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Pension reform update

Things are happening.

Mayor Sylvester Turner

Mayor Sylvester Turner

Longtime firefighters pension fund chairman Todd Clark has retired from the department and resigned his post, a move City Hall observers interpret as perhaps the clearest sign yet that Mayor Sylvester Turner’s push for pension reform may succeed.

The municipal pension also is in upheaval, having bought out former director Rhonda Smith’s contract for nearly $438,700 and replaced her with David Long, a controversial figure who played a central role in the 2001 benefit changes that created the city’s pension funding shortfall, a gap that has now reached $5.6 billion.

The mayor last week sidestepped questions about whether Clark or Smith’s departures were harbingers of reform, saying the results of his negotiations matter more than who is at the table. Though sources with knowledge of the talks say they have intensified in recent months, Turner gave a cautious assessment of his progress.

“We’re having conversations, and I think the conversations have been constructive,” Turner said. “This is not an easy subject matter, and I’m under no illusions. I mean, it’s hard. It’s hard. Since 2002, no previous mayor has resolved it, especially on a long-term basis. But we shall see. I’ll take it one day at a time.”

[…]

Sources with knowledge of the talks said Clark was upset when he put forward a reform proposal earlier this year that went further than any of his previous offers, only to have Turner seek further changes.

Seeking more optimistic news from Austin, Clark then met with state Sen. Joan Huffman, R-Houston. But the sources said Clark came away from that discussion having concluded that hoping for the best in Austin during next year’s legislative session would be even riskier.

Confronted with the choice of agreeing to unpalatable changes or risking an even less palatable outcome in Austin, the sources said, Clark chose to step down.

Huffman said she learned of Clark’s retirement, which came shortly after their meeting, only when he announced it publicly. But Huffman said in her meetings with all three pension boards she has urged them to strike a deal with Turner.

“I’ve made it clear to them that I strongly urge them to sit down and to work this out, that the politics-as-usual was not going to work and that it was only fair to their members and to their people that are going to retire one day that this system be sound,” Huffman said. “I was firm about it and will continue to be firm about it, because they have to work it out.”

Huffman said she has tried to act as an arbiter, saying she would prefer the funds “fix what they have” rather than switching to a 401(k)-style system abhorred by workers as much as it is loved by some conservative lawmakers.

“There is a feeling that there will be good-faith efforts to get something done. The tough part, of course, is always bringing along the membership of these groups,” she said. “I understand that’s the tough part, but they need to, given the facts – and the facts are that the system is unsustainable. It hurts to fix it, but it would hurt a lot more if the system were to collapse.”

Todd Clark was a strong defender of the status quo for the HFRRF, so his departure could indeed be an indicator of how the wind is blowing these days. That probably suggests that the firefighters themselves are – ready for? resigned to? some other verb? – change as well. Mayor Turner seems to keep things like this close to his vest, so we’ll know more when he’s ready to make an announcement. In the meantime, this is your Conventional Wisdom Update for the week.

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2 Comments

  1. Steve Houston says:

    If you have sources inside HFD, by all means share what they are saying because mine suggest that the rank & file of both HFD and HPD are not very happy with the anticipated changes. Remember, employees do not get to vote on pension deals, only their elected pension leaders so it really doesn’t matter what they think except in terms of how many retirements will take place. I gather that any retroactive benefit cuts will lead to more people leaving both groups, the same if cuts to certain areas are made.

    That would help ease the budget in seeing extra senior people leave, their replacements under whatever new benefits would be more affordable. When Mayor White cut benefits, the police saw retirements more than triple for a few years and the municipal rate more than doubled; the devil is always in the details. As I recall, PD staffing did not catch up for over ten years and the rate at which new recruits leave is much higher than previously, the uptick in officers fired for criminal misconduct or major policy violations increased as well. On the plus side, their department had to ease up on the quotas/hiring preferences, pay new recruits substantially more to attract them, and it’s cheaper to train them/keep them for a few years/see them leave for greener pastures, than to watch them become more expensive with time (though it doesn’t help the rates at which they solve crimes).

    Both FD and PD pensions have large sums of money owed in the form of DROP accounts so attacks to interest rates for the program could prompt retirees to move such to IRA’s, a significant hit when over 30% of the entire pension funds are in such accounts. If people will have to stay more years, some on the margin will leave before the changes take effect, so I predict that the level of changes will be less than what is needed to fix the deficit once and for all. But Todd had a point when he continually showed the public that total compensation at HFD remains well below that of other cities, Houston opting to pay them later with better pensions than throughout their careers.

  2. Houston city council are idiots.

    Houston police and firefighters are the lowest paid nation wide.

    We’re still waiting for City Controller chris brown to do a feasibility study on public banking and paid parental leave.

    Maybe mike knox can put down the anti transgender and anti muslim posters long enough to learn public finance and google ideas.

    4 lawyers on city council, if they’re too lazy to put ideas in writing on yheir website. What exactly did they do in the private sector?

    They wouldn’t let us vote on the $12 revenue cap but they sure had to have term limits extended.

    God forbid city council dinosaurs like jack christie tell the legislature to close corporate appraisal loopholes, expand medicaid, etc.