On Tuesday, the Senate Finance Committee made a strong declaration warning senators that the state employee pension fund is on track to run out of money by 2061. The Employee Retirement System (ERS) of Texas currently has unfunded liabilities of $14.7 billion, and these liabilities are projected to grow more than a billion dollars each biennial budget cycle.
Comptroller Glenn Hegar said he’s worried this could put the state’s perfect credit rating at risk. “The rating agencies are consistently and continually giving fair notice that these issues are weighing on Texas’ rating,” he said. “Are we going to solve it all in one swoop? No,” he said. “But just as you did with TRS, it’s on a six-year path. If we don’t, I don’t think Texas wants the black eye of having a warning on our credit when in reality, look at all the good things we have going on in this economy.”
Back In 2019, the Legislature had to address a $47 billion unfunded liability in the teacher pension system, the issue was solved by raising contribution rates from both the state and active employees.
Some Senators were not very adamant about going for this solution. Georgetown Senator Charles Schwertner does not think that increasing contribution is an acceptable option. “If they were my financial advisor, I would’ve fired them,” he said.
It seems as if the Senator would rather have the board don’t even bother about funding and fixing the pension fund, stating that even if they added money to it, the problem won’t ever go away. “Pensions can blow up a budget, blow up a state, blow up a city,” he said during the session.
A bill previously presented by Schwertner proposed to prohibit the state from providing funds for public retirement systems, blocking this and other pension funds from rescue.