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Senate Finance met on February 22 to discuss Article III of SB 1, the Senate’s proposed base budget bill. Before Article III conversations were held, TDEM Chief Nim Kidd provided a presentation to overview potential budgetary changes due to the winter weather in Texas last week. Included in Article III is TEA, TRS, Optional Retirement Program, Higher Education Group Insurance, Windham School District, School for the Blind or Visually Impaired, and the School for the Deaf. LBB presentation documents for these entities can be found here. A video of the hearing can be found here.

 

This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but 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.

 

Opening Comments

  • Nelson – Events of the winter storm were unacceptable, are several hearings to figure out what happened; will ensure what happened never happens again
  • Nelson – Will affect state budget, but not sure how it will yet
  • Nelson – Asked Nim Kidd to give us a brief update on what we do know

 

Nim Kidd, TDEM

  • Impacts currently are around $4.2 million dollars; those numbers change daily
  • Because of the emergency and disaster declaration, state net impact is around $10 million; this is just state agency costs that are above and beyond
  • Only 88 self-reporting costs at under $50 million, will see that number continue to rise
  • 77 counties the White House approved for individual federal assistance; originally asked for all counties, aiming to add another 31
  • Have registered 114,000 homes in the 77 counties; $629,000 has been disbursed which has been very fast
  • Nelson – Where could they find TDEM’s self-reporting tool?
    • Social media, asking offices to push that out
  • Housing assistance max grant is $36,000; does not mean they all qualify for all of the max grant
  • Paid out in OWNA, FEMA will give us reimbursement, but will capture the 25% non-federal share
  • State agencies estimated $41 million, locals $49 million; does not count damage to state infrastructure
  • Lucio – Heard from the agriculture communities what the impact was to them and what estimates … interested in the citrus industry
    • Participated in a call with ag producers; asked for federal agriculture assistance
  • Kolkhorst – 77 counties, trying to ask counties to self-report, what are the chances of getting those 31 or all? (Later in the day, the Governor announced those 31 counties have been added)
    • Weeks to months damages on a local level; because of COVID, this is the fastest turn around that we have
    • Believes all 254 will qualify; believes the 31 will be added relatively quickly
    • Is a belief that homes in the South are built the same
    • Need people to self report in order
  • Kolkhorst – IA, that allows people that had pipes exploding, do make a claim on insurance and then this help
    • Will help with certain re-homing efforts; will never replace insurance
    • Helps replace carpets; does not pay utility bill or water bill and does not
    • Will only pay a fraction of the maximum
  • Perry – About $300 million is the estimate on the citrus and have lost $80 million worth of milk
  • Perry – Nothing today from the federal side will help with utility assistance? Working on it?
    • Nothing in the FEMA grant program today would help, but is another program that could help that has about $4 million in that program
    • Notes have had difficulties with FEMA; is frustrated
  • Bettencourt – Estimate of where we will hit for homeowner assistance?
    • No information on that yet, in the IA questionnaire it kicks you out if you have insurance
    • Do not know how many more people have insurance and are underinsured, or those who do not have insurance at all
  • West – Have a survey on your website, will it help if the constituents report on that in order to get more federal assistance?
    • Yes, this is the only data we have right now and is the only thing FEMA is looking at for looking at additional dollars
    • Is the first step, will then register with FEMA if you are in one of the 77 counties, then they will contact you for a site inspection
  • Huffman – When all claims are in, are losses greater than Harvey?
    • Too soon to tell, but IA data will be very important to us in determining that
    • Only public property is covered by FEMA funding; this is a larger footprint than Harvey, but not as concentrated
  • Campbell – Commends the work of Kidd and TDEM; is FEMA paying this quicker than Harvey
    • Individual assistance is faster than ever due to COVID; 77 counties and category B for other counties
    • Public assistance, no counties have been turned on for permanent work; will have to work on this county by county
  • Whitmire – Priority is price gouging; know it has already taken place gas and oil producers are gouging currently
  • Whitmire – What can we do right now to stop gouging from the well head specifically?
  • Whitmire – AG’s plate is pretty full, do we turn to the PUC, RRC or the Justice Department; how do we hold these companies responsible and prosecute them?
    • Will be reporting as a citizen, and as we do state agency buying we will be reporting those; do not have any authority over oil and gas
  • Nelson – Is beyond TDEM’s preview, PUC issued an order that no one can be disconnected because of nonpayment
  • Nelson – Governor convened a meeting previously stating that we need to stop this; are meeting this week with the Lt. Governor, the Speaker, and others to put a stop to this
  • Nelson – This committee is going to look at budget impacts, Governor made it clear we will resolve it this week
  • Huffman – Next Jurisprudence meeting will be finding solutions
  • Lucio – Cannot leave this legislative session without solving these issues
  • West – Hope to get the 1-800 number for gouging and ask citizens to self-report; hopes the appropriate agency has the information on the run-up in price has been, may be ERCOT
  • Nelson – People found that it was very difficult to get assistance in the midst of the storm? local government partners
    • Cities and counties
  • Nelson – From a budgetary standpoint, is there anything we can do
    • Every county in Texas has their own approved emergency plan, some counties/utility companies are very good at communicating with the public, but others did not
  • Nelson – Communicating with ERCOT and PUC was easy?
    • PUC has been very easy as they are in our operations system
    • ERCOT varies; would love to have a conversation about our relationship in the future
  • Nelson – Overviewed the updated Finance schedule
  • Nelson – After March 8, will get work groups together

