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Panel reviews HB 694 to redirect TRS health-plan surplus into pensions if health trust hits 100%
Summary
Lawmakers discussed House Bill 694, which would establish a default “pour-over” of certain state and employer health contributions into the Teachers’ Retirement System pension once the TRS health insurance trust reaches full funding; sponsors and members debated which payments would move, timing and potential impacts on teachers.
At a meeting of the Pension Oversight Board, lawmakers discussed House Bill 694, which would set a default process to redirect specified contributions from the TRS health insurance trust into the Teachers’ Retirement System (TRS) pension benefits once the health trust reaches full funding.
The bill’s sponsor, Representative Petrie, told the committee the measure would pass two specific components of the health plan’s incoming funding into the TRS pension when the health trust becomes 100% funded. "The only 2 payments that are being moved over would be the state payments on behalf of local districts and other employer contributions," Petrie said, adding that employee contributions and other health-plan receipts would remain in the health trust.
Supporters and several teacher members questioned how the change would affect educators. "So I'm a teacher. When I signed my contract, it was my understanding that I would pay x number of dollars and that I would then be vested in the pension and get that return," Representative Bojanowski said in public remarks. He asked whether the bill would shift responsibility for paying unfunded liabilities to teachers; Petrie responded that it would not move employee contributions and that the bill only relocates the state on‑behalf payments and other employer contributions once the health trust is fully funded.
Committee members pressed on timing and scale. Petrie said actuarial projections currently anticipate the TRS health trust could reach full funding in 2027, though he acknowledged projections could shift. Using 2024 numbers, Petrie estimated a potential "pour-over" of approximately $154,000,000 annually into TRS pension benefits if the health trust reaches 100% funding. He described that figure as a temporary boost until the pension systems can adopt a different recommendation.
Members also reviewed the fund’s recent funding trends as presented by Petrie: health insurance funding rose from roughly 36% in 2018 to about 80.45% in 2024, while pension funding has moved more slowly (Petrie cited pension funding levels clustering near the high 50s percent in recent years). Representative Tipton asked whether the employee contribution, currently 3.75%, might be reduced or otherwise adjusted if the health trust reaches full funding; Petrie said he was "open to any conversation like that" but emphasized the bill establishes a default position to apply if the board or legislature has not adopted a different plan by the time the trust reaches the threshold.
No formal action or vote on HB 694 was recorded in the meeting. Committee members said the bill is intended to create a default mechanism; boards or the legislature could propose an alternative path before the presumed trigger date.
The discussion included clarifying details on the funding streams that feed the TRS health plan (employee contribution 3.75%; state on‑behalf payment for local districts at roughly 3% in combination with a 0.75% state contribution; and other employer contributions such as universities) and explained that the bill would not move employee contributions into the pension plan.
The committee closed the discussion without a vote and invited further questions and follow-up from Representative Petrie.
