Mayor Parker, fire pension reach agreement that will reduce taxpayer spending by millions

Mar. 6, 2015City of Houston

Mayor Parker and the Houston Firefighters Relief and Retirement Fund (HFRRF) have finalized a three-year agreement that will cap escalating taxpayer contributions to the pension system. 

Under the terms of the arrangement, which still needs legislative approval in Austin, firefighters will contribute three percent more to the pension system for the next three years.  Correspondingly, the City’s payroll contribution to the fund will be locked in at 25.8% for Fiscal Year 2016, and 24% for both Fiscal Years 2017 and 2018. This represents a more than $70 million decrease from the amount the city would have to pay in the absence of this arrangement.

The HFRRF board proposed that the firefighters who benefit from the system should pay more.  “This protects taxpayer interests and provides budget certainty for the next three years,” said Mayor Parker.  “The agreement was achieved through good faith negotiations by both parties.  While it is not the pension reform I have sought, it is a step forward.  The work must not end here.”

The agreement is the result of informal discussions between the City and HFRRF over the last several months.  State law gives the city the ability to meet and confer with the police and municipal pensions, but no such mechanism exists for HFRRF.

“Despite our differences, both of us came together to do what is best for the City,” said 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.”

There are four other key provisions in the agreement:

  1. The mayor will agree not to seek City Council approval of the new pension plan she proposed last August for incoming fire cadets
  2. Two lawsuits filed by the City against HFRRF will be dismissed
  3. Both parties will oppose any proposed legislation during the current session that impacts city firefighter pensions
  4. 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 as opposed to being taxable lump sum cash payment.

At a news conference announcing the deal, Mayor Parker expressed her gratitude to State Representative Sylvester Turner and State Senator John Whitmire for agreeing to carry the legislation in Austin. The agreement becomes null and void if not approved by the legislature.