Texas lawmakers unanimously voted May 26 to overhaul the $116 billion teacher pension system, sending to the governor legislation that includes the first cost-of-living increase in 12 years and a requirement that school districts foot part of the bill.

Teacher contributions to the Teachers Retirement System of Texas would gradually increase from 6.4 percent of their pay to 7.7 percent by 2017, and school districts, which currently contribute nothing, would pay 1.5 percent of total salary costs.

The state contribution would increase from 6.4 percent of covered payroll to 6.8 percent in September.

Teachers who have been retired since before August 2004 will see a 3 percent increase in monthly benefits, capped at $100 per month.

The legislation helps make the Teachers Retirement System of Texas actuarially sound, with less dependence on investment returns, said Sen. Robert Duncan, R-Lubbock, the bill’s author.

“This puts us in a situation where we are actually having long-term fixed contribution rates that should support this system for a long time,” Duncan said.

Teacher groups criticized a portion of the bill that decreases the pension and health benefits of hundreds of thousands of active employees who have earned those benefits under the current system.

Those who will have fewer than five years by August 2014 will have to work two extra years to get full benefits. The legislation raises the minimum retirement age from 60 to 62 for those employees—a 10 percent pension cut for 190,000 employees, according to the Texas branch of the American Federation of Teachers.

It also raises to 62 the minimum age at which a retiree is eligible for full TRS-Care health benefits. Retirees younger than that can only get catastrophic coverage.

That new requirement does not apply to members who, by Aug. 31, 2014, meet a “rule of 70″—age plus years of service equal to 70 or more—or who have at least 25 years of service credit.

Senate Finance Chairman Tommy Williams, R-The Woodlands, told senators that the Legislature would do more for retired teacher health care in the 2015 legislative session.


 
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