News for rehired retirees…..

We’re Zooming with the Dawg at 10:00 this morning. Hope to see you there!

Today’s entry is about retired people. I’m not about to join your ranks, but the Dawg is ready for his two-week summer break. So this will be the last Dawg Bone until July 12th

SB 202 is short but strong, and may make life more challenging for TRS-retirees looking to return to work and for schools needing to hire retirees for hard-to-fill positions.  The basic rules for the hiring of retirees remain the same.  Those who retired after September 1, 2005, can return to full-time work for a school district after a full 12-month break.  If the retiree comes back before that long break, the retiree is limited to substitute service, or halftime employment.  A new bill passed this year permits the retiree to tutor a student in an approved program (see HB 1525).  

Current law (Government Code 825.4092(b) requires the employer of a retired/rehire to make a contribution to TRS equal to the sum that would go to TRS if the person was still contributing to that system. According to the bill this amounts to 15.7% (effective September 1, 2021) of the person’s salary.  The employer is also required to contribute a “healthcare surcharge” of $535 for those retirees who participate in TRS Care.  These surcharges together cost school districts between $14,000 and $20,000, depending on what the district pays for the higher steps on its salary schedule.   

Bottom line: it costs the school district more to hire the retired teacher.  Let’s consider a teacher who works for a District that pays the statutory minimum for teachers with 20 years + of experience, which is $54,540. If that teacher is contributing to TRS as an active member, the cost to the school district is $54,540.  TRS rules require the teacher to contribute a percentage to TRS, while the employer pays a lower percentage, passed through from the state after the first 90 days of employment.

If the district employs a TRS-retiree at the same salary, as of September 1, 2021, the district is required to pay the full contribution of 15.7%, plus the health insurance surcharge (if the teacher is a member of TRS Care), with nothing coming from the teacher. Cost to the district, therefore, is about $68,453 (base salary of 54,540, 15.7% surcharge, plus $5350 health insurance surcharge).  And this number is for districts who do not pay more than the minimum salary schedule for teacher with more than 20 years of experience – costs will rise significantly for higher paying districts.  

Some districts have charged the TRS-retiree some or all of this difference.  SB 202 is designed to put the kibosh on that.  The bill analysis puts it plainly: “SB 202 clarifies that employer contributions are just that, a burden on the employer, not the retired teacher.”

Here’s the language of the bill itself:

A reporting employer is ultimately responsible for payment of the amounts required to be contributed under Subsections (b) and (c).  The employer may not directly or indirectly pass that cost on to the retiree through payroll deduction, by imposition of a fee, or by any other means designed to recover the cost.”

Will that make districts less inclined to hire TRS-retirees?  Sure it will.  Districts are required to be prudent with their finances.  If you were deciding between two qualified applicants, one of whom will cost the district $20,000 more than the other, what would you do?

OK, that’s it for awhile, folks.  I’m off to the Dawg House. Hope to see you on the Zoom at 10, and then we’ll be posting again on July 12th


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