The Texas Retired Teacher Foundation (TRTF) is establishing an endowment fund to continue the good work of two of the Foundation’s most iconic, important figures, Mike Lehr and Tom Pritchard.
Lehr served as the Executive Director of the Texas Retired Teachers Association (TRTA) from 1994 to 2003. He went on to serve on TRTF’s Board of Directors until 2015.
Pritchard was TRTA’s President from 2002 to 2004. Subsequently, Pritchard became the President of TRTF’s Board of Directors and he also served in his position until 2015.
The endowment fund proposes to solidify and expand the “A Helping Hand” program, which Lehr and Pritchard fostered to success. The purpose of the program is to help retired educators in times of financial crisis.
Additionally, the fund will forever secure TRTF’s future as a fixture within the retired educator community.
The goal of the endowment fund is to reach $2 million in donations by December 31, 2019. You can help us reach this goal by donating here.
You can learn more about endowment funds and TRTF’s resolution below.
Resolution to Create the “Lehr-Pritchard Endowment Fund” Within the Texas Retired Teachers Foundation (TRTF)
The Board of Trustees of the Texas Retired Teachers Foundation (TRTF) hereby create the Lehr-Pritchard Endowment Fund within the books of the Foundation.
Funds donated to the Lehr-Pritchard Endowment will be invested and earnings will be used to fund the “A Helping Hand” program.
No earnings will be distributed until the corpus of the endowment reaches a $200,000 threshold. If the endowment corpus does not reach the $200,000 threshold by December 31, 2019, then the endowment will be dissolved and funds in the endowment will be used directly to support the “A Helping Hand” program.
Once the Endowment reaches the $200,000 threshold, earnings net of investment expenses up to 4% on an annual basis will be distributed to the “A Helping Hand Restricted Account” for use by the Board of Trustees to fund the needs of the “A Helping Hand” program. Earnings in excess of 4% during any given year will be retained in the endowment and will become a permanent part of the corpus of the endowment.
The Board of Trustees has the sole discretion to determine guidelines for the eligibility for the “A Helping Hand” program.
Why is TRTF Creating an Endowment Fund?
The Texas Retired Teachers Foundation (TRTF) was founded in 1988 to help raise funds to establish a permanent home for the Texas Retired Teachers Association (TRTA). After many successful years of fundraising, this goal was accomplished, allowing TRTA to open its own building just steps from the east door of the Texas Capitol in 2004.
TRTF’s focus shifted to philanthropic endeavors, and since that time, the Foundation has given over $200,000 to educators of the past, present and future through programs such as student scholarships, grants for classroom teachers and financial relief to retirees in critical need.
In 2016, TRTF will launch its newest endeavor, one that will help fund the Foundation’s most vital and needed program, “A Helping Hand.” Established in 2010 at the behest of longtime trustee and TRTF Past President Tom Pritchard, “A Helping Hand” provides assistance to retirees who are struggling with unexpected financial emergencies.
“A Helping Hand” has benefitted 87 retirees since 2010 with over $83,000. Additionally, when the fertilizer plant explosion occurred in West, Texas in April 2013, TRTF and its supporters rallied together to provide financial assistance to both active and retired school personnel who faced seemingly insurmountable hardships as a result of the disaster. Referred to as the West Relief Fund, a subsidiary of “A Helping Hand,” over $41,000 was raised and given directly to residents and schools in the small Texas town.
This year, TRTA celebrates the 25th anniversary of a significant legislative change that enabled Texas public education retirees to receive permanent benefit increases to make up for losses due to the high inflation rates of the 1980s. The “CPI Catch-Up” plan was passed in 1993, and phased in over several years through 2001.
Although the CPI Catch-up strategy was the collective brainchild of the TRTA leadership at that time, former TRTA Executive Director Mike Lehr is recognized as the driving force behind the implementation of this strategy. This initiative was a huge success. By 1999, retiree benefits had been fully adjusted for inflation and were ahead of inflation by 10%. By 2001, adjusted benefits exceeded inflation by 15%!
The total value to all current and future retirees for the CPI Catch-Up initiative equaled $14.8 billion. All current and future retirees on average are getting an extra $300 per month as a result of the work of Mr. Lehr and the TRTA leadership.
Today, TRS retirees live on an average fixed income of $1900, and approximately 80% do not receive federal Social Security benefits. The likelihood for significant benefit increases for retirees going forward is very low. Over time, the number of retirees needing assistance will increase as the purchasing power of fixed annuities is eaten away by inflation.
Annual donations from TRTA members to the current “A Helping Hand” program to assist fellow retirees in need have been generous, but will not be enough to fund the increase in the number of retirees needing assistance.
To ensure that adequate resources are available in the future to fund “A Helping Hand,” TRTF is creating the “Lehr-Pritchard Endowment Fund,” with earnings from the endowment being dedicated to the program.
TRTF graciously asks for your financial support as we begin this essential mission to help retirees in need. Please consider making a tax-deductible gift to the Lehr-Pritchard Endowment Fund today.
A one-time donation to the “Lehr-Pritchard Endowment Fund” of $30 by all members of TRTA would enable the endowment to raise over $2 million to help generate earnings to fund “A Helping Hand.”
What is an Endowment?
An endowment is a fund established by a donor or donors in which the original and subsequent contributions are held in perpetuity or for a specific term of years. It is invested to provide regular, predictable income for a specified charitable purpose and to maintain or increase its purchasing power. The contributions are not spent; usually only a portion of the earnings is expended.
What Legal Requirements Pertain to Endowments?
Prior to creating an endowment, it is important to be aware of the legal issues pertaining to the establishment and management of endowments to protect your organization, its board members and your donors. Briefly, these fall into three areas:
- The Permanence of An Endowment
True endowments are established by donors through an expressly made or implied contract with your organization, which stipulates that the contributions will not be expended and only the earnings will be spent. Board-designated endowments, which are established by resolution, are quasi-endowments. While the board initially can plan not to spend the contributions, it can at some future time actually do so. An organization may have both types of endowments, but they must be accounted for separately.
- How the Endowment is Invested
Endowments must be invested according to the “prudent investor rule,” which contains five basic principles:
- Sound diversification is fundamental to risk management and is therefore ordinarily required of trustees.
- Risk and return are so directly related that trustees have a duty to analyze and make conscious decisions concerning the levels of risk appropriate to the purposes, distribution requirements, and other circumstances of the trusts they administer.
- Trustees have a duty to avoid fees, transaction costs and other expenses that are not justified by needs and realistic objectives of the trust's investment program.
- The fiduciary duty of impartiality requires a balancing of the elements of return between production of income and the protection of purchasing power.
- Trustees may have a duty as well as having the authority to delegate as prudent investors would.
To meet these requirements the endowment will usually be invested in diversified assets to provide current income for the organization, to moderate portfolio volatility and to build the fund to counteract the effects of inflation.
- Maintenance of the Endowment Fund’s Historic Value
Endowments are governed by the Uniform Management of Institutional Funds Act, which requires that expenditures from an endowment fund not reduce the fund below its “historic value.” The “historic value” is made up of the value of the original contribution establishing the fund plus the value of subsequent contributions at the time they were made.
The governing board of an endowment ideally invests it to:
- allow a distribution to be made for the designated charitable purpose;
- increase the value of the fund to counteract inflation;
- pay investment and administrative fees, if required.
To accomplish this, the governing board must establish both an investment policy and a spending policy that take the above goals into account. These policies enable the endowment to build value in good economic times, which protect its value in hard economic times. Research has shown that a spending policy between 4-5 percent of the value of the fund is the maximum that can be sustained and still meet all these goals.