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State Pension Plan Contributions Could Be Cut

By Mose Buchele, KUT News

http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-953773.mp3

Austin, TX – As Texas lawmakers look to slash billions in state spending, pension plans have become fair game. KUT's Mose Buchele reports on a legislative proposal to decrease state contributions to some plans.

Taken together, the Teachers Retirement System and the Employees Retirement System of Texas take contributions from over one million Texans, and pay benefits to close to 400 thousand more. Currently the state contributes around 6.6 percent of an employee's salary to those pension plans. But Democratic State Rep Craig Eiland of Galveston, has a prediction about that.

Craig: "I would not be surprised this session if the state cuts back its contribution to about six percent."

To which Mike Gross with the Texas State Employees Union says.

Gross: "It would be disastrous."

Gross points out that, under Texas Law, an employee cannot contribute any more than the state to their program. So cuts of even a fraction of a percent to the Employees Retirement System of Texas will have a snowball effect.

Gross: "The total contributions would be 12 percent the employees kicking in six the stste kicking in six that would be much less than it would take to keep the fund healthy."

Beyond the health of the pension fund, critics of the proposals are also concerned with the health of retirees. Tim Lee is the executive director of the Texas Retired Teachers Association.

Lee: "Their also wanting to reduce funding to the health insurance program, and more than 200 thousand people on the TRS insurance program will have their premiums go up if they do reduce that funding."

Mike: "Let's make it clear. If the state is going to change the pension plan for existing employees or even future employees that's going to be a decrease in compensation. There's no other way to look at it."

Michael Granoff is a professor of Accounting at UT Austin. He says the state should proceed with caution when weighing cuts to the pension plan. Part of that comes down to the quality of employee the state wants to attract and retain.

Make: "You get what you pay for!"

T-R-S does not normally comment on pending legislation. Ann Fuelberg ,the Executive Director of the State Retirement System of Texas, has released a video press release assuring members that the short term impact of proposed changes will be minimal but quote -If in the longterm we don't get the required amount of contributions, then there will not be enough to pay for the benefits in the future- unquote.