The Houston Firefighters’ Relief and Retirement Fund Board (HFRRF) and the city of Houston came to an agreement last Friday that would save the city close to $77 million dollars and drop the city’s lawsuits against the pension.
The plan, which asks the state legislature to make changes to the statutes that govern the pension, is aimed at reducing the city’s general fund expenses to the HFRRF while avoiding reductions in benefits for firefighters.
“The firefighters and the mayor after years of acrimony and animosity finally started talking over the last month and found their way to a consensus,” said Carroll Robinson, board member of the HFRRF.
“I think everybody’s general opinion was there was no way the two of them would have come together and nothing would have been done this legislative session. Now they both get to go to Austin to work together to make some modifications to the pension fund statute.”
Under the proposed agreement the city’s contributions to the pension would decrease incrementally over a three year period and firefighters’ contributions would increase from 9 percent of their salaries to 12 percent.
“The agreement reduces the percentage of payroll the city has to contribute. The city currently contributes 33 percent of its payroll and the agreement with the firefighters over the next three years reduces that from 33 percent to 25 percent. The city saves on average $25 million dollars each year for three years so it frees up $77 million in cash flow that the city does not have to spend out of the general fund,” Robinson said.
In addition, the city has agreed to drop two lawsuits against the HFRRF, and the mayor will not seek city council approval for the new pension plan she proposed last August for incoming fire cadets. Both the city and the pension have agreed to oppose any proposed legislation during the current session that impacts city firefighter pensions.
Any payment owed a retiring firefighter for unused leave time will be made as a pre-tax contribution into the employee’s Deferred Retirement Option Account (DROP account) as opposed to being taxable lump sum cash payment.
The agreement did not go without criticism from members of city council. Both Council Members Stephen Costello and Dave Martin publicly opposed the plan. In a statement issued by his office, Martin stated that it “kicks the proverbial can down the road from one administration to another.”
“Our firefighters deserve to have their pensions covered in full and this deal, negotiated without city council input or approval, not only leaves their pensions cut short but continues to put the city’s financial well-being at great risk over the long haul,” said Costello, chairman of the Council’s Budget and Fiscal Affairs Committee. “This agreement simply continues the damaging cycle where the city of Houston fails to fund the pension, racking up tens of millions of dollars in new debt in the future. The ultimate solution in the long term is local control. Houstonians should have the authority to craft their own solution rather than continuing to leave our fate in the hands of politicians in Austin.”
State Rep. Sylvester Turner helped facilitate the agreement between the city and the pension board and will file a bill in the Texas House this session that would put the agreement into law.
“Despite our differences, both of us came together to do what is best for the city,” said Mayor Annise Parker. “This doesn’t change my position. I still strongly believe that those who fund our employee pensions should have a say in how we pay for them. These are decisions that must be made here at home, not in Austin.”