 

  • Nelson – SB 1 fully funds previous commitments like $2 billion for teacher pay and $5 billion in property tax relief

 

Texas Education Agency

LBB

  • Total Funding increasing by $1.6 billion due to large in the Foundation School Program and decreases in the Non Foundation School Program
  • Non Foundation School Program; technology program $313 million decrease from last biennium due to a carried over unexpended balance; elimination of one time funding and expiration of first round of Coronavirus funds
  • Foundation School Programs major budget property value assumptions and enrollment estimates
  • Savings $5.4 billion inn GR and $3 billion in All Funds; district property value growth was much higher in FY 2020 and federal funds supplanted, TREE fund outperformed previous estimates
  • Additional $3.8 in GR increases in enrollment growth, tax compression, replacing CARES Act supplanted funds, savings from district property tax growth
  • West – Exclusion of instructional materials was $312 million
    • Do not know what; shown as a decrease because we do not know the amount
    • West – SPED decreases?
    • Related the USDA’s lawsuit for TEA, state did not
  • West – Is this an agency decision or LBB decision?
    • Is supposed to be one time funding; If not resolved in the current fiscal year
    • Nelson – Will be a supplemental issue
  • West – Disposition of Charter School Funds; how these assets were disposed of
    • The agency would be better to answer that
  • West – $1.1 billion in funding from the federal government; property tax collections includes funds from recapture?
    • The state aid is a calculation of entitlement after local funds and recapture was accounted for
    • Document shows total entitlement; state column does not include recapture
  • West – Regarding certain entitlements?
    • Funding was received in FY 2020, and entitlement was adjusted; appears that way because settle up hit in 2021

 

