A version of the following public comment was submitted to the members of the Texas House Committee on Pensions, Investment and Financial Services and on August 18, 2026.
The Pension Integrity Project assisted with technical analysis on the landmark Employees Retirement System (ERS) reform (Senate Bill 321) in 2021, which created a new cash balance plan for new hires and improved the contribution policies. Thanks to this reform and the hard work of the legislature, the growth of ERS pension liabilities has slowed, and the system is now receiving contributions adequate to keep it solvent, put it on the path to full funding, and protect the retirement promises made to the state’s public employees.
In 2020, before the SB 321 reform, ERS stood at 64.6% funded with $14.7 billion in unfunded liabilities. We are pleased to see that the latest 2025 reports from ERS show that its funding has improved to 74.4%, and unfunded liabilities have been reduced to $13.3 billion. The 2021 reforms were crucial in securing the funding necessary to achieve these improvements.
Continuing to adhere to the recommended legacy payment schedule (as established in SB 321) will save Texas taxpayers billions in the long run. Based on our modeling, we estimate that staying the course with the current $510 million-per-year contribution could lead to the system’s full funding by 2040. Reducing these contributions down to the minimum liability payment would extend ERS’ debt schedule to 2054, with expensive interest adding an estimated $8.7 billion in employer costs. Lawmakers must continue to honor the responsible contribution policies set in the 2021 reform, as the short-term savings from reducing these annual payments will create much higher long-term costs.