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.

Texas County Speeds Up Plan to Pay Down Pension Debt

Welcome to Texas

Officials in Dawson County, Texas have revised a plan to pay down pension debt this week.

Originally, officials planned to fully pay down the county’s pension debt over a period of 15 years. Now, the county plans to pay down its debt completely by 2018.

From the Seminole Sentinel:

The Commissioners’ Court approved a decision to pay in full a deficit in the retirement plan for county employees during the next four years instead of during a longer period of time. By paying sooner than later, the county will save $ 861,000 in the long run, said County Auditor Rick Dollahan. The new payment plan is a decrease from original 15-year plan.

“I think it’s a good return on our investment, said Court member Blair Tharp.

Employees receive benefits through the Texas County and District Retirement System, in which a percentage of their paychecks, chosen by employers, are deposited into their TCDRS accounts. The savings grow at an annual, compounded rate, and upon retirement, employees receive a benefit payment for life based on the final account balance and employer matching. Employers pay 100 percent of their required contribution rate each year. The current deficit does not negatively affect employees’ retirement plan investments.

“I don’t want our retirees to get scared or worried. We’re in great shape,” Dollahan said.

Currently, the plan is funded at about 80 percent; the county plans to pay the deficit by 2018.

The Texas County & District Retirement System manages $23 billion in assets and works with 655 counties in Texas.