Published Online: March 12, 1997

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Texas Gov. Eyes Teacher-Pension FundIn Search To Pay for Property-Tax Cut

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Teachers' groups in Texas are rallying to defeat Gov. George W. Bush's proposal to divert $47 million in teacher-pension funds to pay the overhead costs for the state's teacher-retirement system.

The administration fees are now paid by the state.

Lawmakers are also being urged by the unions to restore $400 million in state contributions to the pension system that were dropped in the state's 1995 biennial budget. Neither move alters benefits to the system's 800,000 members, but the lost funds could affect future cost-of-living adjustments, some observers say.

"The retirement system plays a role in teacher retention," said Richard Kouri, the president of the Texas State Teacher Association. "You need to commit to things that enhance their retirement plan."

Ray Sullivan, a spokesman for Mr. Bush, said that the shift of administrative costs would simply put the TRS on the same footing as other state retirement funds that pay their own overhead.

"The governor is always looking for savings and efficiencies in state government," he said.

Other Issues

But the proposal is not so clear-cut, according to teacher representatives, who see the proposal as part of a troublesome trend.

First, state funds for the $55 billion teacher-pension fund has dropped from 8 percent of the pot to 6 percent in four years.

And while the fund had paid its own administrative fees before 1995, the legislature voted to foot that bill as part of a package that also restricted TRS staff members from actively lobbying on behalf of the retirement system's members.

The governor's proposal goes back on that compromise, opponents argue.

The agreement "was advertised as making sure that member funds would be used solely for benefits," said Eric Hartman, the legislative director for the Texas Federation of Teachers. "The deal should be honored."

The Republican governor is closely scrutinizing the state budget, trying to come up with money to subsidize his proposed $2.8 billion in property-tax cuts.

The cuts would be paid for with increased sales and business taxes, along with $1 billion in surplus state revenue.

"The governor's staff, in a mad scramble to pay for tax relief, was looking for more money in the general-revenue pot," Mr. Hartman said.

Mr. Sullivan denied that characterization of the pension proposal.

"Our proposal would simply return it to the way it was before 1995," he said.

Legislative Promise

The teacher groups saw some legislative hope for their positions begin to emerge last week.

Rep. Hugo Berlanga, a Democrat, filed two bills that would restore the funds that were reduced in 1995 and adjust the retirement system's health benefits.

Mr. Sullivan did not rule out the governor's support for an increase in the state's contribution to the pension fund. "The administration issue is not related to the TRS contribution," he said.

And a legislative budget committee also had harsh words for Mr. Bush's budget, essentially calling it "dead on arrival."

According to Mr. Kouri, the governor's tax plan "is being rewritten as we speak."

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