- Associated Press - Monday, December 22, 2014

AUSTIN, Texas (AP) - Budget analysts are warning lawmakers the state’s credit rating could be harmed unless they do more to properly fund the retirement plan for Texas employees.

Ann Bishop, the outgoing executive director for the Employee Retirement System of Texas, said the plan’s unfunded balance is about $7.5 billion. That number is projected to increase to nearly $10 billion by 2018 if the Texas Legislature, which convenes in January, doesn’t immediately pursue reforms, the Austin American-Statesman (http://bit.ly/1APMyj4 ) reported.

The pension fund provides retirement and health benefits to more than a half-million state employees, retirees and their families. State officials say Texas only has 77 cents for every dollar needed to pay future benefits. The plan will run out of money to pay for promised pension benefits by the 2050s if nothing changes, Bishop said this month at a legislative hearing.

“Inaction is not an option. The problems facing ERS will continue to grow if we do not pursue additional reforms immediately,” according to a December report by the Comptroller’s office.

Contributions and investment returns haven’t covered the retirement system’s expenses and payouts since 2003. Unless the agency receives an additional $350 million every two years from the state, Bishop says the solution is some combination of more benefit cuts or increased contributions from both the state and employees.

Lawmakers in 2009 and 2013 have increased state and employee contributions and cut benefits for newly hired workers. While that “has done a lot to help close the gap,” Bishop said, “it isn’t enough.”

“It will have to be fixed. And it’s just going to get worse before it gets better,” she said.

___

Information from: Austin American-Statesman, http://www.statesman.com

LOAD COMMENTS ()

 

Click to Read More

Click to Hide