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The growing teacher pension debt in Texas is forcing

teachers and administrators to make something from nothing.

Texas has only fully funded its teacher retirement system 4 times between 2001 and 2021.

Rising teacher pension debt costs driven by underfunding and poor investment performance has resulted in disproportionate impacts for low-income and marginalized students in Texas. In the video above, Josue Tamarez, Yuridiana Lewis, and Josh McGee explain how Texas is falling short on its promises of equity in education. 

Scroll to learn more about the challenges facing Texas and hear from voices on the ground. 

How Texas' $60 Billion Teacher Pension Shortfall is Harming Education Equity

1 / Hidden Cuts to K-12 Education Budgets that Disproportionately Harm Low-Income Communities

Texas retirement costs for teachers and public school employees as a share of combined state and local K–12 spending have grown 32.9% between 2012 and 2020.


This is an effective cut to education budgets, leaving fewer resources to improve teacher pay, fund enrichment programs, and hire more mental health counselors. While wealthy districts can raise additional funding through property taxes to make up the difference, low-income districts cannot.  

2 / Pension Subsidies for Wealthy Districts 

Texas pays virtually all of the cost of teacher retirement benefits through state resources, effectively subsidizing wealthy districts, that can pay teachers more and retain them longer than lower-wealth districts that have smaller tax bases.


For example, Gunter ISD, in a suburb of Dallas, with a median household income of $98,000 and a poverty rate of 5.5%, receives a subsidy of $612 per student. In Hunstville ISD, where the median household income is $35,000 and a poverty rate of 28.1%, the state provides a subsidy of $202 per student.

3 / Growing Costs for Teachers and Retirees

Teachers are paying more for the same retirement benefits. In 2016, teachers paid 7.20% of their salary to fund their pension plan. As of 2023, they pay 8.25%. That means they also have less take home pay due to rising costs.

The trend of rising contribution rates is likely to continue, as Texas is likely underestimating the value of their teacher pension debt due to overly optimistic investment assumptions. Currently, the state estimates about $60 billion in pension debt, but the real value is likely closer to $92 billion, meaning they will need to raise contributions further. 

Despite teachers paying more for their benefits, the quality of those benefits have declined in quality over time. (Back in June, Texas ranked at the bottom of Equable Institute's list of the best new teacher retirement benefits). 

Hear from Voices on the Ground in Texas


In the wake of a global pandemic, Texas schools need more resources than ever before. Josue Tamarez explains the reality of schools burdened by pension debt. 


Yuridiana Lewis explains how a lack of resources caused by growing teacher pension debt costs exacerbates one of Texas' biggest education challenges - the teacher shortage. 


The budget squeeze in low-income districts means students haven't been able to get the resources they need to thrive.


Administrators struggle to navigate budgets that haven't kept pace with retirement spending.  


Teachers in Texas don't have a guaranteed COLA to help retirement benefits keep up with inflation.  

How Texas Can Solve the Unequal Burden of Teacher Pension Debt

1 / Adjust Investment Assumptions

Investment assumptions for Texas TRS should be reduced to create a more realistic baseline for measuring the contribution rates necessary to get the pension funds back to full funding. 

2 / Require that the State Pay the Full Pension Bill Every Year

The legislature should ramp up employer contribution rates as appropriate to reach an actuarially determined contribution rate based on a realistic assumed rate of return and then direct the Legislative Budget Board (LBB) to include whatever the actuarially determined contribution rate is projected to be for TRS in the budget each cycle. The difference between this approach and the status quo would be to avoid having a fixed employer contribution rate in favor of a contribution rate set by actuaries that takes into account the performance of the pension fund's investments.

3 / Improve Transparency 

The legislature should increase transparency by officially showing the portion of state and local K–12 resources (excluding itemized federal dollars) that are spent on retirement and other benefit costs. In addition, the legislature could require additional reporting that shows what portion of any additional increases in K–12 funding are actually required to cover growing retirement costs. The legislature might also use general funds or more one-time contributions that are designed to offset local district contributions that are needed to cover unfunded liability amortization payments.

4 / Review the School Funding Formula and Study the Subsidization of Wealthy Districts

The state should review how its process of subsidizing districts is exacerbating inequities. Currently, the state provides on-behalf contributions that are a flat percentage of salary and effectively provide larger subsidies to wealthy districts that have higher paid, longer-tenured teachers. 


The state could solve this by adopting an adjustment to the school funding formula that requires higher-income districts that pay larger salaries to contribute more to TRS. Or the state could directly assume a greater share of contribution rate requirements in lower wealth districts 

5 / Improve Benefits for All Educators

The benefits provided for teachers and staff through Texas TRS should be improved — the one-size-fits-all benefit design currently offered is not optimal for all educators and public school employees, nor do the actual benefits themselves meet reasonable standards of adequacy. 

Has Your School District Been Impacted by Growing Pension Debt Costs?

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