Mike Morath, Commissioner Texas Education Agency

  • SB 1 fully funds Foundation School Program, which means it fully funds HB 3; is clear the number one priority of the legislature is public education
  • Has been a 10 year increase in public education resources; last three years, an increase of $10 billion in public education spending
  • Budget appears quite large, but only a small portion is kept for administration and oversight
  • Strategic Plan priorities are: need to invest in teachers, need to ensure youngest improve in literacy and numeracy skills, and all students need access to education
  • Have a variety of resources devoted to determine where our students are, and then use that information to build action plans
  • Are concerned specifically with meeting Federal mandates for the state’s special education programs; last three years have added more students in special education than are in other states total
  • Have another exceptional item; remediating the achievement gap that has arisen from COVID; aims to target these areas called Ensuring Equitable Opportunity through Targeted Supports
    • Agency is requesting $20 million and 5 FTEs for this program
    • Would expand existing teacher development programs and develop online training modules
    • Would implement training materials designed to close the achievement gap
  • Exceptional item related to data; need to keep data secure to maintain the integrity of the system; and ensure data is safe from North Korea
  • Windham has asked for restoration of 5% cuts since they were not covered in the Foundation School Program, but TEA did not
  • Nelson – Have learned there is no substitute for in-person education; how many are operating remotely, but are we incentivizing those districts to get kids back in classrooms?
    • Had to craft some school finance system; need to make in-person instruction available for who want it
    • Are allowances for schools that have a certain amount of cases; may be a few hundred campuses that are closed 2 weeks maximum
    • Fauci himself said kids are
  • Nelson – Student progress, how do we identify students are falling behind without the stress of the high stake tests?
    • Have done everything I can to take the states away from that test; have waived all re-taking requirements in grades 3-8
    • Flexibilities for schools to skip teacher evaluations as a result of STAAR scores
    • Have waived usage of STAAR data to be used for accountability; assessments serve the purpose of providing information to students
  • Nelson – Summer slide, am concerned about the slides related to COVID and the winter storm; what is this going to cost us in the future?
    • That is the $70 billion question; in September, found there was 3-4 months of learning loss
    • Instruction was significantly better this school year, but does not mean they are learning at the same pace as before the pandemic
    • Will have a more accurate read on things after STAAR results come in
    • Adjustments will need to be made from how instruction time is blocked, but this will not be costly
    • Techers will need more instructional and training support
    • Will be substantial issues for some years relating to filling in the school year with more instruction from educators; do not know what that would look like or what that would cost
    • What we are asking from our teachers currently is unsustainable; need to get them to specialize
  • Lucio – Should make every effort possible to ensure our teachers get the vaccine
  • Lucio – Regarding student attendance, what assumptions regarding student attendance account for the Foundation School Program
    • LBB uses information from LPE for enrollment and attendance, SB 1 was based upon estimations we made rather than LPE because that data was not available
    • Estimates show that enrollment and attendance should go back to normal
  • Lucio – Funding for supplemental appropriations on Hold Harmless?
    • Could take action on the Hold Harmless, that is under my disaster leadership in consult with chamber leaders
    • Conversation is ongoing and are expecting a resolution soon
  • Lucio – Concerns about the STAAR test, what are the costs associated with implementing the test?
    • $44 million in State Funds and $31 million in Federal Funds; about $7 per student
    • Participation rates are normally around 99%, but will be nowhere near that
    • If districts are not ordering as many there could be savings there, and savings could be found regarding grading
  • Lucio – Could those costs be better served for students recovering from the pandemic?
  • Lucio – $220 million appropriated in last year’s supplemental appropriation for facilitation of Special Education spending MOE
    • Recommendation is for that to be rolled into another supplemental bill since DOE discussions have stalled out
  • Lucio – What funding for compensatory education those with special needs?
    • Very shaky currently, districts are technically on the hook for this
    • A big issue for the ledge is between the level State funds and Federal CRRSA funds; $2.2 billion has been appropriated to TEA from the state that is federal funds
