This session of the Texas Legislature was a mixed bag for public pensions: how did YOUR pension system fare?

Dear friends,

The 86^th Texas Legislature is officially over, and we wanted to recap whether senators and representatives addressed YOUR pension system's biggest needs!  

We believe public pensions should be a priority every session – and legislators shouldn't make public employees feel like they are in competition with one another for retirement security.

Teacher Retirement System

• In the final TRS plan, state funding will return the pension system to an actuarially sound condition, ensuring better long-term health
• The negotiated terms also enable a supplemental payment—or “13th check”—for retired teachers up to $2,000. This would nearly match an average monthly pension payment.
• Teachers’ contribution rate into TRS will remain at 7.7 percent of their salaries until2021, and then increase to 8.25 percent by 2023. During this period, the state’s contribution rate will also increase, eventually matching that of educators. School districts will be required to increase their contribution rates form 1.5 percent to 2.0 percent by 2024.

Employees Retirement System

• The Legislature ultimately rejected measures that would have improved ERS's long-term health. The budget conference committee excluded additional funding for ERS in the 2020-2021 state spending plan. An earlier budget plan passed by the House would have increased agency contribution rates into ERS by half a percent.
• The legislature also passed on an opportunity to assist ERS through supplemental appropriations—surplus money unaccounted for in the previous two-year budget. The House's plan included an amount that would have helped close ERS’s depletion date, the point at which the fund could no longer provide payments to its recipients.
• Another measure that would have benefitted retired state employees, House Bill 596, did not make it across the finish line. The bill would have enabled retiree representation on the ERS board. It had broad support in the House, but couldn't clear the Senate.

Additional Bills

• The proposed Legacy Fund – a commonsense and time-tested approach that could be used to help ERS and TRS – wound up with a looser mandate than hoped for.  In the House's version, the Legacy Fund would have reinvested surplus Rainy Day funds more aggressively, using some of the returns to address TRS and ERS's unfunded liabilities. In the Senate version, which passed both chambers, the state will not be required to direct Legacy Fund investment returns to either retirement system. Still, this is a great first step toward a measure that could improve public pensions' long-term health.
• On the positive side, a bill that would have made it more difficult for municipalities to issue pension obligation bonds – Senate Bill 957 – failed to make it to the end.  

Above all, I want to stress that the work on pensions isn't over. Our state legislature meets every two years, but we have many retirees in the state struggling to make ends meet on their pensions every single month. We need to find lasting solutions to fix that.  

Thank you to everyone who sent a letter, signed a petition, or shared our Facebook posts this legislative session. We're going to keep the conversation going – and I look forward to hearing from YOU over the next few months.

Talk soon,

Keegan

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Keegan Shepherd, PhD
Policy Coordinator
Texas Pension Coalition