Officials monitoring the state pensions system say they face tough decisions to avoid a multibillion-dollar shortfall and the possibility of insolvency decades from now.
The Employees Retirement System of Texas faces many of the same problems as other pension systems, though not nearly to the scale of some states. Still, officials project the system will run out of money to pay benefits by 2052 if nothing is done, the Austin American-Statesman reported.
When it meets again in 2015, the Legislature could consider several options to improve the fund's health: a one-time payment of $4.5 billion; an increase in the rate of payroll contributions shared by employers and workers; a cut in benefits to future hires; or a separation of law enforcement employees allowed to retire earlier, according to officials.
"It's not going to be easy, and it's not going to be quick," said Ann Bishop, executive director of the Employees Retirement System. "It didn't happen overnight, and it's not going to be fixed overnight. It does take some discipline."
The system serves state workers outside of higher education and elected officials.
Bishop said switching from a pension system for employees to a 401(k) plan "may solve a future problem, but it doesn't solve this problem."
Seth Hutchinson of the Texas State Employees Union called increased pension contributions from workers a non-starter. He said workers had already agreed to raise their share from 6.6 percent to 7.5 percent.
"Asking them to sacrifice more and more is a recipe for disaster," Hutchinson said.
But a representative for a law enforcement union said he was willing to look at increased costs. Separating law enforcement, which comprises about 30 percent of the fund's membership, from the rest of the workers might make it easier to find targeted fixes, officials said.
"I've indicated that my members are willing to pay a little bit more to get the solvency issues taken care of," said Lance Lowry, president of the union chapter that represents correctional officers. "Other groups were less willing to look for alternatives."
Legislators and other elected officials also draw pensions from the fund. Members of the Texas Legislature earn a pension based on the annual pay of a state district court judge, set at $140,000, even though they contribute 8 percent of their $7,200 annual salary.