    • CRRSA included $5.5 billion of public education funds, some could be used for compensatory programs
  • Lucio – What about funding that could integrate students back into the classroom? Like counselors?
    • CRRSA funds could cover those mental health items
  • Lucio – How did TEA
    • Tried to prioritize funds on remote instruction resources that would be free for everyone
  • Taylor – Achievement gap, see opportunities in the technology kids have access to now; could have kids do extra work after school on their device
  • Taylor – STAAR test is $7 per student, price is worth it to see where these kids are
  • Taylor – Do we need to give another test next year
    • Chambers will need to determine what test would be needed for those students; STAAR test specifically has certain parameters
    • Had a beginning of the year test that looked like the STAAR, but did not have a controlled testing requirement
    • Reading scores went up exponentially; parents may have been helping
  • Taylor – Concerned about the kids who are just getting moved through the process without any actual skills
    • The ledge may consider a policy where parents may retain their kids, district has ultimate authority over that
    • Grade retention has social cons for the student; the younger the child, the less stigma
    • Taylor – Would not be stigmatized if everyone is doing it
    • Seeing largest enrollment declines in pre-k and kindergarten; you all should entertain if that should be encouraged
    • Enrollment numbers should be in to inform us soon
  • Taylor – EOC exams you are not able to waive?
    • Correct, are a graduation requirement; are EOC committees
  • Taylor – For those who are graduating this year, they already took their EOCs?
    • Already had taken a majority, all passed History so we marked them as passing that EOC
  • Taylor – Do not want to graduate those who do not have the knowledge, concerned about college enrollment
  • Perry – District rankings will not change since COVID? On your radar?
    • Yes
  • Perry – Cybersecurity issues, national standards have to be met for contracting
    • Created self-assessment framework and require it to be assessed every quarter; information is confidential, but am focused on kids’ data from leaking from our systems
    • Going above and beyond
  • Perry – Third party is reviewed; worth it to have a third-party auditor to prevent data issues; do not sell data off?
    • We do not
  • Whitmire – You said there is no substitute for in-person learning; wouldn’t a quick solution be to vaccinate all school personnel?
    • Not at the table in those discussions, EVAP and DSHS is; teachers are getting vaccinated because they meet 1B criteria
    • Have schools that are fully open, but only 55% – 60% of parents have chosen to do on-campus instruction
    • Could be an issue the ledge needs to take up if there is a discrepancy between parents and schoo
  • Whitmire – Fully open schools is concerning, should those decisions be made by the school districts? Do you believe that is the best model?
    • Difficult to say, of course need local autonomy, but the state holds them accountable
  • Whitmire – Do not know where the students live? If there is school negligence, you cannot send a student a laptop?
    • No; recent court decisions have constrained TEA
  • Whitmire – How many kids are missing? Where are they?
    • Non contactable last school year was 2%, will be able to talk about them this school year in September
    • Switched learning environments, kids are missing, kids are not enrolled but skipping, low engagement, and “red shirts”
  • Whitmire – Reimbursements for school districts on food, tech, etc.?
    • Most technology items/ plexiglass was reimbursed $0.75 to the $1.00
    • No funding source outside of technology; could use CRRSA funds
  • Nelson – What about truancy? Why is it not being enforced?
    • Are not getting any enforcement support; not being enforced by Peace Officers
  • Whitmire – Truancy gets grey; are honest conscientious people keeping their kids home versus those who are not being honest
    • Been challenging to get kids to consistently show up for online learning
    • Whitmire – Truancy models do not take in to account online learning
  • Whitmire – Could you incentivize districts to have a team that knocks on doors to find kids who are not showing up?
    • Are incentives, but Hold Harmless eliminates that
  • Taylor – Enrollment and participation in high school/
    • Enrollment is actually up, but consistent participation is an issue
  • Taylor – Whitmire, your bill in 2015 gave JPs less power?
    • Whitmire – Bill related to them ticketing families for truancy that was out of their control; aimed to reduce abuse students by JPs
  • Taylor – Parents are using the excuse that their kids are not motivated, I am frustrated by this; onus is on the parents
    • Whitmire – Cannot legislate parenting; need a strike team that would be more like an intervention rather than a crime?
    • Taylor – Hold Harmless will be extended for a while, but need to increase the effort to get these kids back in order to prevent a generational education crisis
    • Morath – Need to adjust the system to support what our kids need
