Feb. 16-17 TRS Board Meeting Highlights

As typically occurs during February TRS board meetings — which are held outside the board’s normal quarterly meeting schedule — most of the board’s business consisted of briefings by staff, ethics training for board members, and various other business.

The following is a summary of some of the items addressed during the meeting. (Click here for the comprehensive February “board book” agenda and here for TRS board webcasts.)

Board Briefed on Potential for ActiveCare Premium Rate Hikes

TRS staff briefed the board (slides) on various issues regarding TRS-ActiveCare — that largely centered around the possibility that the premium rates could increase substantially when the new plan year begins on Sept. 1, 2023, without the infusion of a great deal of funding from the Legislature or another source.

The issue mainly involves the fact that the Legislature and state leaders directed that more than $700 million in federal COVID-19 relief funding be given to TRS to forestall what would have been a probable massive premium rate hike for the current plan year (see TEN, May 9, 2022).

• Note: Other cost cutting measures enacted by the Legislature resulted in requiring districts to offer either ActiveCare to their employees or an alternative plan (but not both at the same time), and allowing districts to opt into or out of ActiveCare and giving them a five-year wait-out period before they can either opt back in or opt back out of the program.

The TRS presented to the board a couple of scenarios (here and here) illustrating what could happen to ActiveCare premiums should the COVID-19 funding not be replaced.

The worst case scenario was for school auxiliary employees where — if the cheapest ActiveCare plan for families had been chosen — the employee’s premiums would have constituted more than half (55 percent) of the employee’s pay.

The data reflected (see graphic) that ActiveCare employers reduced employee contributions for the current plan year. COVID federal funding earmarked for ActiveCare resulted in savings in the total gross ActiveCare premiums — savings that were passed on to employees.

The typical employee saw a decrease of $20 per month for employee-only coverage and a decrease of $59 per month for family coverage.

Staff noted that when it comes to employers setting their contribution rates for health insurance, they mostly concentrate on how their decisions will affect employee-only premiums, and pay scant (if any) attention to how their decisions will affect family premiums.

The board scheduled a special meeting for June 6 — just after the regular legislative session ends on May 29, to discuss TRS-related items that passed, and didn’t pass, during the session — which could provide clarification on the ActiveCare issue for the upcoming plan year that begins Sept. 1, 2023.

TRS Executive Director Brian Guthrie reported that included in the preliminary House and Senate general appropriations bills is the “exceptional item” request submitted by the TRS to address the ActiveCare funding issue (see graphic).

Study Compares ActiveCare Plans to “Alternative” Plans

Staff also summarized the findings of a study comparing TRS-ActiveCare plans with alternative plans offered by school districts.

They presented data (see this graphic) reflecting that although ActiveCare has lower total premium costs than typical alternative plans, covered ActiveCare employees are paying more in premiums than their alternative plan counterparts.

That’s because ActiveCare employers are contributing less toward the premiums of their employees than are alternative-plan districts.

The result, according to this TRS graphic, is that although overall ActiveCare premium rates are lower, districts offering alternative plans are, on the whole, contributing $200 more toward their employees’ share of premiums than districts offering ActiveCare.

The same graphic also reflects that employer contribution rates toward their employee premiums for health care both for ActiveCare and non-ActiveCare school districts lag far behind what Texas counties and cities are contributing to their employee health care premiums.

Staff reported that the minimum school employer share for employee health insurance hasn’t changed since 2001 ($225 monthly, consisting of a flat $75 from the state and a minimum of $150 from districts, with some districts electing to contribute more than their required minimum).

TRS health division staff also noted that they have received a few inquiries from districts that chose to exercise their option to leave ActiveCare — to offer an alternative plan — about whether there is any way to rejoin ActiveCare without having to wait five years (as required by state law) to do so.

check. Staff also reported that 14 districts currently offering ActiveCare notified the system that they will opt out of the program for the upcoming plan year, and three employers said they are joining ActiveCare. More than 90 percent of ActiveCare eligible employers are participating.

Possible Good News for Retirees

The good news for the system’s retirees, TRS Executive Director Guthrie said, is the Rider 21 provision — that is included in the preliminary general appropriations bills — that says that the Legislature intends to provide a “benefit enhancement” to TRS retirees contingent on the determination that the TRS pension fund is considered to be actuarially sound.

Guthrie said that barring any unexpected financial market catastrophe, it is likey that the fund will exceed the benchmarks required to be considered actuarially sound.

Guthrie said that should the Legislature determine that a cost of living adjustment (COLA) or other form of benefit enhancement be made to retirees — it could be made in a number of forms.

Some of the options, depending on the will of the Legislature, could be same amount checks to all retirees, differing amount checks to retirees based on how long they have been retired or years of service before retirement — or supplemental checks paid over a period of time.

Guthrie added that the Legislature could literally choose from thousands of options, adding that “all it takes is money,” because with more money comes more options.

Guthrie added that the preliminary appropriations bills included the TRS’ expectation (in the system’s legislative appropriations request) that no supplemental funding will be needed from the state for the TRS-Care retiree health insurance program.

Two New Board Members Welcomed

Attending their first meeting were two new board members:

• Elvis Williams, assistant superintendent of operations for Edgewood ISD (Bexar County), who is one of two board members who will serve in a position reserved for a public education employee. He was appointed by the governor from the three top vote getters in a referendum election in which only public education TRS members were allowed to vote.
  
• Brittny Allred of Dallas, a principal of Luther King Capital Management, an investment management firm. Allred was appointed by the governor from a slate of nominees submitted by the State Board of Education.

The governor also recently exercised his direct-appointment authority to re-appoint Austin attorney John Elliott to the board.

New Pharmacy Benefits Manager Selected

The board approved Express Scripts to be the primary vendor for pharmacy benefits for the system’s health plans starting with their upcoming new plan years (TRS-ActiveCare as of Sept. 1, 2023) and for TRS-Care (as of Jan. 1, 2024).

Express Scripts, subject to final contract approval by TRS, replaces CVS Caremark as the pharmacy benefits provider. More info