Defined benefit retirement systems in Houston and Dallas are collapsing under their own weight, putting retirees and taxpayers in harm’s way. And while pension reform proposals are right now taking shape (see here and here), there’s a big problem with the outlines of both plans: they leave these systems locked in state law.

As I’ve said in the past, one of the key deficiencies with Texas’ local systems—especially those in Houston and Dallas—is that many, if not all, of their most important plan elements are codified in state statute. This sweetheart setup effectively locks in generous plan features while locking out those who foot the bill.

Rigging the system like this has had disastrous fiscal results, with unfunded liabilities for Texas’ 13 state-governed systems adding up to almost $11 billion as of January 2017.

Actuarial Valuations for January 2017

Source: Pension Review Board

Until the problem of state-governed systems is resolved—as recommended by the Governor’s office (pg. 23) and by SB 152 and HB 1502—community stakeholders will continue to be at a distinct disadvantage. To be a true success, legislative reforms can’t simply focus on plugging the holes in these sinking ships, but also restoring stakeholders to their rightful place as captains.