  • West – HVAC systems, is there monies coming from the Federal government or GR for schools to get those?
    • Would be wise to use CRRSA funds; have not been appropriated yet
  • West – Are superintendents advocating for that?
    • Does not come up super regularly, but believes that it is a very important issue
  • West – Have done mapping to determine where connectivity gaps?
    • Phase II is mapping these gaps using existing infrastructure; want to begin negotiations directly with ISPs on providing a low cost plan
    • Have completed the maps and have started negotiations; could be additional appropriations that would incentivize ISPs
  • West – Is there anything in SB 1 that would appropriate for that?
    • Some kind of purpose in HB 3, but no separate funding bucket
  • West – CRRSA funds could be used for that?
    • In my top 5 list; would benefit all kids to be able to learn and there are ripple effects economically
  • West – Without connectivity and being in school on a regular basis, there could be loss in educational attainment and loss of productivity for the state
  • West – $312 million in unexpended balance for instructional materials?
    • Is normal district practice and can be used on technology too
  • West – Engaged Prairie View and Texas Southern on some of these issues?
    • Yes, can get back to you on the specifics on that
  • West – Targeted intervention and campus supports at $20 million? Where are we getting these evidence based practices from and are those posted on TEAs website’s best practices page?
    • Is about changing operational practices within institutions, and have gotten them from all over
  • West – Increase in dropouts across the state? Can we get this year’s projections?
    • Not sure off the top of my head; yes
  • Bettencourt – $70 billion in expenditures, have gotten a bill together to address that amount of spending; what percentage are in person versus full time online
    • 54% on campus in October; 56% on campus in January, but there could be some data inequalities that is making that number smaller
  • Bettencourt – How many drop offs? Information about blended learning?
    • 80,000 pre-k and kindergarten, and about 77,000 for grades 1-12
    • Only have blended learning information that is given to us; will not know information until we get STAAR scores back
  • Bettencourt – Notes relief from HB 3 like property tax reform and recapture
  • Huffman – Based on best information, only half are back? What percentage of those remotely are getting a worse education?
    • Yes, and will not know exact breakdown until the future; anecdotally, 60% of fully time online have had a materially worse experience
  • Huffman – Taylor said the onus is on the parent, but all kids work differently; concerns me that kids are losing so much
  • Huffman – How do we incentivize schools to get these kids back? What is their real incentive to get them back if the Hold Harmless is in place?
  • Perry – Mentions Whitmire’s truancy bill in 2015, this bill shutdown holding kids and parents accountable
  • Perry – How much of the rural is non-virtual? Need to get broadband to rural areas
    • Well above 80% since September, will see some achievements gaps in high population density areas compared to the rural areas
    • Nelson – Can solve this problem at least partially with federal funding
  • Taylor – How much do we spend on internet? Some providers have internet for $10 a month
    • $13,000 a student
    • Notes that technology for students is great, but will require future investment as technology foes not least forever
  • Schwertner – Has your agency looked at how inflation would affect property tax values? Wants to understand more about the 2.5% cap.
    • If local property tax collections go up, but we have the same number of kids, the state’s obligation to spend on public education actually goes down
    • If a function of enrollment growth; is projected to decrease
  • Nichols – the number of students not going to class? Reveals discussions he had with local districts and they have had to entice students to come back by telling them they can’t be in UIL events
  • Nichols – Provides example of a local district partnering with businesses for wi-fi access; inexcusable in urban area to have such a high amount of no-show; something fundamentally is different in big urban areas
  • Nichols – if you remove incentive for districts to look for students; if we pay them for kids that don’t show up there is no incentive for districts to look for them
  • West – If we don’t have teachers our whole structure will crumble
  • West – School district should document efforts district is making to get kids in seat; parent plays a role in getting kids in class as well
  • Lucio- hear kids are wanting to get back into classroom, opinion of what might happen
    • Think higher levels of student agency is a great question; students more motivated than before is a great thing
  • Campbell – You think internet services could be used for other things; not just curriculum and instruction?
    • School system will typically load up filters but it won’t be highly restricted
  • Campbell – How do you limit use?
    • Probably more expensive to try to limit the use

