State Employee Retirement & The Budget

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Chandra Villanueva

This week, I shared this testimony with Senate Finance Committee members on the state’s Employee Retirement System:

ERS is more than just retirement income for our state employees. As a Defined-Benefit pension plan, ERS retirement benefits are:

  • an effective tool for the recruitment and retention of a quality workforce;
  • they strengthen the middle class by supporting self-sufficiency among our seniors;
  • and provide economic benefits for all of Texas.

ERS has weathered the economic downturn better than systems in other states and has seen it’s investment returns rebound in recent years while maintaining a funding ratio above 80%.

However, investment returns alone will not eliminate the current unfunded liabilities. ERS needs a greater financial commitment from the legislature in order to remain strong and sustainable.

The legislature has not funded ERS at the statutorily recommended rate of 7.4% since 1990. This chronic underfunding is a major driver of the unfunded liability projected today.

Considering that the ERS appropriation represented less one percent (0.89%) of General Revenue last biennium, we encourage this committee to adopt a state contribution rate of 10% as requested by ERS.

At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.

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