a future year. Written notice of opt-out or opt-in must be provided to TRS by December 31 of the year preceding the first day of the plan year of the election. So, districts seeking to opt out for the 2022–2023 plan year must notify TRS by December 31, 2021.

TRS rulemaking is in progress and is expected to be shared publicly at the July TRS board meeting before seeking public comment. Final approval of rules is expected at the September TRS board meeting. TRS also hopes to provide entities with additional claims data to help inform the opt-out decision-making process and is working to make this available to plan members.

Finally, the bill requires education service centers (ESCs) to conduct studies to assess health care needs and options available to school district employees in their region. Study results must be submitted to named recipients, including the governor, Texas Education Agency (TEA), and TRS by November 1, 2022.

TRS has provided a Guidance for Employers webpage on this topic, as well as answers to frequently asked questions related to opting out of ActiveCare. TRS also has provided a document covering additional considerations for self-funded health plans, which includes some similar points to TASB’s guidance on the topic. This bill takes effect September 1, 2021, though as noted many sections of the bill are not effective until September 1, 2022. (Effective 9/1/2021)

Districts already offering an alternative health care plan will need to review their claims data to determine by this fall whether they plan to opt out of ActiveCare or discontinue offering alternative coverage. Districts that are offering an alternative health care plan for the first time in 2021–2022 will have an even more difficult time determining which plan will be best for its employees, given the short period from plan year start to when TRS must be notified of the district's opt-out choice for 2022–2023. Communication with employees about timing and district choices will be critical.

Employer Payment of TRS Surcharge (SB 202)

Beginning with the 2021–2022 school year, districts will be responsible for payment of surcharges for retire/rehire employees and are prohibited from passing the expense to the retiree through a payroll reduction, fee, or other effort to recover the cost, directly or indirectly. HR Services published additional guidance in the HRX earlier this month. (Effective 6/14/2021 but applies beginning of the 2021–2022 school year)

Retirees Rehired for Learning Loss (SB 288)

This bill includes two exceptions for retirees working in a position to mitigate learning loss attributed to the COVID-19 pandemic, effective until February 1, 2025. First, TRS may not withhold retirement benefit payments for a month a retiree is working for a public educational institution, other than an institution of higher education, performing duties to mitigate learning loss. Second, the district will not be subject to surcharges for retirees working in these positions. However, three criteria must be met for the retiree’s position to qualify for either exception:

• The position must end on or before December 31, 2024
• The position must be in addition to normal staffing levels
• The position must be funded entirely by federal funds provided for relief from the COVID-19 pandemic

The exceptions don't apply to disability retirees but under the right circumstances may provide some relief for districts concerned about the implications of the employer payment of TRS surcharges under SB 202. Districts should consult with local counsel to ensure assignment and contract decisions are appropriate and compliant, but districts creating new positions with Elementary and Secondary School Emergency Relief (ESSER) funds could consider employing retire/rehires in positions performing duties to mitigate learning loss to take advantage of the surcharge exceptions provided by SB 288. (Effective 9/1/2021)

Tutors for Learning Loss (SB 1356)

Beginning with the 2021–2022 school year, members of a nonprofit teacher organization or nonmembers who meet eligibility requirements can participate in a tutoring program to provide supplemental instruction to students individually or in small groups. Participants must be active or retired teachers and not included on the Do Not Hire Registry.

The superintendent, charter school chief executive officer, or designee must oversee the program and submit a report to the board each semester about the number of teachers who contacted the district or school about tutoring and the number who were used on a volunteer basis or employed. Any available funds can be used to compensate a tutor as part of this program.

At least quarterly, each participating nonprofit teacher organization must provide to its members a description of the program, how to participate, and the contact information for the district in which the member resides, any open-enrollment charter schools in the district, and adjacent districts.

TRS is prohibited from withholding a monthly benefit payment for retirees employed by a district as a tutor under this program, and TRS also must regularly provide information in an electronic format to members and retirees about the tutoring program. (Effective 6/16/2021 but applies beginning of the 2021–2022 school year)

Teacher Incentive Allotment TRS Creditable Compensation (HB 1525)

Teacher Incentive Allotment payments made to a teacher by a school district are compensation subject to report and deduction for member contributions and to credit in benefit computations for TRS (i.e., creditable compensation). (Effective 9/1/2021)

TRS-Care Reenrollment (HB 2022)

TRS-Care retirees will have a one-time reenrollment opportunity if their initial enrollment was voluntarily terminated between January 17, 2017 and December 31, 2019, and if they’re eligible to enroll in Medicare. The option to reenroll is available through December 31, 2023, and TRS rulemaking will occur no later than November 1, 2021. (Effective 6/15/2021)

TRS Sunset and Ombudsman Position (HB 1585)

This bill includes a wide variety of TRS-related changes, but many don’t have direct impact on school districts. Items that may be of interest to educational entities include:

• TRS Ombudsman: TRS must create an ombudsman position charged with assisting members and retirees by performing protection and advocacy functions, including monitoring TRS interaction with members and retirees, responding to member and retiree complaints, informing the TRS board of complaints, and recommending corrective actions to the board as necessary.
• Failure to Remit Payments: TRS no longer certifies to the commissioner of education employers that have failed to remit required payments. That certification now will only be to the state auditor and only required for employers that are institutes of higher education.
• Outreach Plan: The TRS board must develop with stakeholder input an outreach plan designed to help TRS members plan for retirement. TRS must create and distribute understandable outreach materials, create, and update policies to ensure benefits counseling is available throughout the state, provide members annual estimates of retirement benefits, and create an internet portal to help employers assist members. The plan must be developed no later than December 1, 2021 and must be reviewed and updated once every five years.
• Benefits Counseling: Retirement benefits counseling may now be in person or by phone at the election of the member.
• Notice of Forfeited Benefits: A retiree does not forfeit benefits unless TRS provides a written warning that the retiree’s employment does not qualify for an exception for employment after retirement without forfeiting retirement benefits.

(Effective 5/26/2021)