 

Windham School District

LBB

  • Already presented

 

Windham School District

  • Moving forward with academic programs
  • initiatives of district are also detailed in supplemental request
  • Reviewed request; total $108.5 million
  • $5.7 million decrease with 5% reduction; asking to have it reinstated which would impact teaching positions and positions to support instruction
  • Whitmire – Thanks them; hears good reports on the district
  • Kolkhorst – What is success rate?
    • Over 80% in passing which is very high
    • There is a different subset of population that that pursues a diploma
  • Lucio – Impressed with the information and presentation, is this a volunteer program for prisoners?
    • There is an assessment program that determines needs and student advisors will meet with them; they can opt out but there would be consequences
  • Nelson – Average reading level of inmate?
    • 5th grade level; TDCJ as whole is 8th
    • Nelson – wouldn’t it be great if when they leave the system it is higher than that

 

Teacher Retirement System

LBB

  • Recommendations includes AF increase due to SB 12 and estimated payroll growth rate at 2.5% and 2% for TRS care
  • Pointed out items is under Strategic Fiscal Review and also undergoing Sunset Review

 

Brian Guthrie, Teacher Retirement System

  • Reviewed programs and system
  • Thanks members for work last session; they are actuarily sound currently
  • 26 years is anticipated funded level or it make even go down to 25 (below 30 years)
  • Do not require supplemental funding for TRS Cares at this time; but cautions overtime they may end up with a shortfall but that is most likely 2-6 years out
  • Active Care has always had an affordability issue which has been exacerbated with Districts of Innovation; over 100 districts have used DOI to “exploit a loophole to offer competing coverage with active care” but this cheaper coverage does take away healthier members from the active care system and make this current structure unsustainable
  • Huffman – Exciting to hear the fund is actuarily sound; are there other reforms that need to be made?
    • Thinks changes made in 2017 were extensive; don’t know if there has been much material change since then
    • As health care continues to become more expensive; health care costs will continue to rise
    • Same premiums that were in place in 2018 are the premiums in place today
  • Huffman – Active Care needs reform as well, why can’t we let districts leave the program?
    • The same thing we see with districts offering less expensive coverage; insurance program sets up where healthy population subsidizes care of less healthy population
  • Huffman – Does this DOI loophole need to be cleaned up through legislation? COLA? Competition for employees?
    • Protentional to ask AG for decision but thinks it would be complex, believes legislative fix may be cleanest way to address the issue
    • COLA could be $17.2 billion but would need to make sure fund is actuarily sound
    • Benchmark paid is believed to incentivize the staff; adopted compensation philosophy for investments trying to be in ballpark of what individuals could earn if they work in the private sector
  • Additional FTEs would held bring $1 billion in savings over 5 years; all administrative operations are paid for out of trust fund
  • Whitmire – what is base pay for those that you incentivize? Top people paid before the incentive?
    • Probably making $200-225k
    • Whitmire – What to know top pay?
    • Senior management is making $350k or more
    • Yes, also gets a bonus at the state agency
  • Whitmire – Why do you need to be incentivized to do your job? Why do you need a bonus? Are you a state agency?
    • Yes, they are a state agency
    • Trying to pay individuals similar amount they could make at a private entity
    • Considers his compensation package as very generous
  • Whitmire – Who are you accountable to?
    • Retirees, teachers, you and the state
  • Whitmire – Why did you not address lease agreement in downtown? What is status of building? Why would you even consider paying $400k month for a lease and what is status of unloading it? What were you thinking?
    • Working to sublease parts of the building – remains an attractive space
    • We were thinking we were already paying a lease at building they did not own; better to pay lease they owned
  • Whitmire – Like a real estate investment? Did you think what Legislators or retirees would think?
    • Did not think about constraints on communicating message
    • Prevented from saying they owned the building
  • Whitmire – Bottom line is you knew restraints, what were you thinking?
    • Prior to this had received legal guidance he could not say anything about it
  • Whitmire – Shocked they didn’t have anyone in place to say wait a minute, should thank ERCOT, when does lease begin?
    • Paying in November of this year
    • Chances of finding a subletter will happen but don’t know when
    • Overall cost would be $400k a month until they can sublease
  • Whitmire – Serious doubts of you and your board judgement on running the system; perception is the problem?
    • CBA requires them to look at the lowest cost
  • Whitmire – Thank you used horrible judgement, and someone should be held accountable for it
    • Saving fund overall by making that decision
  • Perry – Letter in September 2020; asking about exempt salaries?
    • Not asking to get out of disclosure; that is base pay
    • CIO makes over $500k plus incentives when hitting benchmarks; in private world they make a lot of money because they have no job security
