The Teacher Retirement System of Texas (TRS) has adopted a new standard definition of the term “school year” that takes effect in 2012-13, but will continue to credit either contract year salaries (for members with a July 1 to June 30 or Aug. 1 to July 31 contract) or the new school year for 2012-13.
Starting in 2013-14, the school year for every TRS participant will be a 12-month period that begins Sept. 1 and ends Aug. 31 (34 TAC §25.133). All compensation will be credited on this standard year period. Contract start and end dates would no longer be relevant for purposes of creditable compensation under the new rule.
The change could impact creditable compensation during the last year of employment for those who retire before Aug. 31. Creditable compensation is based on what an employee is actually paid during the September to August time period. For example, an employee who retires at the end of June would be credited with just 10 months of salary (September to June). This two-month reduction could prevent the employee’s final year of employment from being one of his or her highest paid years.
Educators have expressed concerns that the ultimate effect of this rule change may be that employees in their terminal year of employment will have an incentive to delay retirement until Aug. 31, which is not the best time of year for school districts to find qualified replacements. Early planning and communication will be necessary to evaluate options and chart the best course for both the employee and the district.
