HB 3857

relating to cost-of-living adjustments applicable to certain
benefits paid by the Teacher Retirement System of Texas and a
biennial study on providing additional cost-of-living adjustments
based on the effects of increased inflation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subchapter H, Chapter 824, Government Code, is
amended by adding Section 824.704 to read as follows:
Sec. 824.704.  COST-OF-LIVING ADJUSTMENTS FOR INFLATION;
BIENNIAL DETERMINATION.  (a)  Notwithstanding any other law, the
amount of a service retirement benefit, disability retirement
benefit, or death benefit paid under this chapter is adjusted in
accordance with this section as necessary to reflect inflation.
(b)  During the last seven days of October of each
odd-numbered year, the board of trustees shall set the rate of the
adjustment that will apply to the following two calendar years
based on the sum of each annual percentage increase, if any, in the
current year and the previous year in the Consumer Price Index for
Urban Wage Earners and Clerical Workers (CPI-W) published by the
Bureau of Labor Statistics of the United States Department of Labor
as determined by the commissioner of social security under 42
U.S.C. Section 415(i) for purposes of providing an annual
cost-of-living increase to social security benefit payments
payable in the next calendar year.
(c)  Subject to Subsection (d), the board of trustees shall
increase the amount of a benefit payable under this chapter by
applying the adjustment rate set by the board of trustees under
Subsection (b) to the amount otherwise required to be paid as
determined in accordance with the other applicable provisions of
(d)  The board of trustees may not pay a benefit increase
under this section in any calendar year unless the board finds that
the retirement system is actuarially sound and has money available
to pay increased benefits in that year.  If the board of trustees
finds that the retirement system is actuarially sound, but that the
amount of money available is not sufficient to pay the full amount
of the adjustment under Subsection (b), the board shall compute the
largest rate of adjustment possible for the amount of money
available while maintaining the actuarial soundness of the system
and shall use that rate in increasing benefits under Subsection (c)
(e)  The board of trustees by rule shall define "actuarially
sound" for purposes of this section.
SECTION 2.  Subchapter B, Chapter 825, Government Code, is
amended by adding Section 825.1086 to read as follows:
Sec. 825.1086.  BIENNIAL STUDY AND REPORT ON PROVIDING
ADDITIONAL COST-OF-LIVING ADJUSTMENTS BASED ON EFFECTS OF
INFLATION.  Not later than January 1 of each even-numbered year, the
(1)  conduct a study to evaluate and identify the
effects, if any, that increased inflation has had on annuitants of
(A)  during the preceding state fiscal biennium;
(B)  unless the annuitants received a
cost-of-living adjustment in the preceding fiscal year, since
annuitants last received a cost-of-living adjustment; and
(2)  submit a written report to the legislature
(A)  findings of the study; and
(B)  if appropriate, recommendations for
potential legislation to address any adverse effects of inflation
identified under Subdivision (1), including specific
recommendations regarding whether and in what amount the
legislature would need to provide a cost-of-living adjustment to
the benefits of annuitants to remedy those effects.
SECTION 3.  Section 824.704, Government Code, as added by
this Act, applies only to a benefit paid by the Teacher Retirement
System of Texas on or after January 1, 2026.
SECTION 4.  This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution.  If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.