State Retiree Benefits Fact Sheet – Texas

Texas' public sector pension system generally is in good shape, with funding levels that exceed the national average; however, the state has not made its full annual required contribution since 2002. On the non-pension side, in late November 2007, the Employees' Retirement System of Texas reported a $17.7 billion bill coming due for retiree health care and other post-employment benefits for state employees, while the Texas Teacher Retirement System announced an additional $19 billion tab for those benefits for teachers. (These valuations came out after Pew's report went to press. The report references the Credit Suisse estimate from March 2007 of $26.8 billion for state employees.) Unlike every other state in the country, however, Texas likely won't report these obligations as long-term liabilities, because it has rejected the new accounting rules that ask states to do this. Texas leaders argue that retiree health benefits are offered on a year-to-year basis and can be withdrawn if they become unaffordable.