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Todd Clark

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.

Pension progress report

Our favorite subject, back in the news.

Mayor Sylvester Turner

Mayor Sylvester Turner

Mayor Sylvester Turner and the leaders of the city’s three pension boards made clear to a visiting group of state lawmakers on Monday that they agree a fix to the city’s growing pension burden must be found, perhaps by the mayor’s deadline of year’s end.

The state House committee on pensions set up camp at City Hall Monday to hear testimony from the mayor, his rival in last fall’s mayoral contest, Bill King, city workers and various pension experts about the challenges presented by Houston’s retiree benefits.


The chairs of the municipal (Sherry Mose), police (Terry Bratton) and fire (Todd Clark) pension boards all stressed their commitments to continuing to work with Turner in the coming months.
Even Clark, who rarely missed an opportunity to accuse former mayor Annise Parker of “attacking firefighters,” struck a conciliatory tone.

“We will continue the dialogue going forward, and we do believe by the end of the year we will have an agreement,” Clark said. “We agree that the city should be healthy and we’re willing to do our part.”

Granted, the pensions’ leaders pushed back a bit. Municipal and police leaders stressed that the city must be forced to meet its obligations, since the city’s failure to make its full payments has helped create those plans’ poor funding levels.

Both also stressed that they already have sacrificed by cutting benefits for new hires, with Mose saying, “Reform plus time equals success.” Bratton, for his part, pointedly noted that firefighters have not been similarly accommodating. Clark declined comment on that.

Clark, for his part, noted that firefighter retirement costs amount to only a few percentage points of the $2.3 billion general fund budget.

In general, however, it was clear the pension boards planned, at least publicly, to embrace “change” at the hearing.

“We see this as an opportunity. We really don’t want to come back in 2019,” Bratton said. “Our members have worried too long about the most important benefit they have and it’s time to allow them peace of mind in knowing that their benefits are secure and the plan is sustainable.”

There are plenty of people of varying degrees of trustworthiness out there who are happy to get into the gory details of this and tell us all just how DOOMED, DOOMED we are, so I’ll leave that to them. What I know is that politically speaking, Mayor Turner has staked an awful lot on his ability to get the pension funds to agree to some fundamental changes to help ease Houston’s short-term fiscal problems while ensuring the long-term future of these funds that will then be ratified by the Legislature. This is obviously a very narrow and perilous path to walk, though just getting everyone to the table to talk was a big achievement. I don’t want to say that Mayor Turner’s term in office will be judged a success or failure depending on the outcome of all this, but I think it’s fair to say that a significant part of his grade is riding on it. We’ll see what we get later this year.

Yet another report on pensions



Some city leaders have spent years standing in the town square, hollering themselves hoarse that Houston’s financial footing is unstable, that huge pension costs threaten the city’s future ability to police the streets, pick up trash and maintain parks.

In recent weeks, they’ve been joined by two others with bullhorns: The Greater Houston Partnership and the Arnold Foundation.

The region’s most influential business group and one of its best-funded think tanks each has released a formal paper focusing on city finances and pensions, arguing in varying degrees that action – or at least an honest discussion of the way forward – is urgently needed.

Marc Watts, who chairs the GHP’s Municipal Finance Task Force, acknowledged some city leaders long have sought the partnership’s help in addressing their budget struggles.

“There were efforts in the past that were aborted because it can be such a contentious issue. But I think the issue now has got to be addressed, and we’re willing to be a partner to help solve the problem,” Watts said. “We’re going to push this to a solution to the maximum extent of our capacity. We can’t wait.”

Both groups’ initial papers were largely informational, covering few facts unfamiliar to those who have followed public discussion of city finances. Each organization plans to release more detailed reports in the coming months.

Watts said the partnership’s goal, for now, is voter education. He said his group views itself as most effective in a “fair arbiter” role.

“It’s not because we’re afraid to put forward a solution. It’s because we think that would make us less effective,” he said. “The partnership is not normally comfortable in a role of being out front on an issue that could be considered controversial. We’re only here because we feel like for the good of the city of Houston, for our families, for the future of all of us, somebody has to do it.”


The GHP’s report explains how dollars flow into and out of the city’s $2.4 billion general fund, which draws mainly on property and sales taxes to pay for basic services such as police, fire, trash pickup, parks and libraries. It also focuses on the rapid growth of pension payments and, because even these rising payments have not kept up with the growth in costs, the $3.2 billion unfunded liability that has built up in the police, fire and municipal pension funds.

The Arnold Foundation’s report accuses city leaders of mismanaging the pensions, in part by using risky assumptions about future investment returns to artificially depress the annual payments required from the city. Despite this, the city still has failed to cover these lower payments to fund the benefits being promised.

The report advocates for moving control of pensions from the Legislature to local leaders, for implementing what the authors argue are more prudent policies guiding how the plans are funded, and for paying the full annual amount that policy change produces.


