This summary covers the joint hearing held by the Legislative Budget Board and Office of the Governor on November 5, 2020, at 9am CST. This hearing covered Article III (Public Education) agency Legislative Appropriations Requests (LARs). The agencies covered in this report are the Texas Education Agency (TEA) and Teacher Retirement System of Texas (TRS).  A link to the full agenda can be found here. A link to a recording of a hearing can be found here.

The HillCo report below is a summary of remarks intended to give you an overview and highlight of the discussions on the various topics discussed. This report is not a verbatim transcript; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Texas Education Agency Testimony

Mike Morath, Commissioner

  • Provided LBB with slide deck Morath references throughout
  • References background of the agency and organizational structure
  • TEA oversees implementation of school finance policies
  • Large amount of the budget relates to passing through money to all 1200 public school districts in the state, and a small portion relates to administrative purposes
  • TEA focused on increasing opportunities, outcomes, and success of students, and increasing postsecondary success
  • Specifically focused on driving progress in priority areas, given the size and complexity of Texas public education
  • Texas has over 350,000 classroom teachers and 700,000 public school employees that work “tirelessly” to give students a better future
  • Exceptional item changes are distinct from the baseline, which is just a continuation of previous funding, inclusive of the 5% cuts and funding for the Foundation School program required in statute
  • The only exceptional item is relating to COVID-19 in schools, as there is a massive impact on educators and school systems
  • COVID has presented a large challenge and disproportionate impact
  • Graph shows weekly progress of students in mathematics using an online learning tool both before and during the COVID pandemic. While this is not exclusive to Texas, the conclusion is similar to data received from Texas public schools and conversations with Texas Public Educators
  • The data shows that students from low-income backgrounds, middle-class backgrounds, and high-income backgrounds are all helped equally by public education in Texas, but the COVID pandemic has resulted in a significant bifurcation in success. Wealthy students made similar or more academic progress as before the pandemic, but middle- and low-income students saw significant declines in progress. Middle-class students recouped those lost gains over time, but low-income students did not. This holds true at present
  • Exceptional item is a “targeted investment” to focus on support for teachers and other educators, and schools, to deal with the disproportionate impact of COVID on schooling and education
  • TEA is also the administrative body for Windham ISD and has their exceptional item request as well
  • TEA requesting changes in riders, specifically a spending flexibility rider to give TEA more flexibility given the “administrative reality” of needing to issue grants and contracts on a specific timeline

No questions

Teacher Retirement System Testimony

Brian Guthrie

  • References slide deck throughout
  • TRS serves 1.6 million educators in Texas and administers health care programs and pensions for retirees and employees
  • The Pension Trust Fund ended FY 2020 with $165 billion in value, beginning FY 2020 at $157 billion
  • There was a decrease during March of FY 2021, but TRS regained and out earned those losses
  • Return was approximately 7.24%, just below the assumed rate of return at 7.25%
  • TRS also administers healthcare programs; TRS Care is for retirees
  • Unlike previous biennium, there is a positive fund balance for TRS Care of approximately $1.9 billion, due to several factors including the restructuring of the program by the legislature, and a new procurement TRS completed, as well as a decline of approximately 30,000 members of the program since 2018
  • TRS expects this surplus to decline over time
  • TRS has spent approximately $2 billion on healthcare every year
  • TRS does not directly request funding for the TRS Active Care; that flows through school finance
  • TRS base request is a “modest increase”, including contributions for public and higher-ed retirement programs as well as the retiree health care programs; the administrative request is fully funded by the Pension Trust Fund
  • The request does include costs for opening a pilot office in El Paso to see if it can better serve members
  • TRS also requesting an increase of 25 FTEs to continue funding for building the fleet and bring investments in house to provide cost-savings
  • TRS’s sole exceptional item is increased funding for 25 new FTEs, $5.8 million total
  • SB 12 provided stair-step increases in contribution by state to trust funds, like Pension Trust fund. Contribution for PTF will increase from current 7.5% to 7.75% in FY 22 and 8% in FY 23
  • LAR includes funding for these increases
  • State contribution to TRS Care remains constant at 1.25%
  • TRS requesting a new rider; contingency rider relating to Sunset directives that may occur in the coming months to allow TRS flexibility to implement directives as needed
  • Update on COVID-19 – Impact on Operations: most expenses have been through healthcare programs. TRS experienced $31 million in costs for TRS Care in FY 20 and $86 million in TRS Active Care in FY 20 directly related to COVID
  • TRS was able to provide benefits to members during the pandemic; testing and any required therapeutic treatments is being completely covered, contributing to costs

No questions