in Houston, Texas
Largest public pension plans sound, Texas Comptroller Susan Combs says
Wednesday, Dec 05, 2012, 01:37PM CST
By Mark Lisheron
Texas state Capitol

While the largest public pension plans in Texas continue to be financially stable, the underfunded Houston Municipal Employees Pension System is an example of why taxpayers need to pay closer attention to the health of a system with nearly $207 billion in assets, Comptroller Susan Combs says.

While it was difficult to determine whether she was on official business or making an exploratory appearance for a run for lieutenant governor she has not formally announced, Combs has issued a valuable primer on public pensions in Texas and the nation.

Combs pronounced the two biggest pension plans in Texas, the Employee Retirement System and Teacher Retirement System in "pretty doggone good shape," Associated Press reports today.

Statewide, pensions have a combined liability of $250 billion, meaning that all plans combine are underfunded by $43.8 billion. This 82.5 percent ratio of liabilities to assets is actually much better than in most states, Combs says.

Still, as Texas Watchdog has reported, betting on returns on investment that are not realistic has driven plans and in one case the state of Rhode Island to insolvency.

In the actuarial world, an 80 percent unfunded liability ratio is considered safe. By this standard, the Houston Police Officers Pension System and the Houston Firefighters’ Relief and Retirement Fund are healthy.

The Houston Municipal Employees Pension System has a funding ratio of 61.4 percent.

Watchdog’s review of a Pension Review Board report on 96 pension plans in the state found 63 or nearly two-thirds of them with funding ratios below the magic 80 percent actuarial threshold.

The 10 largest membership plans in Texas had a combined unfunded liability of $36 billion at the end of 2011.

Combs and her report are a little fuzzy about what is to be done about chronic underfunding of some public pension plans. She referred to herself as “agnostic” on a call by some conservatives to convert public pensions into 401(k)-like plans for public employees.

Spoken just like someone running for something.

***
Contact Mark Lisheron at 512-299-2318 or mark@texaswatchdog.org or on Twitter at @marktxwatchdog.

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Photo of Texas state Capitol by flickr user matt rife, used via a Creative Commons license.

Comments
John Doe
Wednesday, 12/05/2012 - 04:19PM

If White and Parker would have made the payments to the HMEPS, they would not be in such terrible state. The deferrals and expectations did not match the state of the markets and the boards were too stupid to force their contribution. Converting what the employees have worked for for many years into a 401k would be inexcusable and unless back payments were to be made and growth in the 401 would be contributed it is another way to take it out on the "overpaid, lazy government employee". Considering precedence has been set to not pay their share, the municipalities would not hold up their word to adequately fund the 401 conversion.

The only reason Police and Fire are "healthy" in Houston is because they can have a case of "blue flu" and the city is scared. The civillians get hosed by every administration. Look at raises in PD and FD compared to non-classifieds. Look at the health plans and look at the "acting position" fat cat policies in the PD and FD retirement systems.

Cut the senators and representative perks, cut their retirement, put in term limits.... Oh sorry, can't do something to politicians.... after all we have a small government employees to beat up!

Peter Houston
Sunday, 02/03/2013 - 03:19AM

Houston's pension problems stem from city politicians preferring to spend money to buy votes instead of contributing the lawful amounts agreed to each year. The police and civilian employees have repeatedly given in major concessions while the firemen stuck to the mantra that they gave up raises for years to make their pensions affordable. With over half of all classified police and fire employees able to retire between now and the next few years, the city is in no position to keep beating the rhetoric drum that employee greed is to blame when it is clear that the city has not paid in statutory needed amounts for over a decade.

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