This 2021 law makes it harder for Texas schools to hire teachers

LAW

The Legislature inadvertently exacerbated the teacher shortage crisis facing the state in 2021 when it approved legislation designed to help retired teachers who want to return to work. But instead of helping, the new law made it prohibitively expensive for districts to re-hire teachers who are collecting their pension benefits.

The bill, SB 202,  required school districts to pay 100 percent of a surcharge fee associated with re-hiring a retired teacher who is also receiving benefits from the Teacher Retirement System pension fund. The surcharge can add up to $10,000 to a district’s costs for bringing a teacher out of retirement, several experts estimated.

In the past, the teacher could cover part of the surcharge to lower the district’s overhead.

But under the 2021 law — as school districts scramble to find enough teachers in a tight labor market — they no longer have that flexibility. 

“The need is part of what’s changed, right? Eleven years ago when I began as superintendent, it was almost unheard of for us to ask a retired person to return to the workforce because it just wasn’t necessary. It would have been unneeded expense,” said Brian Woods, superintendent at Northside Independent School District in San Antonio, one of the largest districts in the state. 

“Now what you’ve got is a combination of a high need for these folks to return with added expense to the school district.”

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The state is currently grappling with a massive shortage of teachers. Surveys of teachers have showed plummeting morale within the profession because of low pay and a perceived lack of support from the state government and the general public. A recent report from a task force of education experts and educators recommended a “significant increase” in teacher salaries to try to fight the problem. 

Woods said the 2021 rules have made it about $8,000 to $10,000 more expensive per year for a school district to hire a teacher out of retirement. That estimate was for Northside ISD, as it could differ around the state. He estimated that the district needs to fill about 200 teaching positions.

“If we hired a retired person in each of those 200 vacancies who left us with 35 years of experience, we’re talking about an internal cost of almost $2 million per year,” Woods said.

Brian Guthrie, the executive director of TRS, spoke about the issue during a legislative hearing last week.

“That has actually been a cause for concern for many districts because that is a new cost that they shared in the past or didn’t have to pay at all. Now that they’re paying it, they’re a bit reluctant to hire retirees into those positions. That’s something that is a policy issue that I know many of you are aware of, and we look forward to working with you on it this session,” Guthrie said. 

Teachers in Texas and their school districts together make contributions into the Teacher Retirement System throughout their career. Then, when those teachers retire, they begin receiving monthly pension checks from the TRS based on their years of service and their salary upon retirement. 

If a teacher who is retired decides to go back to work, they could receive a salary from the school district in addition to their pension benefits. For a time, because those teachers were no longer active members of TRS, they also weren’t required to pay into the pension system or its health care plan, said Tim Lee, executive director of the Texas Retired Teacher Association. 

Those hires were therefore draining resources from the pension system, which relies on contributions from working teachers to keep it solvent. So in the mid-2000s, the Legislature created a “surcharge” fee that had to be paid for retired teachers returning to work. That fee covered the pension contributions that would be missed, and the cost would be negotiated and shared between the teacher and the district.

But the bill from 2021 changed that. Some retired teachers complained that they had to pay any portion of the surcharge fee, Lee said, so the Legislature required districts to cover the entire amount.

Payouts to retired teachers are a significant political issue in the state, as there hasn’t been a cost-of-living increase in a decade despite high levels of inflation, and retirees since Sept. 1, 2004, have never received one. The Legislature in 2019 and 2021 provided supplemental checks to the roughly 2 million TRS retirees in the state, and it’s likely retirees will again see some help this year, but retirees are instead pushing hard for a permanent cost-of-living raise. 

The 2021 bill was adopted as millions of American workers began changing fields during what’s now known as the Great Resignation, and in Texas “the retired teacher market has sort of dried up,” Lee said. 

“I think what TRS would say is it’s important to not incentivize retirement for people and then have them come back and be collecting a pension and a salary. But my hope is that there’s that threading the needle that would allow that to happen,” said Kevin Brown, the executive director of the Texas Association of School Administrators and a former superintendent of Alamo Heights ISD in San Antonio. 

Brown said the issue has hit rural and urban school districts alike, particularly for more specialized, and thus harder-to-hire, positions such as special education, math, science or bilingual teachers. 

“I think that we have heard, especially in areas where they really are struggling with staffing, just trying to find qualified, quality people to come in, and they’re looking for any means to get them to do that,” Woods said.

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