    • Would agree with Whitmire it’s hard to pay an incentive on top of salary and the environment they are in is better
  • Perry – Have a lot of real estate because work force is choosing to stay at home so do you know balance in REITS? Are we weighted? What does 5 year look like? How many employees not coming back?
    • About 25% will stay at home (200 people will not need office space)
    • Whatever we do needs to be a generational solution – should house employees for 20-30 years
  • Perry – Would like to know how exposed we are in commercial leases?
    • Jase Auby, CIO about 15% of fund is invested in real estate and about 25% of that is in office leases; do share concerns about demands of office real estate
  • Lucio – What is your current salary?
    • $450k
  • Lucio – Retirees can’t live on checks they get monthly, there has to be some way to use better judgement and have more transparency
  • Taylor – Concerning Active Care, are complaints that once you are in it, you cannot leave; who do you use?
    • United Healthcare, they provide the service
    • Taylor – District could look at providing full self-insurance
  • Taylor – Are there an outside party looking at new ways to run the plan?
    • No
  • Taylor – Worthwhile to at least look at an alternative because people feel like they are locked in; we need to save them some money
    • Teachers are now paying 30% of their salary on this plan
  • Nelson – How do we do this?
    • Taylor – Could me a rider in the budget; need to protect our districts, especially the smaller ones
    • Taylor – Could survey the districts to see if they would be interested in self-insurance
  • Kolkhorst – How did the TRS fund balance go from a bad financial place to solvent in two years?
    • Changes in 2017 caused the cost to go up significantly for dependents, and lost about 30,000 which was a significant unanticipated savings
  • Kolkhorst – Made a number of changes to TRS in 2005, what do changes do to the long-term solvency of the fund?
    • Want to ensure we are not undermining the fund; would need to be actuarily neutral
    • Aim to not incentivize people to retire before they would normally
    • Looking at a dollar-for-dollar reduction that could limit changes like that
  • Kolkhorst – What kind of changes did we make in 2005?
    • Had to have a year or more sit-out period, when you came back you had to be part-time, rounded from three year to five-year salary
    • Average retirement age was 59 now up to 62
  • Schwertner – Need to ensure pension is solvent long-term, and could change dramatically with returns; what is the 20-year return?
    • 9%
  • Schwertner – Does not match what it needs long-term to be solvent; what are the effects of inflation or declines in market conditions? Do you have a tail risk plan?
    • Jase Auby – In a way, but tail risk products are a guarantee to have a loss over a 25-year frame
  • Schwertner – Asks about investing in the portfolio; asks them to be progressive on long term ways to reach the fund’s goals
    • The very best firms cannot take our money in size; we participate in later stages of growth
    • As interest rates have gone down, our bond size has gone down
  • Nelson – Some investments that could have been made a year ago can not be made today
  • Campbell – Cost benefit analysis of the tower that was $400,000 plus real estate?
    • Lease three floors
    • Current rate is $35 a square foot; $330,000 without holding real estate
  • Campbell – It will not be solvent in 2, 3, 4 years?
    • That is TRS Care because it is a pay as you go program; base appropriation in the current bill will be enough so we will not have to ask for future supplemental appropriations
  • Whitmire – Running overseas offices? What is the cost benefit of that?
    • One in London; have about 7 members out there to manage investment funds in Europe
    • Found other funds were getting better deals; lower investment fees and better deals
    • $40,000 a month for the office space
    • Whitmire – Do your board members go to conferences to be better
  • Whitmire – Paid out of where?
    • It is a combination of state funds, members’ funds, it is the pension fund
    • Is a line item in the appropriations bill, are constrained with what they put in there
  • Whitmire – Notes a state agency should not be spending as TRS is; if TxDOT or DPS or anyone pulled with you do, there would be firings and there would be accountability
  • Huffman – The fund has grown? I think you have done a good job, but you could do better
  • Perry – 100% insured in Active Care? Need to look at the reinsurance stop gap for catastrophic care, how much do we have to return that meets the projected distributions or payouts of that fund?
    • Yes; 7.25% and we look at this every interim
    • If we hit 7.25% for the next 27 years, we have 0 liability
  • Taylor – The $40,000 a month in London for 7 employees is blowing me away
  • Huffman – It is right in the middle of the financial district
  • Whitmire – Huffman I am disagreeing with you on every time you defend this fund; they are spending money “like drunk sailors” and it is alarming this fund is leasing and not owning
  • West – Current TRS employees online tutoring programs; will it affect the retiree and why?
    • Changes we made in 2005, some worked around the law to work for a third party; are working to ensure this does not count against the retiree this session
  • Schwertner – Reiterates the 7.25% return needed to maintain solvency; board needs to be proactive and looking at the current investment environment
    • Yes, as long as there is not a significant change in retirement
  • Whitmire – Want to point out 135,000 retired teachers make less than $1,000 a month

