Combs sees red flags in state pensions

AUSTIN (AP) —Republican Comptroller Susan Combs said Tuesday "there are some warning signs in Texas" surrounding certain public-employee pension obligations but defended the stability of the state's largest retirement funds that total $139 billion and could face calls for reform next year.

Combs, the state's chief accountant, said the Employee Retirement System and Teacher Retirement System are in "pretty doggone good shape." Those programs cover more than 70 percent of public employees in Texas and paid out a combined $8.9 billion last year.

Both are defined benefit plans, meaning the employees under them are guaranteed a certain level of benefits upon retirement. Some conservative groups have called for changing the teacher's fund to a defined contributions plan, which operates more like a 401(k) and is more dependent on investment returns.

Her new report on pensions is the last in a four-part series on public money in Texas. Combs said the reports are driven by transparency, but there's also a whiff of political ambition behind the series.

Combs didn't take a position on whether changes are needed. She said her office's report on public pensions released Tuesday — the last in a four-part series on public money in Texas — was instead driven by a need for greater transparency.

"Plan design is so individual," Combs said. "You may be able to have a great defined benefit plan depending on what's going on. We're agnostic on that. We simply say, 'Know what you've got.'"

Combs is widely rumored to be considering a run for lieutenant governor in 2014. Her public money series has also touched on local taxes and bond elections that are the source of rising local debts, all of which are issues resonating lately with fiscal conservatives and some tea party supporters.

Combs, however, again declined to address her political future while unveiling the pension report. She said her decision would come later.

She also wouldn't provide any hints about the crucial numbers her office is sitting on regarding how much money the Legislature will have to spend on the next two-year budget. Combs will release that amount, known as the biennial revenue estimate, next month.

Critics seeking pension reforms have pointed to municipal bankruptcies in California that were partly driven by pension obligations. Combs' report highlights the city of Houston, where Mayor Annise Parker is seeking reforms in the face of a reported $2.4 billion in unfunded liabilities. The city has used its firefighter pension program in an attempt to force the fund's operators to open the books.

Max Patterson, executive director of the Texas Association of Public Employee Retirement Systems, said Tuesday he hadn't reviewed the report in-depth but echoed Combs' call for transparency. But Patterson, whose organization represents local public retirement pension systems, said it isn't that difficult to get pension data.

"My experience is that anyone who asks for information from the (state Pension Review Board) can easily get it," Patterson said. "They're very forthcoming."

Combs pointed to Houston as an example where some public pensions are facing "warning signs." But she refrained from directly criticizing any specific local pension program, while calling for the state to give more staffing and resources to the Pension Review Board that monitors all public retirement systems in the state.

More than 15 percent of workers in Texas are public employees. Pension plans in the state cover 2.3 million active and retired members, according to Combs' report.