State in ‘Decent Shape’ With Its Pension Plan

By Aissatou Sidime, San Antonio Express-News

Dec. 19–Texas is in “relatively decent shape” to cover the pension promises made to state workers, but it’s behind most states in planning for roughly $37 billion in future health-care costs, according to a report released this week.

“Texas is not treating those as genuine liabilities,” said Richard Greene, co-author of the study titled “Promises with a Price” that was released by the Pew Center on the States. “In this instance, Texas is bucking the trend.” The Pew Center report shows that Texas had enough money at the end of fiscal 2006 to cover 89 percent of future pension liabilities in the Employees Retirement System and Teacher Retirement System of Texas. That was a slight improvement from the 88 percent funding level in fiscal 2005.

The 2006 funding level places Texas among the 30 state pensions that had at least 80 percent funding to qualify as being in “relatively decent shape,” according to the authors. In comparison, the national average is 85 percent funding.

“Relative to a number of other states, Texas is doing well,” Greene said.

However, the Pew report points out some weaknesses in the Texas pensions for retired state employees. Texas was one of the 44 states that had a plan that would not reach full funding within the recommended 30-year time period. More significantly, Texas currently has promised to cover about $36.7 billion in post-retirement health-care costs for teachers and state employees, but has set aside no money to pay for those benefits.

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