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Firefighters union rejects contract deal

Oops.

The contract rejected Tuesday by 93 percent of the roughly 2,900 firefighters voting would have taken a similar approach, granting a pay raise in exchange for concessions on members’ ability to take leave. With the no vote, as of July 1 members of Houston Professional Fire Fighters Association Local 341 enter an “evergreen” period under their prior contract that would run through 2016 unless a new agreement is approved.

The evergreen situation would provide no raises, but imposes few effective caps on how many firefighters can take time off, raising questions about whether the department’s proposed $507 million budget for the fiscal year that begins July 1 includes enough money to cover overtime costs, and whether HFD will repeat the fiscal woes of recent months.

“Make no mistake about it, this is a resounding statement that the firefighters are together on this. That the concessions are too high, that giving back was enough,” said fire union president Bryan Sky-Eagle, whose team negotiated the deal. “I’m very optimistic we’ll go back to the table and find out what went wrong and try to fix it.”

Parker said the city is willing to return to the bargaining table. She said it is far from clear, however, that the union will be able to win more favorable terms from a city council that opposed hiking HFD’s overtime budget earlier this year and is poised to vote Wednesday on several items that would cut her proposed $2.4 billion general fund budget.

“If they want to come back with the idea of significant pay raises in the next year, I’m just going to have to say it will be seriously impacted by what Council does, and my sense of the mood of Council is they’re not wanting to put a whole lot more money in the budget,” the mayor said.

See here for the background. Sky-Eagle negotiated the deal with the city, so I can only wonder where the disconnect was. The issues with overtime are real and not going anywhere on their own, so one way or another this is going to have to be dealt with. I presume they’ll figure it out eventually. The Chron editorial board has more.

City reaches contract agreement with firefighters

Give a little, get a little.

Mayor Annise Parker

Mayor Annise Parker

Houston firefighters would give up some of their ability to schedule time off in return for a pay hike under a tentative new labor contract that city officials hope will enable them to rein in overtime costs that threatened to bust the fire department’s budget this year.

The City Council and the membership of Houston Professional Fire Fighters Association Local 341 must ratify the agreement for it to take effect as planned on July 1.

The agreement, which includes a 4 percent raise, comes on the heels of a budget crisis that has seen the department, on some days, pull ambulances and fire trucks from the streets in recent months to control a spike in overtime costs.

[…]

Firefighters would get the 4 percent raise beginning Jan. 1, 2015, along with new terms encouraging them not to miss work, which often creates the need for shifts to be filled on short notice by replacements on overtime pay.

“Neither of us is really excited about what’s in the contract, but it moves us forward,” Mayor Annise Parker said. “It’s a workable arrangement. Neither side got everything they wanted.”

The deal would run through the end of 2016, though negotiations could reopen in February 2016 on pay and some scheduling items. The idea behind that option, City Attorney David Feldman said, is to see whether voters amend a decade-old cap on city revenue that Parker has said will force layoffs next year if left unaltered. The deal would last only 30 months because of these uncertainties, Parker said.

Fire union President Bryan Sky-Eagle said the raise is not what firefighters deserve, but he said the union acknowledges a need to work with the city given its revenue limitations.

The contract, Sky-Eagle added, also allows for more flexible scheduling, improves a voucher program by which firefighters buy uniforms and equipment, and secures city promises not to hand its emergency medical service over to private firms or to replace the firefighters running it with civilians.

“Am I going to say it’s the best deal for firemen? No. But am I going to say it’s the best deal we can get under this mayor, this administration? It’s about as fair as you can get,” Sky-Eagle said. “The incentive programs we have in place, we think they will work. We wouldn’t have signed off on this contract if we didn’t want to give them a shot because there’s some tangible benefits for the firefighters.”

The Mayor’s press release on this is here. Seems like a reasonable deal to me, and if it avoids all the overtime problems, so much the better.

Todd Clark, chairman of the Houston fire pension board, opposes the deal. The board and the union are separate, but historically, the union contract has allowed the Houston Firefighters’ Relief and Retirement Fund chairman to be assigned full time to the pension office while drawing a city salary via the fire department.

That “special assignment” – at Parker’s insistence, Sky-Eagle and Clark said – has been dropped in the proposal. Deluca said the change means Clark would report to work at a fire station. Clark said he will do so, while doing pension work on his days off – if the agreement passes.

“By removing me, it gives the pension enemies – for instance Mayor Parker – an advantage on making changes to our plan,” Clark said. “She doesn’t want me here because I’ve worked the last two legislative sessions and defended and protected the fund from her attacks. What this is, is retaliatory in nature.”

Whether one sees this as a brilliant piece of political strategy by the Mayor or a total jerk move likely depends on one’s opinion about the pension issue. The calculation is left as an exercise for the reader.

