Written by Keegan Shepherd, Policy Coordinator for the Texas Pension Coalition

Improv comedy is not really my thing, but there are a few principles in improv that I find helpful when engaging with people who bring up negative news about pensions. In fact, these improv rules actually make it easier to have an honest conversation about the state of pensions in Texas and what needs to be done to protect them. I’m going to use some of these rules to engage with this recent report by the Reason Foundation, which looks at the financial health of our Employees Retirement System (ERS).

The first improv rule is basic: say “yes.” Rather than shut down the conversation with a “no,” it’s often helpful to begin by acknowledging what, exactly, critics have gotten correct. The Reason Foundation has stated that ERS currently has $11.7 billion in unfunded liabilities. They maintain that this has been the result of chronic underfunding since the turn of the century and that part of the reason for this underfunding has been the overestimation of long-term investment returns. Reason even notes that the system runs a very real threat of becoming insolvent in 30-40 years. And, well, yes: all of that is quite true. ERS is in a financial predicament: that problem is nothing new. In fact, ERS has repeatedly made clear that it now faces an impending depletion date. In other words, legislators have known for a while that one of our statewide pension systems needs to be quickly restored to full health.

This gets us to the second rule of improv: say “yes AND.” It’s not enough for me to agree with these facts––I need to then follow it up with the reasoning that confirms why those facts are accurate. Reason’s analysis falls a bit short in explaining why we are where we are. The authors of the report point to our state’s constitutional cap on employer contributions, “which can only be exceeded under an emergency declaration.” Which, yes, that is true––and our lawmakers could pressure the governor to make such a declaration. Yes, the gap between the normal cost of the pension and its actuarially sound contribution is only continuing to grow––and our lawmakers could put funds into the system so that those two values are closer to one another. 

The third essential rule of improv is also straightforward: “make statements.” Whether on stage or in pension policy, that means that we are not going to rely on open-ended questions to do the heavy lifting. Instead, we are going to make clear assertions that take us where we need to go. Reason takes a great deal of time to make statements about what it thinks should be done about ERS. This can lead the reader into a false sense of agreement––surely, if we’re nodding our heads for the first 90 percent of a report, then we’re going to agree with the final portion, too. But what Reason does suggest at the end is troubling: because few Texans work long enough in public service to earn a full pension, they posit that the more logical solution is to offer cash balance or 401(k)-style plans. 

So let me make a statement: that’s absurd. If the issue is retention (especially during a pandemic), then the state needs to raise wages so that workers feel compelled to stay for the long haul. If the issue is pension sustainability, then it doesn’t make sense to further damage a system with investment schemes that offer much less for far greater costs. If the issue is an investment base, then the state can expand its public workforce to reflect growth in our state population over the past twenty years. 

There’s nothing amusing about seeing lawmakers pass on their responsibilities to right the ship––or in analyses that recommend giving up the ship altogether. We can solve ERS’s problems by paying down its unfunded liability and ending corporate giveaways. This is no mystery. Offering other solutions at this point is a bad joke.