PERRY PUTS TEACHERS AT RISK

Each year, Texas educators contribute some of their salary to the Teacher Retirement System (TRS) so
they will have money to live on when they retire. For many of the 1.2 million teachers in TRS, their
TRS pension is their only source of income when they retire. Perry appointed the entire board running
TRS, and under their watch TRS has become dramatically weaker. Retirees have not had a cost of
living adjustment in nearly a decade, despite the rising cost of living. TRS’s ability to keep its
promises to teachers is increasingly uncertain. Rick Perry must explain to teachers how he took a
well-funded pension plan and turned it into one with a gaping hole.

 On Perry’s watch, TRS went from strong and secure to weak and unfunded
Perry took office at a time when TRS had been building. In 2000, TRS had more assets than
it needed to fund retiree benefits for more than 30 years. Its funded ratio was 107.4%, and it had a
$5.4 billion surplus. But now, TRS has an unfunded liability of $21.6 billion, and its funding ratio
is only 83.1%. While the worldwide recession has impacted TRS, it had slipped to a funding ratio
below 90% and an unfunded liability in excess of $10 billion, years before the recession, on Perry’s
watch.

 Perry was reckless in appointing gambler James Lee to safeguard teachers’ money
In March 2006, Perry put James Lee, a major Perry campaign donor, political fundraiser, day
trader and gambler, on the TRS board. In February 2008, Perry appointed Lee chair of TRS. Then,
before his Senate confirmation hearing, Lee resigned abruptly in January 2009 when it became
known that he had six-figure gambling debts to a Vegas casino. Although Lee had to leave TRS,
he’s still helping Rick Perry by serving as a statewide finance chair for his campaign.

 Lee pushed TRS to put trust funds into investments that are hard to value with high fees
In 2002, TRS only had 0.5% of its funds invested in private equity, but by 2009, it was up to
almost 6% and headed toward a board-adopted goal of 10%. Investments in real assets also grew from
0.6% in 2002 to over 17% in 2009, almost achieving the board’s goal of 20%. The result of Lee’s
strategy was that TRS now owes hundreds of millions of dollars in fees on account of these
investments every year. TRS paid $314 million and $399 million in 2008 and 2009 respectively in
fees to these funds. Four investment funds that received more than $6.6 million are led by donors
who gave Perry $460,000 in campaign contributions.

 Perry pushed TRS to invest in companies that advanced his own agenda
Perry urged TRS to make investments in the companies that advanced his own agenda of
developing the Trans Texas Corridor and giving out subsidies from the Emerging Technology
Fund. He tried to get TRS to invest in the companies he was subsidizing through the ETF. Perry also
pushed for TRS to fund the Trans Texas Corridor, which alarmed many TRS members. Just this
summer, the TRS board committed $300 million to a Zachry infrastructure fund. Zachry is one of the
companies involved in the Trans Texas Corridor.

 Perry vetoed a bill that would have given teachers more say in TRS investments
Last year, the legislature passed a bill that would have added another educator to the TRS
board. Perry vetoed the bill because he does not trust the TRS’s members—educators—to make
decisions about their own money.