Fearing the fire reform

This ought to be interesting.

Rumblings of coming reforms in Houston Fire Department’s operations have union leaders and the department’s command staff wary, despite Mayor Annise Parker’s insistence that these concerns are unwarranted.

HFD’s staffing shortage has driven up overtime costs, creating a budget crisis that has, on some days, seen ambulances and fire trucks pulled from service. These budget discussions have dominated City Hall in recent weeks, leading the mayor and some council members to question whether the department’s $450 million budget could be spent more efficiently.

Parker, for instance, said she questions whether the city should invest in more ambulances and fewer new fire trucks, given that 85 percent of HFD’s calls are medical emergencies and that fire trucks are more expensive to purchase, staff and maintain. She also wonders whether the city is “oversaturated” in the way it places its 103 fire stations and deploys its 216-vehicle fleet.

The mayor is adamant, however, that she will not pursue reforms without a planned third-party study of HFD’s operations that is months away.

“Let me say this for about the 15th time publicly: I am not interested in splitting fire and EMS, nor am I interested in privatizing our EMS service in the city of Houston,” Parker said. “Are we clear? People make stuff up all the time. It’s just amazing.”

Most of the concern centers on the upcoming utilization study for the fire department, and a recent reorganization that has “HFD” and “EMS” reporting to different people. The firefighters’ union is worried that despite the Mayor’s insistence that it won’t happen, fire and EMS will be split into two distinct groups, with EMS workers being separate from the firefighters’ pension plan. The study is still several months away from beginning, and who knows what it will eventually conclude, but I think it’s safe to say there will be resistance to any recommendations of big changes. The early returns are quite revealing:

[HFD Chief Terry] Garrison and [HPFFA President Bryan] Sky-Eagle each said they would not fight the third-party study Parker wants as long as their input is welcomed. But some council members questioned whether the reforms such a study might recommend could be implemented.

Even idling a few trucks has affected the public’s perception of their safety, Councilman Ed Gonzalez said.

“Can you imagine if we said we’re going to start shutting down stations?” he said. “That’s a huge monster to undertake.”

Councilman Dave Martin was blunter.

“The council member is going to go crazy, the citizens are going to go crazy and World War III is going to break out,” he said. “I’d bet my last nickel it’s not going to be able to happen.”

I’ll be blunt as well. I’ve conducted over 100 interviews with Council candidates since 2007. Pretty much every one of them says something to the effect of how the city needs to be more efficient, to do more with less, to find new ways to deliver services in a cost-effective manner – you get the idea. Everyone wants the city to live within its budget and not raise taxes while doing all the things the city needs to do. Well, public safety is the majority of the budget, and if we can’t even talk about how they’re spending that money – if we can’t “look for efficiencies” and all those other cliches in that part of the budget – then we’re just chanting mantras about the budget and how we manage it. I’m not saying we have to accept any of the recommendations that the study will eventually make – for any number of valid reasons, we may find those recommendations to be unsuitable – but I am saying we need to keep an open mind. Change is always hard, but if it makes sense we ought to at least consider it.

City sues HFRRF again

From the inbox:

Mayor Annise Parker

Mayor Annise Parker

In the face of growing concern about its ability to meet long-term retiree pension obligations, the City of Houston filed a lawsuit today against the Houston Firefighters’ Relief and Retirement Fund (HFRRF), one of three pension systems covering City employees. The lawsuit seeks to enable the City to have the same input on contributions and plan design for HFRRF that it already has with the Houston Police Officers Pension System (HPOPS) and the Houston Municipal Employee Pension System (HMEPS).

“State law that applies only to Houston is unreasonably restricting our ability to protect taxpayers and keep our commitment to secure and sustainable firefighter retirement benefits,” said Mayor Annise Parker. “It is clear from the difficulties experienced by other cities that this is an issue that must be addressed. We have to have the ability to negotiate these benefits at the local level and be able to verify the financial health of HFRRF. We cannot and will not kick the can down the road.”

Through the “meet and confer” process with HPOPS and HMEPS, the City is already able to negotiate employee contributions, retirement ages and benefit levels for police and municipal retirees. In the past, these negotiations have resulted in agreements that have improved the city’s ability to meet its long-term obligations for these two pension systems. Under existing state law, there is no similar process available for the firefighter pension system. Contrary to the laws that apply to other cities, Houston is excluded from the important financial decisions about benefit levels and the contributions to support those benefits for its firefighter retirees. These decisions are made by boards controlled by current and retired firefighters who have an obvious conflict of interest. Several attempts to obtain a legislative cure for this problem have been unsuccessful.