Todd Clark, who chairs the fire pension board, said the GHP and Arnold Foundation reports do not change his views.

“They have their thought process on what they think needs to be done, but I’ll say it again: Pension reform is not the answer. The city spends their money on all these wasteful pet projects,” Clark said, mentioning hiking trails, bike lanes and dog parks. “They just keep on harping on this, and the bottom line is the city just owes the money and they need to pay what they owe.”

The fire pension has met its 8.5 percent investment return over recent decades, Clark said, and expects to over the long term, as well. The fund was on target to finish the last fiscal year well below its target, however.

Rhonda Smith, executive director of the city’s municipal pension fund, called for any discussion of city finances to include not only pensions but the slowing local economy and the voter-approved cap limiting the revenue Houston can collect in property taxes.

You can find the reports if you want. The GHP’s may be worthwhile, but I don’t trust the Arnold Foundation on this, any more than I trust them on education reform. They’ve got an agenda. Let’s be clear here that there are two issues with pensions. One is with the firefighters’ pension fund, which is well-financed but which is not controlled by the city. The city would like to have control over how much it has to contribute and how much of a cost of living adjustment the pensioners get – this is the short-term problem with pensions, as the city’s contribution amount has increased – while the firefighters point out that the city has this power over the other pension funds and has shortchanged them as a result, causing them to have greater unfunded liabilities – this is the longer term issue. I’m sure the reports make this clearer than the story did, but I trust we’re all familiar with the terms of debate here.

As for Todd Clark, I agree that the firefighters’ pension fund is in fairly good shape, but it’s disingenuous to claim as he often does that pension contributions are a relatively small part of the city’s budget, then blame items that are even smaller for the city’s financial troubles. Like just about everyone else in this debate, he glosses over the fact that public safety is two-thirds of the budget, and it’s been growing as well. Given that a large number of firefighters don’t even live in the city of Houston and thus would be conveniently unaffected by the cuts Clark prescribes, I find the attack on hike and bike trails distasteful. (Not to mention the fact that they’re part of a bond referendum that was approved by the voters.) Rhonda Smith is on the right track in calling for a broader discussion of finances than just pensions. I’m still waiting for this subject to come up.

I guess what really frustrates me about this issue and the discussion around it is that it seems to take it for granted that if the next Mayor just doubles down on trying to get a bill through the Legislature to wrest control of the firefighters’ pension fund back from Austin that all of this can be neatly solved. I’ve yet to see anyone explain what the next Mayor ought to do that Mayor Parker didn’t try, and I’m still waiting to hear how this solves the long-term underfunding issue for the other two pension funds that the city already controls. Maybe – I know this is crazy talk, but stay with me – there are ways to improve this situation without waiting till 2017 to do once again what we haven’t been having any success at doing in the past several years. Maybe offering a higher base salary in return for some cost certainty might entice the firefighters to negotiate. I’ve seen it suggested elsewhere that maybe the various TIRZes could be made to chip in a few bucks towards the pension funds each year. Maybe there are some other possibilities – I wouldn’t know, since that just doesn’t seem to be part of the discussion. And maybe this really is the most viable alternative. It would just be nice to have some confidence in that rather than have to accept it as an article of faith.

I should note that Steve Costello released his full pension plan yesterday, which claims to address these things I’m complaining about, while still starting with the premise that he can succeed at getting a bill passed; he cites the Murphy bill from last session, which never got a vote in committee, as his basis. I remain skeptical.

Police officers’ pension fund speaks up

The firefighters’ pension fund is the one that gets all the attention, but it’s not the only one the city is responsible for. The Houston Police Officers Pension System (HPOPS) has sent a letter to the city reminding it that they have a deal that restricts what the city can request from the Legislature.

Police pension leaders, in a March 11 letter to Mayor Annise Parker and City Council members, asked for documents proving that city officials are complying with a provision of the 12-year deal, approved in 2011, that requires the city to join the fund in opposing legislation that would affect the terms of the agreement.

The letter named no particular official, but it would be hard to miss the recent actions – and accompanying press releases – of mayoral candidates and City Councilmen Steve Costello and Oliver Pennington, who back a bill filed by Rep. Jim Murphy, R-Houston, that would grant the city local authority over its three pension plans. Today, the plans are controlled in Austin, where lawmakers have stymied repeated attempts at reform. The rising cost of pensions has caused stress at City Hall for more than a decade; Houston is paying $353 million into its pensions this fiscal year, almost twice what it spends on trash pickup, parks and libraries combined.

In writing the mayor, police pension officials also sought a meeting, which they got Friday morning. City Attorney Donna Edmundson said the gathering was cordial and brief, and served simply to confirm that pension leaders and the Parker administration view the agreement similarly and will thus jointly oppose Murphy’s bill, despite the mayor having sought related legislation in years past.

