Pension increases could be frozen through 2010 because of the $16.2 billion investment losses over two years, according to state auditors, Reuters reported. The $71.7 billion fund saw its return on investments sink 7.81% for the fiscal year ending August 31, 2002, according to the report.
Not making life easier have been moves by the state legislature increasing retirement benefits in recent years without raising the amount employees paid into the fund.
Also fueling the deficit: In the 2002 fiscal year, teachers paid just $1.6 billion in contributions while the fund distributed $4.5 billion to retired educators. At the current pace, the retirement system calculated that over the next 30 years it will need to address its first-ever unfunded liability of $3.3 billion.
The Texas fund joins its counterparts elsewhere in the country struggling with dismal market returns and state lawmakers not very excited about making cash infusions to the pension plan. (See S&P: Pension Pressures May Push Public Funds).
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