AUSTIN (KXAN) — The Texas Legislature passed Senate Bill 10 this session, setting the stage for a cost-of-living adjustment to the Texas Teacher Retirement System (TRS) at the start of the new year.

It will become law in Texas unless vetoed by Gov. Greg Abbott before June 18.

Once the bill becomes law, it mandates an immediate one-time payment of $2,400 for TRS retirees and beneficiaries who are at least 70 years old. This payment is increased to $7,500 for those who are 75 and older.

According to the Texas Retired Teachers Association (TRTA), 186,000 TRS retirees will receive $7,500 and 104,000 TRS retirees will receive $2,400.

“We’re extremely pleased to know that the work put in by our grassroots retirees and all the folks that worked on this is the largest state funded increase for retirees in the history of TRS,” TRTA Executive Director Tim Lee said, “It’s it’s also coming at a time that retirees have probably been hit by inflation at higher rates than they’ve ever been.”

The total cost of these payments is estimated at $1.636 billion, according to the Legislative Budget Board.

“So many of our retirees, because they’ve been living in this high-inflation environment and they haven’t had regular raises over the years, are living on credit cards, they’re living on savings that are getting depleted,” Lee said. “Retirees are basically digging themselves out of a hole and can use these funds to help them get out of that hole so that they can manage their ongoing expenses a little bit better.”

Voters to decide cost-of-living adjustment

SB 10 also lays out the legal groundwork for a cost-of-living adjustment to the TRS annuity. However, voters have the final say on whether to use state money for that purpose.

On Election Day in November, a constitutional amendment to approve this funding will be on the ballot. The exact wording remains to be seen.

“Our appeal to the voters is that retired Texas educators and education employees have no cost-of-living adjustments built into the retirement benefits, and almost all of our TRS retirees don’t have Social Security,” Lee said.

When a worker starts earning TRS benefits, the yearly amount does not change — unlike many other retirement plans, Lee claims.

This cost-of-living adjustment would only effect TRS retirees and beneficiaries who began receiving benefits before September 2020. The purposed rate depends on when those benefits began.

The specific amount this requires from the state budget is an estimated $3.354 billion, according to the Legislative Budget Board.

“Out of the 450,000 current retired teachers and school employees, about 130,000 of them make $1,000 a month or less,” Lee said. “So this is a moment where all Texans can help these retirees, and can help their communities, because retired school employees are a vital part of the economic engine in every community.”