“Litigation is the only remaining option available to the City,” said City Attorney David Feldman. “Instead of Houston determining, or even having a meaningful say about the level of its own contributions to HFRRF, that decision is being made by people likely to benefit from the decision. The City is asking the court to declare unconstitutional the laws that allowed this. The suit also seeks to end the practice of HFRRF using taxpayer money to lobby in favor of such laws.”

Firefighters retiring with 30 years of service are currently eligible for an average initial monthly lifetime annuity of 94 percent of their average pre-retirement salary, plus an average estimate lump sum of approximately $850,000. The value of the average combined benefits for these retirees is estimated to be $1.6 million, which is equal to a lifetime monthly annuity of 197 percent of their average pre-retirement salary.

The City’s lawsuit does not seek any change in benefits being paid to current firefighter retirees, nor would it have any impact on HPOPS or HMEPS.

The press release is here, and a copy of the lawsuit is here. As you might imagine, the HFFRF did not take this lying down. I’ve put a copy of their press release beneath the fold, but here’s a quote:

The leadership of the Houston Firefighters’ Relief and Retirement Fund say the lawsuit filed today by Mayor Parker is nothing more than a power-grab and publicity stunt. The lawsuit is characterized as a political tactic aimed at attacking and hurting elderly and disabled firefighters and their families.

“The Texas constitution and statues that govern our plan have been in place since 1937, and has served our firefighters for over 75 years, and now according to Parker, our plan is all of a sudden unconstitutional,” says pension fund chairman Todd Clark. “Texas legislators have been supportive of our profession and have been the key decision makers in the protection of our plan.”

The Chron story has more reaction from the firefighters, including the president of the HPFFA, who among other things expressed surprise at the timing since the union is currently in negotiations with the city. I’d say if there’s one thing that Mayor Parker and the HFFRF agree on, it’s that the Legislature, in particular the Houston-area delegation, has been squarely on the side of the firefighters all along.

Anyway. The city had previously sued the HFFRF to get more access to their books, and won a ruling a few months later. This is a much bigger can of worms, as the city is seeking to do via the courts what it has been unable to do via the Legislature, which is get more control over how the pension fund operates. If you go back to the interview I did with Mayor Parker before last year’s election, she talked about what she wants the city to get. Skip to 8:54 for the start of the discussion about pensions, and 12:18 for the direct question about what she wants; basically, it’s to allow a defined-contribution option as an alternative for those who want it, and to make annual cost of living adjustments (COLAs) discretionary rather than mandatory. She does allude to some other changes she might pursue specifically for the firefighters’ pension, and I’m quite sure a change to the deferred retirement option (DROP) program would be on that list. You can also listen to the interview I did with Todd Clark and Chris Gonzalez last January if you want the opposing view. These things have all been points of contention for a long time, and in fact COLAs and DROP are both specified in the lawsuit. The city’s argument is that state laws regarding this pension only apply to Houston, and that is unconstitutional. They seek to overturn the Houston-specific laws so that the remaining state laws apply to Houston as well. We’ll see how it goes. Texpatriate has more.

(more…)

Endorsement watch: For Calvert

The Chron’s second endorsement on Friday, and what should be their last for the regular election, was for Rogene Calvert in At Large #3.

Rogene Gee Calvert

Rogene Gee Calvert

Experience is valuable on Houston City Council. Council members often spend their first two-year term learning the basics of job: Figuring out who the players are, learning how various departments and budgets work and getting a handle on knotty problems such as the pension mess. By the time that council members really understand how things work, they’ve served six years and are term-limited out of office.

Rogene Gee Calvert, running for At-Large Position 3, wouldn’t face that learning curve. She already knows her way around City Hall. She served as a director of volunteers under Mayor Bill White, steering the massive volunteer efforts that surrounded Katrina, and was chief of staff for former council member Gordon Quan.

Right off the bat, she’d be ready to get more bang for taxpayer bucks. Houston, she says, should eliminate redundancy by combining services and sharing buildings with entities such as Harris County, Houston Independent School District and METRO. And the city needs to do a better job of getting state and federal grants.

[…]

Calvert is uniquely ready to get to work, and to tackle a broad range of issues. She’d make a great city council member. Vote for Calvert.

As you know, I’ve been critical of the Chron in years past for being lackadaisical about endorsements. They do seem to do better in odd-numbered years, and this year they got them all done before the start of early voting. Kudos for that. As for this endorsement, Calvert is indeed a strong candidate in a deep field – really, most of the races this year have multiple good choices; nobody should be complaining about picking among nonentities or least-of-evils this year. My interview with Rogene Gee Calvert is here. I encourage you to listen to all the interviews I did with At Large #3 candidates, for which links are on my 2013 Election page. Four of the six candidates also did Q&As with Texpatriate and one with Texas Leftist, and those links are there as well.

