Texas House Plan Would Plug Hole in Pension FundCategories: Texas Developments
The Texas Tribune by Jim Malewitz, March 10, 2015
House lawmakers unveiled a plan Tuesday to shore up Texas’ chronically underfunded retirement system for state employees.
The roughly $440 million proposal would increase how much the state and its workers contribute to the Employees Retirement System pension fund, which currently holds just 76 cents for every dollar it promises retired workers.
Employees — who gave the plan mixed reviews — would get across-the-board pay raises to ease the strain.
“This is a balanced proposal to assure that neither the state employees nor our taxpayers are expected to fix the problem on their own,” said Rep. Dan Flynn, R-Van, who chairs the House Pensions Committee.
Under the plan, employees and the state would each boost their contributions to the fund to 9.5 percent of payroll by 2017 – 2 percent more than what each would chip in otherwise. Meanwhile, workers would see a 2.5 percent pay boost.
The Employees Retirement System benefits about 230,000 active and retired state employees, elected officials, police and custodial officers and judges. Its pension fund is short about $7.2 billion, a liability projected to grow by $500 million each year if left unaddressed.
Lawmakers have failed to fully fund the system in 19 of the past 20 years.