 

Optional Retirement Program

LBB

  • Offered as an alternative retirement for those interstate
  • Recommendations $171.1 All Funds, a $10.1 million increase
  • Set 6.6% state contribution rate for participants; annual growth rate approximately 6%
  • West – How many employees are in this program?
    • Will get this to you

 

Higher Education Group Insurance

LBB

  • $1.4 billion in All Funds, an increase of $8.3 billion
  • For institutions of higher education (excluding community colleges), the total number of HEGI and Staff Group Insurance-funded employees increased by 3.1% from the previous biennium
  • Overview of community college hold harmless petition; decline in contact hours may request the percentage is Held Harmless
  • Decrease in contact hours
  • South Texas College headcount appropriation $5.7 million less than they would have received, requesting a supplemental appropriation
  • Kolkhorst – Entirely self-insured?
    • Yes

 

School for the Blind and Visually Impaired

LBB

  • $49.5 in All Funds; approximately $900,000 decrease
  • $1.1 million above base request to restore goal A strategies in the Foundation School Program
  • Request maintains teacher salary increases
  • Requests a move from group 4 to group 5 for the superintendent salary position

 

Superintendent Emily Coleman, School for the Blind and Visually Impaired

  • Facilities fared pretty well during the winter storm; serves 111,027 students
  • Was forced to close in March, about 64% students are electing to be on campus currently
  • Exceptional item is additional restoration of initial 5% reduction; $1 million to run the summer program
  • Additional exceptional items include salary increases for classified staff and additional funds for a campus-wide safety system

 

School for the Deaf

LBB

  • $64.7 All Funds; $906,000 decrease
  • $1.2 million above base request to restore goal A strategies in the Foundation School Program
  • $394,000 each year to maintain teacher salary increases
  • Requests a move from group 4 to group 5 for the superintendent salary position

 

Superintendent, School for the Deaf

  • Exceptional item request to restore 5% reduction funds for summer programs to make up the learning loss
  • Additional exceptional item requests inlcude two new school buses to replace aging buses; $120,000 and $115,000 for FY 2022 and FY 2023

 

Special Provisions for the Texas School of the Blind and Visually Impaired/Texas School for the Deaf

LBB

  • No substantive provisions

 

Public Testimony

Jason Marshall, Palestine ISD/Texas Association of Community Schools

  • Spent over $400,000 of their own money to ensure there was enough devises and hotspots
  • Bandwidth was not good enough; asks the ledge support initiatives to support digital Texas

 

Tim Lee, Texas Retired Teachers Association

  • TRS is the best funded pension system; notes SB 12 and other bills
  • Taylor – Tutoring program going?
    • Has been launched and 700 retired teachers tutoring online across the state

 

Jason Sebo, Children at Risk

  • Wants the committee to focus on the issues of chronic absenteeism, increase available resources TWC Child Subsidized Care System, and importance of making mental health a priority

 

Alicia Castillo, Texas Criminal Justice Coalition

  • Morath mentioned racial and economic disparities have been exacerbated by COVID
  • 35% of those in the juvenile incarceration system are related to classroom behavior
  • Asking ledge funds $20 million for target supports, leverage existing CRRSA funds and economic stabilization funds