One more thing:

In a strong field of competitors, Roland Chavez, a retired City of Houston firefighter, also stands out. Our city desperately needs to renegotiate its unsustainable pension deal with firefighters, and Chavez, who used to represent the firefighters’ union in those negotiations, could bring useful insights.

In my interviews, Chavez was one of a small number of candidates to specifically say they opposed Mayor Parker’s efforts to get legislation passed that would subject the firefighters’ pension fund to meet and confer requirements. Given the Chron’s obsession with pensions and their tireless efforts to bend the local legislative delegation to their will, I find that a most curious thing for them to say. Perhaps, to paraphrase Paul Simon, they hear what they want to hear and disregard the rest. Greg has more.

Endorsement watch: Our first twofer

The Chron has two endorsements today, one that was easy and one that was likely more challenging. First, the easy one.

CM Stephen Costello

CM Stephen Costello

In four years as an at-large city councilman, Stephen Costello has gradually become a “go to” guy on two major issues facing the city of Houston: drainage; and finance and pensions.

Costello, a civil engineer, richly deserves a third term at the council table. We endorse his re-election to At-large Council Position 1.

[…]

Costello acknowledges that he prioritized [ReBuild Houston] projects based on engineering needs, overlooking the need to also address political priorities. That situation is being addressed, he said.

The councilman says he learned a lesson they don’t teach in engineering school. “You have to pay attention to political metrics, too,” he said.

To his credit, Costello has taken a leadership role on council working to solve the employee pension problem, which threatens the city with bankruptcy not too far down the road if left untended.

“We’re in the ‘numb stage'” on pensions, Costello says. To move beyond it, the councilman is working on a matrix showing the alternatives of increasing revenues, reducing benefits and reducing services that should offer a guide to council, taxpayers and the city’s workers to resolve the crisis.

Costello readily acknowledges he plans to run for mayor following his council service. We would recommend that the best way for someone in his position to reach the big office on the third floor at City Hall is to be the best at-large councilman he can be if elected to a third two-year term.

Costello’s Mayoral ambitions are an open secret – I myself noted them earlier this year – but this is the first public acknowledgement of them I’ve seen to date. In any event, Costello is an effective, productive, and well-regarded Council member, and he’s running against the perennialest of perennial candidates, Griff Griffin. It is for situations like this that the word “no-brainer” was coined.

The far more complicated decision was in District A, where the Chron wants to turn back the clock.

Brenda Stardig

Brenda Stardig

Brenda Stardig is the most qualified candidate for that job.

Stardig, a 55-year-old real estate broker, served one term as council member for District A but lost her first re-election race in 2011. Blame that result on extremely low turnout, poor campaigning or anti-government sentiment across the board, but we still believe that Stardig is the right representative for the district.

[…]

“Good schools, good churches, good housing inventory, good infrastructure, good grocery.”

That was Stardig’s mantra when she met with the Houston Chronicle editorial board. It is an agenda that voters should send back to City Hall.

Mike Knox, a former police officer, also stands out as an experienced candidate who would serve district A well. However, we question his disagreement with meet-and-confer for the firefighters pension and his opposition to extending council member terms.

After two years of Helena Brown, it is clear that District A needs a new representative on council. From day one, Brown has prioritized bizarre grandstanding over serving her constituents. She’s accused Republicans of supporting communism, altered staff time sheets, had a questionable relationship with her volunteer chief adviser William Park and requested city reimbursement for a private trip to Asia. And the list goes on. But Brown hit rock bottom when she supported selling a plot of land near an elementary school that the community had been trying for years to turn into a park. While on council, Stardig had successfully blocked the sale. Under Brown, it became a parking lot.

The choice is clear. Vote for Stardig.

“Mantra” is a good word for that quoted phrase. Stardig said it often in the interview I did with her. The way I see it, there are three types of voters in District A: Those who like Helena, those who liked and still like Brenda, and those who want someone else. You can’t say you don’t know what you’re getting with either of the first two. Personally, I thought Mike Knox and Amy Peck both made strong cases for themselves, if one is inclined for there to be a change in A. I also thought Knox had one of the more well-informed answers to my question about pensions and meet-and-confer for the firefighters’ pension fund. He was one of only a few candidates to note that part of the problem we face now is due to the city underpaying into the police and municipal employees’ pension funds in years past. I consider this to be a more nuanced issue than the Chron’s obsessive fixation on meet-and-confer makes it out to be, but hey, it’s their endorsement. In light of that, I’ll go out on a limb and predict that retired firefighter Roland Chavez, who also opposed meet-and-confer when I interviewed him, will not be the endorsed candidate in At Large #3. We’ll see how I do with that. What do you think about the Chron going with Stardig?

