Written By: Mike Cochran

Major changes made by several bills that have been passed and signed into law by the Governor or are on his desk as of this date and expected to be signed, which will affect rehired retirees from the Teacher Retirement System of  Texas (TRS). The applicable bills (and TRS Board action) are listed at the end of this summary. 

• Change in 12 Month “Layout Rule” for Retirees. TRS members who retired prior to January 1, 2021, and who thereafter are reemployed full time will not have to complete a 12-month waiting period to be  reemployed by a TRS member employer, in order to be exempt from losing their TRS annuity payments.  (Rule effective immediately). 
• Notice Required to Rehires and Amount of Penalty. TRS members who are reported as having worked  more than would be allowable in order to receive their TRS annuity payments will be subject to certain  changes: (Rule effective immediately) 

o They must be notified in advance that they will lose their annuity payments. See Note 1. below  for the exact notice requirements. 

o If they are subject to losing their annuity payments, they will have a choice between paying TRS  the amount that they earned in the position during the applicable work period or the amount of  the annuity payment that has to be forfeited.  

o A disability retiree who is employed in any position by a Texas public educational institution for  more than 90 days in a school year is not entitled to disability retirement benefit payments for the  remaining months of the school year during which the retiree continues to be employed unless  the retiree qualifies for the exception described by Section 824.602(g). This list of exceptions is  complicated and should be reviewed by reading the actual statute. 

o The mechanics of implementing the notice and repayment will be determined by the TRS Board. 

• TRS Surcharge. The TRS surcharge to the school district or other TRS covered entity for the cost of the  rehired member’s TRS annuity and healthcare added several years ago by the Legislature and the rules  applicable to how this is calculated will not change. However, a district or other entity may no longer  charge this to the rehired employee in any way. Note that there has been confusion in the past about the  exemption from the 12 month layout rule. All rehired TRS retirees, even those who are now exempt from  the 12 month layout rule because they retired before January 1, 2021, are still subject to the surcharge. 

(Rule effective immediately) 

• Rehire Due to COVID Relief. A TRS member who is rehired to a position fully funded by money  provided under one of the federal COVID relief acts is not subject to a penalty and the hiring entity is not  subject to the TRS surcharge. The position funded by such COVID relief must be in addition to the  normal staffing level at the public educational institution. These COVID acts include the Coronavirus  Aid, Relief, and Economic Security (CARES) Act (15 U.S.C. Section 9001 et seq.), Coronavirus  Response and Relief Supplemental Appropriations Act, 2021 (Div. M, Pub. L. No. 116-260), or American  Rescue Plan Act of 202. This provision does not apply to disability retirees. (Rule effective September 1,  2021; expires February 1, 2025) 
• Rehire as a Tutor. A TRS retiree hired as a tutor under Texas Education Code Section 33.913 will be  exempt from losing their annuity payments, in the same way as other exceptions, such as half-time employees (as defined by TRS rules). There is no exemption for the employing entity from the TRS  surcharge. Note that an employing school district needs to be careful not to refer to the retire/rehire  persons whom they employ in addition to their normal staffing patterns for purposes of learning loss  remediation and pay for with funds received under federal COVID-19 learning loss grants as “tutors”.  “Tutors” will be those hired under SB 1356 and not those hired under SB 288. (Rule effective  immediately)

• Rehire during Summer 2021. The TRS Board took emergency action in the spring to temporarily change  TRS Rule §31.1(b) to allow rehires to work on a temporary basis for summer school, as a substitute in a  non-higher education position, from June 2021 through August 2021. This was in response to requests from members, member entities and Legislators. They must meet the following requirements: (Rule  effective June 1, 2021) 

o The retiree’s employment is expected, or contracted, to end no later than Aug. 31, 2021, and o The retiree is not paid more than the daily rate of pay, set by the TRS-covered employer, for non retiree employees in the same or similar positions. 

• Disaster Relief. A rehired member who works in a disaster area will be exempt from the penalty and the  employing entity will be exempt from the surcharge. The disaster must be subject to a declaration of  disaster by the governor under Chapter 418 or a declaration of local disaster under that chapter while the  declaration is in effect. (Rule effective September 1, 2021) 

Notes 

1. New Notice Requirement:  

A retiree under Section 824.202 (the Section of the Texas Government Code that defines TRS retirement)  is subject to Subsection (b) (the annuity penalty) only if the retirement system first issues the following  notices to the retiree:  

(1) with respect to the first occurrence of the retiree’s employment that does not qualify for an exception  under Section 824.602, the system issued a written warning notifying the retiree of that fact; and (2) in a month following the month in which the system issued the warning described by Subdivision (1)  and with respect to a subsequent occurrence of the retiree’s continued employment that does not qualify  for an exception under Section 824.602, the system issued a written notice:  

(A) warning the retiree of the fact described by this subdivision; and 

(B) requiring the retiree to pay to the system, in a form and manner prescribed by the system, an  amount, as elected by the retiree, that equals the total sum the retiree: 

(i) earned for all employment by Texas public educational institutions for each month  occurring after the issuance of the warning under Subdivision (1) for which the retiree  did not qualify for an exception under Section 824.602 and before the month the system  issued the written notice described by this subdivision; or 

(ii) received in retirement benefit payments for each month occurring after the issuance  of the warning under Subdivision (1) for which the retiree did not qualify for an exception  under Section 824.602 and before the month the system issued the written notice  described by this subdivision. 

A retiree under Section 824.302 who is employed in any position by a Texas public educational institution  for more than 90 days in a school year is not entitled to disability retirement benefit payments for the two remaining months of the school year during which the retiree continues to be employed by an institution  unless the retiree qualifies for the exception described by Section 824.602(g). 

2. Applicable Bills and Regulations
   • HB 1585 – This bill includes the changes recommended by the TRS Sunset Commission. It also  includes most of the changes in TRS made this session. On the rehire issue: 
   • It exempts members who retired before January 1, 2021, from the 12 month layout period.  ii. It includes the notice requirement before TRS can stop and/or require repayment of any  annuity payments made when a member has been rehired and changes the amount of the  annuity repayment. 
   • SB 202 – No longer allows TRS member employers to have the surcharge applicable to rehired  annuitants paid by the employee. The language is broad and prohibits any method of having the  employee reimburse the district for the surcharge. 
   • SB 288 – Contains the same notice requirements applicable to rehired retirees as HB 1585 and  contains the exemption from the rehire rules and surcharge for positions funded by COVID relief  laws (see forth major bullet above), until 2025. 
   • SB 1356 – Members who retire after January 1, 2021, may work in certain tutor positions under  the program provided by Texas Education Code Section 33.913 without losing their annuity  payments. It does not exempt these retirees from the TRS surcharge. 
   • TRS Board Action – The TRS Board adopted a temporary emergency rule in the spring of 2021  that exempts rehired retirees hired between June and August 2021 from the annuity penalty and  surcharges. Note that they may not be paid more than the daily rate of pay for their position and  their employment under this rule must end by August 31, 2021. 
   • HB 3207 – Provides the exemption from the annuity penalty and surcharge for rehired retirees  who work in certain officially declared disaster areas.