Certain municipal retirement systems have positioned the State as a barrier to local reform (see Better Management of Local Retirement Systems Under State Governance). As a consequence, many of these systems have begun to exhibit signs of fiscal distress.

The Pension Review Board’s (PRB) latest actuarial valuations report for February 2016 reveals that Texas’ thirteen state-governed systems have unfunded liabilities of $8.7 billion, or $171,155 owed per active member. That’s a sizeable increase since June 2015 when pension debt for these systems was closer to $7.5 billion.

The systems’ funded ratio, a measure of pension assets to pension liabilities, also suggests reforms are needed. Generally speaking, a retirement system is considered healthy if its funded ratio is at or above 80 percent—but just 4 of the state’s 13 sweetheart systems are in that territory. And the average funded ratio among the group is 74 percent.

What’s more, 7 of the 13 systems have amortization periods outside the PRB’s “recommended” period. One plan, the Dallas Police & Fire Pension System, even has an amortization period of infinite, which is quite telling and doesn’t bode well for future taxpayers.

As the Foundation and many others have argued in the past, putting Austin between Texans and the pension plans that serve them is poor public policy, and an entirely new approach is needed. 

Red shading signifies plans that are under 80 percent which “may indicate that a pension plan is not fiscally healthy.

Source: Texas Pension Review Board