A deeper look at the city’s pension funds

I appreciate this just-the-facts analysis of the city’s pension funds. It’s delightfully free of fearmongering and doomsaying, which tend to cloud most stories on the funds. I don’t have anything specific to say about the article, but I do want to make a few general points about the city’s pension situation.

1. I reject the idea that pensions “need” to be replaced by defined contribution plans. The only true winners in that scenario are the fund managers, and they don’t need the help. There’s no reason why the pension funds can’t be made solvent, and no reason to replace them given that.

2. That said, I don’t object to offering a “blended” defined contribution/defined benefit option, as long as it truly is optional. I don’t expect it to be much of a difference-maker if one is offered, however. Police officers and firefighters tend to be in it for their careers, and those that do leave early often do so either involuntarily or because of unforeseen circumstances, like a spouse taking a job elsewhere. Such people, unless they were unusually gifted with foresight, would have had no reason to eschew the traditional pension option. Perhaps this would be more popular with municipal employees, but again, my suspicion is it would be a fairly small piece of the puzzle.

3. For all the fuss over “meet and confer”, it should be noted that it’s a bit of a double-edged sword for the city. Meet and confer lets the city negotiate how much it pays into the funds each year. That gives it some cost control, but it doesn’t make the financial obligation go away. If the city had paid more into the police and municipal funds over the past decade, the problem we face today would be smaller. I don’t expect the city enters annual negotiations with an eye towards increasing the amount it has to pay that year.

4. The city would also like to negotiate things like the deferred retirement option and automatic cost of living adjustments with the firefighters. I don’t think these are unreasonable things to want to discuss. The firefighters maintain that Mayor Parker could negotiate with them any time if she really wanted to. Mayor Parker, I am sure, would say that it’s the firefighters that refuse to sit down with her. The only thing we know for sure is that there’s no love lost between the two sides. I don’t think it should be a requirement that the Mayor and the firefighters like each other for them to talk with each other. But if there’s no other way, then maybe we do need a law.

I don’t know how this story ends. So far all the talk is at the city level, but if anything fundamental is to change it will have to come from the Legislature, where much to the Chronicle’s dismay there’s no sign of any activity there. Maybe there will be in 2014, I have no idea. But this is where we stand now. If we’re still standing here when the 2015 elections roll around, I won’t be surprised. Texpatriate has more.

We must destroy the pensions in order to save them

There’s so much wrong with this I almost don’t know where to begin.

Houston is the Titanic – it certainly looks impressive, but icebergs lie ahead. That’s the image that mayoral candidate Ben Hall drew when he talked to the Houston Chronicle editorial board last week.

No debate here. Like an iceberg on the horizon, public pensions threaten the budget of our booming city. That danger grows because we’re sailing blind – firefighters have refused to open their books to City Hall. How much will taxpayers owe? We don’t know.

It may seem like an issue for accountants, but pension problems have repercussions beyond balanced budgets. Just look at Oakland, Calif. The Bright Side of the Bay spends 75 percent of its budget on police and firefighter compensation. Yet it has cut 200 police officers since 2008, and crime is skyrocketing. The culprit? Growing pensions. In its last budget negotiations, Oakland allocated more funds for veteran officer benefits instead of new hires.

Bigger pensions, fewer officers, more crime.

The lesson for Houston is that policy changes won’t do much to stop criminals if ballooning pension obligations prevent us from hiring brave souls to stand on that thin blue line. Hall brings this issue to the forefront in his five-point plan on crime, which includes stabilizing pension challenges.

Well, at least this answers my question about what pensions have to do with crimefighting. Too bad it’s based on a large pile of unfounded assumptions.

– There’s no clear relationship between the number of officers on the street and levels of reported crime. This holds true all over the world, and it is especially true for homicide rates. The Wikipedia entry for crime in Oakland, which notes that Oakland has only 18 officers per 10,000 residents, includes this sentence at the end: “As of 2010, the city of New Orleans, whose murder rate outpaces that of Oakland, had 48 officers for every 10,000 people.” Oakland’s homicide rate was 26 per 100,000 residents in 2011. For New Orleans in 2010, it was 50 per 100,000. That’s with nearly three times as many police officers per 10,000 residents. By the way, Houston’s homicide rate for 2012, based on the raw numbers, was 9.6 per 100,000 residents.

– Oakland’s pension problems have been there since the very beginning of its pension program over 60 years ago.

By all indications, the city never had a plan to pay for the Police and Fire Retirement System when it was started in 1951.

It had a $38 million hole from the beginning, said Bob Muszar, a retired Oakland police captain and president of the Retired Oakland Police Officers Association. Muszar has spent years researching the pension. He said that by the 1970s, the pension’s shortfall had grown to over $200 million.

So the city, police and firefighters agreed to close the pension to newcomers, which voters approved.

In 1981, the City Council approved a parcel tax, which costs taxpayers about $447 a year on a $283,900 home, the city’s median value.

