AUSTIN — About 260,000 retired Texas teachers rely on a health insurance system that is partly state funded, but a $1 billion shortfall has left the program on the verge of collapse.

Lawmakers last session plugged a $768 million funding hole in the system, which enabled it to continue without raising retirees’ premiums.

But with oil and gas revenues down, budget makers say Texas has less financial wiggle room this session than last, and thus far, proposals don’t provide extra funding for TRS-Care, which covers retired teachers. 

“TRS Care is in a death spiral right now,” Tim Lee, executive director of the Texas Retired Teachers Association, said. “It’s just not sustainable.”

The problem, said Monty Exter, a lobbyist for the Association of Texas Professional Educators, is that the funding mechanism is, “in no way” attached to actual health care costs. 

And, the gap is expected to increase, possibly doubling every biennium, Exter said.

The state contributes 1 percent of total public school payroll to TRS Care, which would amount to $650 million for fiscal 2018-19.

Exter said that while 1 percent may have been adequate at one point, rising costs now far outpace the state’s contributions to TRS Care, which was created in the 1980s. 

“That amount doesn’t go up very much, not at the 8 percent health care increase every year,” Exter said. “If they do nothing, the program will cease to exist.”

Lawmakers have been hesitant to raise TRS Care premiums in a state where cost-of-living raises for retired teachers are rare, and where 95 percent of retired teachers do not receive Social Security benefits.

The last rate hike was 12 years ago, Lee said.

But, “it has always been known that the way we fund this wasn’t going to last forever,” said Ann Fickel, associate executive director of the Texas Classroom Teachers Association.

Fickel said that while lawmakers have “surprised us before,” and covered funding gaps, “they’re less willing to spend money this time.”

The Legislative Budget Board offered one possible scenario for meeting the TRS Care shortfall, now estimated at $1.05 billion.

Under the LBB scenario, the state would cover 50 percent of TRS Care, retirees would cover 25 percent and school districts and active employees would cover 12.5 percent each. 

Exter calls it a “shared-pain” approach, but Fickel said that, “we have grave concerns about turning to active teachers.”

And increasing retiree premiums could actually complicate or worsen the crisis, experts said. 

TRS-Care currently offers retirees a free option with a high deductible. 

But big premium increases to the system’s two paid options could prompt enrollees to choose the free option instead. 

If that happened, revenues would drop and the entire program would run out of money in short order. 

Frank Stone Middle School counselor Merita Head, in Paris, is agonizing over the outcome of the debate on how to fix TRS Care.

“I am waiting to see where this falls,” Head said.

Head, 59,  said she’s debating over whether to retire soon, or wait until she’s 65, and eligible for Medicare, which would cut her insurance costs. A widow, Head has worked 28 years in public education. 

“It’s a volatile situation right now,” Head said.

John Austin covers the Texas Statehouse for CNHI’s newspapers and websites. Reach him at jaustin@cnhi.com.