perry puts teachers at risk

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PERRY PUTS TEACHERS AT RISK Each year, Texas educators contribute some of their salary to the Teacher Retirement System (TRS) so they will have money to live on when they retire. For many of the 1.2 million teachers in TRS, their TRS pension is their only source of income when they retire. Perry appointed the entire board running TRS, and under their watch TRS has become dramatically weaker. Retirees have not had a cost of living adjustment in nearly a decade, d espite the rising cost of living. TRS’s ability to keep its  promises to teachers is increasingly un certain. Rick Perry must explain to teachers how he took a well-funded pension plan and turned it into one with a gaping hole. On Perry’s watch, TRS went from strong and secure to weak and unfunded Perry took office at a time when TRS had been building. In 2000, TRS had more assets than it needed to fund retiree benefits for more than 30 years. Its funded ratio was 107.4%, and it had a $5.4 billion surplus. But now, TRS has an unfunded liability of $21.6 billion, and its funding ratio is only 83.1%. While the worldwide recession has impacted TRS, it had slipped to a funding ratio  below 90% and an unfunded liability in excess of $10 billion, years before the recession, on Perry’s watch. Perry was reckless in appointing gambler James Lee to safeguard teachers’ money In March 2006, Perry put James Lee, a major Perry campaign donor, political fundraiser, day trader and gambler, on the TRS board. In February 2008, Perry appointed Lee chair of TRS. Then,  before his Senate confirmation hearing, Lee resigned abruptly in January 2009 when it became known that he had six-figure gambling debts to a Vegas casino.  Although Lee had to leave TRS, he’s still helping Rick Perry by serving as a statewide finance chair for his campaign. Lee pushed TRS to put trust funds into investments that are hard to value with high fees In 2002, TRS only had 0.5% of its funds invested in private equity, bu t by 2009, it was up to almost 6% and headed toward a board-adopted goal of 10%. Investments in real asset s also grew from 0.6% in 2002 to over 17% in 2009, almost achieving the board’s goal of 20%. The result of Lee’s strategy was that TRS now owes hundreds of millions of dollars in fees on account of these investments every year. TRS paid $314 million and $399 million in 2008 and 2009 respectively in fees to these funds. Four investment funds that received more than $6.6 million are led by donors who gave Perry $460,000 in campaign contributions. Perry pushed TRS to invest in companies that advanced his own agenda Perry urged TRS to make investments in the companies that advanced his own agenda of developing the Trans Texas Corridor and giving out subsidies from the Emerging Technology Fund. He tried to get TRS to invest in the companies he was subsidizing through the ETF. Perry also  pushed for TRS to fund the Trans Texas Corridor, which alarmed many TRS members. Just this summer, the TRS board commit ted $300 million to a Zachry i nfrastructure fund. Zachry is one of the companies involved in the Trans Texas Corridor. Perry vetoed a bill that would have given teachers more say in TRS investments Last year, the legislature passed a bill that would have added another educator to the TRS  board. Perry vetoed the bill because he does not trust the TRS’s members  —educators—to make decisions about their own money.

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Page 1: Perry Puts Teachers at Risk

8/8/2019 Perry Puts Teachers at Risk

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