But that wasn’t enough. In 1985, the city issued $222 million in bonds to cover pension costs. In the following years, the city refinanced those bonds, issued hundreds of millions in new bonds, and refinanced those bonds.

Then in 1998, the city once again refinanced bonds and also entered into a complicated interest-rate swap with Goldman Sachs that now costs the city $4 million a year and expires in 2021. “The more creative they got, it’s almost like they started digging a hole and they got deeper and deeper,” said Muszar, who feels retirees have been scapegoated for the city’s mismanagement of the pension.

Sure is a good thing that kind of scapegoating could never happen here, isn’t it?

– Oh and by the way, while it is true that crime is up in Oakland, it is also up in many cities neighboring Oakland. I’ll leave it to you to calculate the officers per capita and pension situations for each. Point is, there generally isn’t a simple explanation for these things. The causes are complex, interrelated, and sometimes just plain random.

Back to the editorial:

In his meeting last week, Hall said that this means transitioning from pensions to a defined contribution system. Under Mayor Hall, future police, firefighters and municipal workers would have something like a 401(k) – just like everyone else.

“We are going to have to redefine the pension benefits as a defined contribution plan,” Hall said. “No question.”

This change would be admittedly difficult to pull off. Pensions are controlled by the state government in Austin, and some of Houston’s part-time legislators have full-time paychecks from those pensions. But right now the point isn’t accomplishment, it is debate.

So far, Mayor Annise Parker has led the charge against out-of-control pensions. She’s implemented reforms to lower the city’s burden and worked to open pension books so the city knows what it’s paying for. Parker has said she thinks the city can have pension plans that work and opposes switching to defined contribution plans. That is where she, and the debate, stop.

Hall finally lends a voice to those who want to nix future pensions entirely.

Thank God, Bill King finally has a Mayoral candidate he can support. I just wonder if this is what the firefighters thought they were getting when they endorsed Hall. But like Mayor Parker, this is where I get off. Because let’s be clear on something, pension plans generate vastly superior returns than 401K plans. High income workers in the private sector may do better with 401Ks than they would with pension plans, but lower income workers and public employees do better with defined benefit plans. Employers may do better under 401Ks, but that’s because they get to contribute less. Of course, that comes out of the hides of the employees. Not a bad deal for the Bill Kings of the world, who somehow never call upon themselves to make sacrifices for the greater good, but not so good for the affected employees.

Finally, the conflation of the police and firefighters’ pension funds just serves to muddle what the issues actually are. The city’s complaint about the firefighters’ pension fund is that they don’t have any say over how much they have to contribute to it each year. (Perhaps not coincidentally, the firefighters’ pension fund is also one of the best funded in the state.) The city would also like to negotiate over and try to wring some concessions on things like the deferred retirement option (DROP) and automatic cost of living adjustments (COLAs). The city has already gotten most if not all of the concession it sought from the police and municipal employees’ pensions, and if you listen to my interview with CM Costello, you’ll hear him say that the city has largely solved its long-term problems with these pension funds. There are issues in the short to medium term, resulting in no small part from the city’s underpayments to those funds in recent years, but once we’re past that the system is sustainable. Mayor Parker will tell you that if the city can negotiate changes to DROP and get some discretion on COLAs, it will have a handle on the firefighter’ pension fund. Whether you agree with that or you agree with the firefighters, the point is that replacing pensions with 401Ks is hardly necessary. Making bogus comparisons to Oakland or Detroit isn’t helpful.

The Chronicle is very disappointed in you, Houston delegation

Here they are throwing a hissy fit to express their deep sense of disappointment.

Just shy of 6,000 bills were filed in the Texas Legislature prior to last week’s deadline. Nearly half of those came in the usual blizzard of filing activity 72 hours prior to the Friday, March 8, witching hour.

Some of these bills were serious. Others were downright silly. Not many are likely to get a careful reading by state lawmakers, who are, understandably, overwhelmed by the sheer numbers. That’s life in Austin during the first five months of every odd-numbered year.

Shrug? Sigh? Move on? Well, no. For Houston’s sake, hell no!

Here’s a fact that should make city of Houston voters and taxpayers do a not-so-slow burn: Out of all those thousands of bills deemed by at least one lawmaker as worthy of consideration by our state Legislature, not a single one was filed to address a stubbornly serious problem facing the city of Houston and its taxpayers: the lack of local control over the city of Houston firefighters’ pension fund.

[…]

We’ve tried public shaming. But not even calling out the names of the 37 legislators who represent at least a piece of Houston in a Chronicle editorial was sufficient to stir a single one from his or her lethargy. Or is it fear?

In the past, we’ve hinted about the history of influential local lawmakers using their powers to keep pension fund business cloaked in secrecy and out of the hands of mayor and council. No doubt, that remains a factor in continuing the stalemate.