The key, Edmundson said, is that when the agreement refers to “the city” it refers to the executive branch – in this case, the mayor, her top staff and legislative coordinators – and not individual council members in the legislative branch.

“Council member Costello has gone to Austin. But in those trips to Austin, he’s not representing the city of Houston, and they just wanted to be clear on that and make sure we’re on the same page,” Edmundson said. “We can’t stop an individual from going to Austin and expressing his or her views or the views of his or her constituents. They have a First Amendment right.”

Police pension representatives confirmed Edmundson’s characterizations, but declined further comment.

On the fund’s website, however, chairman Terry Bratton on Friday posted that he had met with Parker and that their plans aligned.

“The agreement provides that the city and HPOPS (Houston Police Officers’ Pension System) will work together to oppose bills adversely impacting HPOPS. The mayor is aware of the provision and intends to honor the contract,” Bratton wrote.

Just a reminder that there’s more than one dimension to the pension issue, and that if you think Mayor Parker should be supporting Rep. Murphy’s bill, the 2011 agreement with HPOPS – which as the story notes, both CMs Costello and Pennington voted for – says she cannot. Mayoral candidates Costello and Pennington are free to do what they want, but that agreement with HPOPS will bind them going forward if one of them gets elected.

Meanwhile, the chair of the firefighters’ pension fund sent a letter to the Chronicle to point out a few things regarding the recent deal.

Regarding “Missed chances” (Page B8, Friday), last August, during a special subcommittee meeting of the Houston City Council’s Budget and Fiscal Affairs Committee, several members of City Council challenged the board of the Houston Firefighters’ Relief and Retirement Fund (HFRRF) to develop an alternative proposal to Mayor Annise Parker’s plan for newly hired firefighters.

In response to this challenge, HFRRF developed a proposal that addressed several issues. Primarily, it maintained the hard-earned and promised benefits of our active and retired firefighters. Additionally, it addressed the City’s contributions needs during the next three fiscal years and avoids costly litigation for all the parties.

Throughout the months of August and September, members of the HFRRF board, including myself, and staff members personally met with almost all members of the City Council and reviewed our proposal.

During these meetings, each of these members were advised that HFRRF was participating in discussions with the mayor about the proposal. Most members expressed encouragement that we had voluntarily engaged in a discussion with the mayor and hoped that some form of agreement might be reached.

Over the next several months, we participated in many meetings in the mayor’s office. Included in these meetings were the mayor, her staff and some members of Council. The mayor also attended two public board meetings at the HFRRF office.

Traditionally, when two parties attempt to come to mutually agreeable terms, each side receives some benefit for their considerations to the other party.

I believe that both the HFRRF and the mayor recognize that the result of this agreement is a reasonable solution, and it addressed the challenge initiated during the August subcommittee meeting.

Todd Clark, chairman of HFRRF

Here’s a post about that Council meeting in August. Looking for that also reminded me that news of the deal was first reported in September. Clearly, a lot of people, myself included, had forgotten about that. The deal that was agreed to this month doesn’t look all that different from what was proposed six months ago. People may not like the deal, but no one can say they didn’t know about it.

Council meeting called to discuss firefighter pension deal

Some Council members are determined to discuss the deal Mayor Parker made with the firefighters’ pension fund.

Mayor Annise Parker

Mayor Annise Parker

Four City Council members have taken advantage of a rarely used provision in city law to call a special meeting Friday to discuss Mayor Annise Parker’s controversial deal with the city’s firefighter pension board that was announced last week.

Typically, the mayor alone controls what items appear on the council agenda to be voted on, a power that can be subverted only when a trio of council members teams up to call a meeting.

Council members C.O. Bradford, Michael Kubosh, Brenda Stardig and Dave Martin did so Monday morning, with one more signer than was required. City officials said this appears to be the first time the legal maneuver has been used in Parker’s more than five-year tenure.

It’s not clear whether enough of the foursome’s colleagues will attend to muster a quorum, but the symbolism of the meeting is more significant than any action that could be taken, given that the group will simply consider registering support for or opposition to the pension deal.

Regardless, Parker’s liaison to council, William-Paul Thomas, said he will work against a quorum. Parker had said she would not put the deal to a council vote because it does not call for the expenditure of city funds.

The three-year agreement would see the city pay a projected $77 million less into the pension fund and see firefighters contribute an estimated $20 million more. Supporters call it a compromise that will free up city funds during a budget crunch, while critics call it a risky missed opportunity that will see $57 million less paid into the system without any changes to the cost of benefits.

Bradford said the aim of Friday’s meeting is for council to discuss the pension deal openly and to send a signal to Austin on the council’s view of the agreement. Firefighters’ pension benefits and the city’s contributions to the fund are controlled by the Legislature, and the mayor’s deal would need to pass in Austin to take effect.


