Neither of the fixes we need for Texas teachers’ pension plans costs a dime. All we need is the help of our state legislators.
Some events are more striking than others.
Consider, for instance, my new role as a great-grandparent. Yes, I said great-grandparent. That means my wife and I now have children who are grandparents.
Keira Marie was born on March 30 to our oldest granddaughter, Shelby. It was a healthy, full-term pregnancy. Keira weighed in at a comfortable 7 pounds, 13 ounces. With a mathematician/computer scientist mom and an electro-magnetic engineering dad, we like to think Keira has the right stuff.
Long-term readers will remember Shelby. She was our 7-year-old gymnast granddaughter in the last segment of my “American Generations” column series back in 2005. The series followed four generations of my family through decades of social, economic and technological change. (You can read the whole series here.)
The next time you read about her was in 2015. That’s when she left for Texas A&M driving our aging 2003 Prius. You can read “Prius Goes to College” here.
The last time you read about her was in 2019, in “Mathematically Blonde,” as she graduated from A&M to begin working at an aerospace company and, going counter to popular trend, married.
Shelby is a great story: She’s the upside of all the good things that women have brought to the table with the freedom they have won in the last 80 years.
Having children is one thing. Knowing that your children’s children are starting to have (more) children is another. It’s bittersweet. It’s joyful, yet sad. Life is about them now, not you. It underlines the fact that you may be loved and respected, but you are no longer a central player in the lives that are most important to you. Not to mention any other lives.
It’s also humbling. The world hasn’t gotten much better, for one thing. And, face it, there isn’t too much time left to work on improving it. At least, not for a great-grandparent.
It does, however, beg serious thinking about making a better future.
No, I am not about to make a call for World Peace. I’m not even going to make a plea for Whirled Peas. I like to think about specific, concrete things that will make a difference for these future generations. And for where we live.
That’s Texas.
The most important thing about the future of our state isn’t money. It isn’t oil and gas, either. It’s human capital. It’s the nurturing, fostering and creating of the knowledge, skills and thinking capacity that will determine whether our state continues to rise and progress or fails. That failure, by the way, could be as complete as the failure of our power grid this winter.
I’m dead serious.
We need to strengthen education in this state at every level. If we don’t, we’re heading for a failure of our human capital grid. Skeptics need only check our projected population growth and the capacities of our education system, kindergarten through grad school.
To that end, there are two concrete, not pie in the sky, things we can do. They won’t solve the whole problem, but they will make a measurable difference in the future our grandchildren and greatgrandchildren inherit.
Amazingly, neither costs money. Seriously. Not a dime.
I’d really like to see these things happen before I pack it in.
Here are those two things we need to do, with the help of our state legislators. Or, if necessary, with their replacements.
Fix TRS fees
As I’ve pointed out in other columns, there is no evidence to support the notion that paying high fees for exotic and intensely managed investments will bring greater returns to our state teachers’ pension system. All it does is provide opportunities to spread teacher retirement dollars around to an army of highly paid financial service drones.
Not spending that money will strengthen the system and reduce the need to add additional funding from taxpayers. It will also make it easier for school systems throughout Texas to attract and retain teachers because they won’t be reading about their underfunded pension plan every year.
We’re going to need them all, and then some.
Pass 403(b) Reforms
Two years ago, in faux homage to free enterprise, our legislators eliminated any limitation on 403(b) plan expenses, stopped supervision and data collecting by the TRS, and opened the door to massive abuse of the tax-deferred plans teachers have that are similar to 401(k) plans.
We can still have a free enterprise solution, but we can do it at far lower expense. How? Easy. Instead of wild west, inefficient, high expense marketing to individual teachers, have major financial services companies bid on a centralized, statewide plan. Pick the most credible low-cost bidder.
Do that, and Texas public school teachers — who far outnumber the employees of ExxonMobil or Texas Instruments — can have a retirement saving plan that costs less than 0.1 percent rather than facing annual expenses of 2.5 percent and more.
As with fixing the TRS pension plan’s expenses, the result will be more successful retirement investing for teachers from plans that are competitive with the best offerings of private industry for large firms.
ExxonMobil and Texas Instruments figured this out long ago and added low-cost plans for the employees’ 401(k)s. Our legislators don’t have to be brilliant to see this. They only need to recognize a better solution that came from the private sector.
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Related columns:
About Texas teacher pensions and 403(b) plans:
Scott Burns, “Making Texas Safe for Investment Predators,” 10/27/2019 https://scottburns.com/making-texas-safe-for-investment-predators/
https://scottburns.com/an-alternative-to-403b-plans-for-texas-teachers/
https://scottburns.com/couch-potato-investing-beats-trs-pension-fund-again/
https://scottburns.com/texas-public-pension-funds/
https://scottburns.com/public-pensions-in-texas-seeing-the-forest/
https://scottburns.com/an-alternative-to-403b-plans-for-texas-teachers/
https://scottburns.com/couch-potato-investing-versus-texas-state-pension-funds/
About Shelby:
https://scottburns.com/prius-goes-to-college/
https://scottburns.com/mathematically-blonde/
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Baby Keira
(c) Scott Burns, 2021
2 thoughts on “Beyond Whirled Peas: Let’s save our kids’ futures by helping their teachers”
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Congratulations, GREAT-grandfather!
As for the TRS and high-cost plans, is it possible there is some fee “exchanging” (lobbying) going on — always seems to be and rarely disclosed
The only thing we can be certain of is that a great deal of money is changing hands and benefiting the empire of the managers. The performance evidence, in Texas and nationwide, suggests this is poorly spent money that belongs to teachers.