Just a few thoughts here.

1. There are fewer than 37 members that actually have Houston voters in their districts. Sorry, I’m still going to be nitpicky about that.

2. There are any number of possible reasons why no legislator took this up. Maybe they agree with the firefighters that the city has misrepresented the issue. Maybe no one actually asked them to carry a bill, and they (correctly, to my mind) chose to keep their nose out of the city’s business in the absence of such a request. Maybe they think that the city has bigger fish to fry first. Who knows?

3. You know how we could know? If some professional news-gathering organization took the time to contact each member’s office, and wrote a story about the answers they did and did not receive. I wonder what professional news-gathering organization might have the interest and the resources to undertake that kind of research and publish the result of it. I’m sure there must be one.

4. As I said before, this issue is now officially moot for the 2013 election. If you run for city office this year and you want to make an issue of this but you do not address the legislative part of it, you don’t know what you’re talking about and you ought to be ignored.

On city delegations and firefighter pensions

There are two points of interest in this Chron editorial about the Legislature and the desire of the city to get a bill passed that would give it some leverage over the firefighters in their fight over the pension fund.

Sometimes we wonder if there really is such a thing as a “Houston delegation” representing our city’s interests in the Texas Legislature.

This is one of those moments. With the deadline for filing bills coming in a legislative heartbeat, on March 8, no representative or senator from Houston has stepped up to carry legislation dealing with what is without question the most important issue facing our city in Austin.

We’re speaking of a bill that would, once and for all, get city pension matters out of the Legislature’s hands and return them to local control.

Failure of a single lawmaker with Houston behind his or her name to take this step is a deep disappointment. The failure of any of our representatives to do so for the second session in a row borders on political malfeasance. Shame!

The inability of the city to have the right of “meet and confer” with representatives of the firefighters pension fund leaves our leaders literally “flying blind” in estimating the amounts owed by city taxpayers to fund the firefighters’ pensions. Enabling legislation granting “meet and confer” with the firefighters is the essential first step in effectively managing the long-term funding obligations of the city to this group. With the firefighters continuing to enjoy the privilege of withholding pension fund information from city officials, the best Mayor Parker and other leaders can hope for is an uneasy truce with municipal employees and Houston police officers, whose pension boards have agreed to meet and confer and changed their benefits. At least through meet and confer with the other employee groups the city has been able to provide sustainable benefit structures for future and recently hired employees.

I’m not going to get into the merits or demerits of such legislation. I’ve talked about it plenty – see here, here, here, and here for a sample – and will undoubtedly talk more about it in the future. But note the bit about the March 8 deadline for filing legislation. If the kind of bill the Chron wants does not get filed by then, that’s it for two years. What that means in particular is that as we enter the city of Houston election season, anyone who talks about the need to control pension costs without acknowledging the legislative aspect of it and the need to find someone to author or sponsor a bill is someone who shouldn’t be taken seriously. Again, I’m not taking a position here on the wisdom of this approach, just pointing out the legal realities. This is a legislative issue first. Tell me what you would do about that, then I’ll listen when you want to talk about what you would do when and if that obstacle is removed. If you’re not even aware that there is an obstacle, then the rest of what you have to say isn’t important anyway.

The other point is this:

There are 37 people representing Houston in Austin – 29 in the Texas House of Representatives and eight in the Texas Senate.

I stared at that list for a few minutes, trying to figure out how they came up with it. The list contains all 24 members of the Harris County delegation, three of the four members from Fort Bend (all but Phil Stephenson), and two of the three from Montgomery County (Cecil Bell and Steve Toth, but not Brandon Creighton). It’s true that the city of Houston extends into those other counties, but the footprint in each is small. In the 2012 election, 998 votes were cast in Montgomery County for the city of Houston bond propositions. This represents less than 0.6% of the 175,419 total votes in Montgomery County. In Fort Bend, 9,304 votes were cast out of 222,626 total, which is 4.1%; we also know that there are a total of 21,504 voters in the relevant precincts, and 341,523 total voters, or 6.3%. Point being, the reach of Houston into these counties is quite limited. I’m pretty sure only Toth, whose district is on the south end of Montgomery, and Ron Reynolds actually have Houston voters as constituents.

