Texas Pension Official Calls For Better Funding, Offers Options to Lawmakers


The executive director of Texas’ Employee Retirement System testified in front of the state Senate Finance Committee.

Executive Director Ann Bishop used the opportunity to call for measures to improve the system’s funding, and warn that credit downgrades could be coming sooner than later if lawmakers stand pat.

Bishop offered lawmakers some options for improving the funding of the system, including a higher contribution from the state.

From Your Houston News:

Bishop said that the problem is not imminent, but every year the Legislature does not fund ERS to actuarial soundness, that is, the ability to meet its obligations over the next 31 years, the annual debt for that fund increases by half a billion dollars.

“If this is not addressed one way or another, the debt is going to keep growing,” she said. “The bond houses do consider this a debt.”

Her agency is asking for an increase in the state contribution rate to employee retirement from the current 7.5 percent to nearly 12 percent. This would allow the agency to begin paying down the debt accrued in the retirement fund.

Bishop offered some other ways to reach actuarial soundness aside from only increasing state funding. One way is to grandfather fewer people when making benefits and contribution changes.

Another is to increase employee contribution rates, for example by increasing the state contribution half a percent to an eight percent and increasing the member contribution rate from 6.6 percent to eight percent, the fund would just meet actuarial soundness criteria over 29 years.

Legally, the state’s pension contribution rate is capped at 10 percent; Bishop’s proposal of almost 12 percent would exceed that cap.