It turns out that the Chron complied this list the way that I would have if I had no other information available to me and wanted to take a stab at figuring out who represents Houston. They simply went to the Find Your Representative query on the Texas House webpage, filled in “Houston” for the city, and then alphabetized the result without giving the matter any further thought. If I were to ask Olivia to research the question and she came back with this answer, I’d tell her she did a good job getting this far. I’d also tell her that we could refine the result and come up with a more appropriate list. It might occur to you, for example, that Harris County is roughly twice the population of Houston. Surely there are a few reps whose districts fall entirely within the non-Houston parts of Harris County. How could one tell? Well, one could check Harris County precinct results from the 2012 elections to see which State Rep districts contained no votes for the Houston bond propositions. And guess what? I already did that work for you. State Rep districts 128 (Wayne Smith), 130 (Allen Fletcher), 135 (Gary Elkins), and 150 (Debbie Riddle) lie entirely outside the city limits of Houston. If anyone took up the Chron’s call to action after reading this editorial, it would be completely appropriate for them to say in response that this was none of their concern. In fact, that’s the response I’d want them to give since they don’t actually represent any Houston voters. Districts 126 (Patricia Harless), 132 (Bill Callegari), and 144 (Mary Ann Perez) have minimal overlap with Houston; if any of them declined to get involved on the grounds that they have higher priorities for their districts and constituents, I would not blame them. That reduces the “Houston delegation” down to 19 in the House. As for the Senate, I didn’t do this analysis for Senate districts back then, and frankly I don’t feel like doing it now. I’d be pretty confident about excluding Sens. Glenn Hegar and Tommy Williams from the “Houston” list, and I’d note that about two-thirds of Larry Taylor’s voters live in Galveston and Brazoria Counties. That takes our size-38 delegation down to 24, and it didn’t take me very long to figure that out. Why the Chron didn’t take a few more minutes to do the same is a question I can’t answer.

City pension funds make their case

This deserves more visibility than it’s gotten.

Representatives of Houston’s three employee pension boards told a Houston City Council committee Monday that the sky is not falling and pleaded with council members to be patient in examining the city’s pension obligations.

The presentations from the firefighters’ pension, the municipal employees’ pension and the police pension were organized in response to an informational presentation from the city’s chief pension executive, Craig Mason, before the same Budget and Fiscal Affairs committee last month.

Mason’s presentation had examined how the city’s liabilities would increase or decrease if the pension plans were to change their assumed investment returns, their annual cost-of-living adjustments or made other adjustments. He made no recommendations.

[…]

City Councilman Stephen Costello, chair of the budget committee, began Monday’s meeting by saying the city won’t be able to fund the pensions in the future without reform. The city’s unfunded liability stands at $2.5 billion, he said.

“This year alone we will pay $242 million in pension costs and in five years our costs will increase by another $110 million. By the year 2020 it’s projected that the contributions will be between 30 percent to 45 percent of payroll, which in my opinion as a business owner is unsustainable,” he said. “It’s obvious the city cannot sustain this rate of growth without having to cut services, lay off employees, or raise taxes. This is not a problem that is 30 years away. It’s a problem that’s within 3 to 8 years.”

Pension representatives responded that pensions are long term and stressed that the majority of retiree benefits are paid from investment returns and employee contributions, not city contributions. Cutting or threatening to cut benefits could spur waves of retirements from the city, they added, as changes to the police pension did in 2004. They noted Houston’s economy is strong and improving, and will allow the unfunded liability to be reduced over time.

Go give a listen to that interview I did with Todd Clark and Chris Gonzales of the firefighters’ pension fund if you haven’t done so, it helped me clear up some of my own confusion. I think the broad outlines of this debate are fairly well known by now, but the one factor I haven’t see discussed much is how the improved economy has affected the city’s short to medium term budget outlook. I would venture to say that if we hadn’t had the collapse of 2008 and the lean years that followed we would not have spent nearly as much time talking about pensions at any level as we’ve done. I’m very much looking forward to seeing the city’s budget numbers for this year to see how things stand now. I do think there will need to be some action taken to ensure that the city’s pension liabilities don’t become unmanageable, but I suspect there’s less we have to do now than there was a year or two ago.

Interview with Todd Clark and Chris Gonzales of the firefighters’ pension fund

I have written numerous times about the ongoing battle between Mayor Parker and the Houston Firefighter’s Relief and Retirement Fund, which is to say the firefighters’ pension fund. After I noted a legal victory by the city in its attempt to get more information from the fund, I was contacted by a representative of the HFRRF asking if I would like to discuss the matter with Todd Clark, the chairman of the HFRRF. Of course I said yes, and we arranged an interview. Chris Gonzales, the Executive Director/Chief Investment Officer of the Fund, was also on the call. Here’s what we talked about:

HFRRF interview

Clark recently had an op-ed published that decried the city’s lawsuit. That District Court ruling has been appealed, though not to the Supreme Court as that Hair Balls story notes; it was argued last week before the First Court of Appeals. I’m neither an accountant nor an expert in these matters, but I hope I’ve helped shed a little light on this. If I get any response from the city to what was said here, I’ll be sure to let you know. My thanks to Todd Clark and Chris Gonzales for their time.