Firefighters union president Alvin White – whose organization is a separate entity from the fire pension board – early Monday raised his own concerns, saying the union “is the only legally recognized entity authorized to negotiate Houston firefighters’ workplace rights, wages and benefits.” White said he was entering into talks with fire pension chairman Todd Clark to “protect our members’ rights” in the deal, which requires firefighters to contribute 12 percent of their pay toward their pensions, up from 9 percent today.

Those talks yielded progress Monday night, however, with White saying the resolution would allow the union the flexibility it needs to negotiate future contracts. Clark did not return a call for comment Monday; a pension spokeswoman said he was busy working to get the bill filed at the Legislature.

See here for the background. At least this gives me some idea what the fuss is about, since the net effect is that the fund will receive $57 million less in payments over the next three years. The fund is in good enough shape that these underpayments probably won’t cause any issues, but for obvious reasons this is not a sustainable approach. I don’t know what these members have in mind to discuss or what if anything they might be able to accomplish, but I see no reason not to let them have their meeting. Maybe they’ll come up with some good questions to ask, or maybe they’ll agree with the Mayor’s judgment. Let them meet and make up their own minds. Campos has more.

The pension deal

Not sure yet how I feel about this.

Mayor Annise Parker

Mayor Annise Parker

Mayor Annise Parker and Houston’s firefighter pension trustees have reached a deal that would lower the city’s payments for three years, a move that would mark an abrupt reversal for the mayor.

The announcement came late Thursday from the fire pension board, whose leaders for years have fought any mention of changes to benefits as Houston’s enormous pension burden has continued to grow. The pension fund estimates the city would pay $77 million less over the next three years.

In a memo Thursday to the City Council, Parker said the agreement is a “modified version” of a proposal the pension board pushed last fall.

“The terms will deliver significant budget relief to the city of Houston,” Parker wrote. “As with any true compromise, both sides have surrendered hard positions to realize a mutually beneficial outcome.”

Craig Mason is a pension consultant who represents the city on the police, fire and municipal pension boards. Mason, who followed the talks but had not seen the final deal, said the deal would see firefighters contribute more of their pay toward their retirement and have the city contribute less, for a term of three years.

Mason and other pension reformers have said, however, that without changing pension benefits the city will not be solving the problem long term.

“I’m opposed to people calling that a savings,” Mason said of the deal. “It’s a temporary reduction in contributions, but it’s going to increase contributions in the future. It’s a short-term focus, which is typical for city administrations.”


Parker’s support for the deal is curious, given that she said the pension trustees’ proposal from the fall “reflects no true pension reform” and repeated the same stance as recently as Wednesday, saying, “There’s no reform in that … we’re just putting more money into a system that I think needs help.”

The announcement said that as part of the deal the city would drop two lawsuits against the fire pension, one that seeks more data to better predict future costs and another that challenges the constitutionality of the city being on the hook for payments over which it has no control; the pension and the city’s contributions are set by the Legislature. The city would agree not to lobby the Legislature for pension reforms for the three-year duration of the deal, Mason added.

The fire pension trustees’ plan from last fall that Mason said forms the basis of the deal would not touch current or future firefighters’ benefits, but would have them contribute 12 percent of their paychecks into the pension fund, up from 9 percent. In that proposal, the fire pension projected the city’s contribution rate would drop from 33 percent of firefighter payroll to 24 percent.

Before I say anything about this myself, let me quote from the reactions I received in my inbox to this, in the order I received them. First, from CM Stephen Costello:

“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. 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.”

From Bill King:

The proposed agreement regarding the Houston Fire Fighter pension plan announced yesterday represents a further abdication of fiscal responsibility. The parties to this deal owe taxpayers an explanation how borrowing $77 million at 8.5 percent is a good deal, or saves the City money. This deal does absolutely nothing to contain the costs to Houston taxpayers, but instead pushes off millions of dollars of pension obligations to the next administration.

I do not believe the City should incur this kind of additional liability without a full and open debate — and approval — by City Council especially when the City’s pension debt has soared by $1.2 billion over the last five years.

From Controller candidate Bill Frazer:

Once again, Houston’s taxpayers have been left holding the bag while its pension issues get kicked down the road for another 3 years. The City Controller stands idly by while the Mayor, a candidate for Mayor and a candidate for City Controller craft a backroom deal based purely on political expediency.

While kicking the can down the road, the Mayor has borrowed another $77 million at “credit card interest rates”, leaving the taxpayers with more debt and no solutions. Houston deserves a higher standard.

From HFRRF Chairman Todd Clark:

Today Houston Firefighters’ Relief and Retirement Fund (HFRRF) and Houston Mayor Annise Parker agreed on a set of legislative provisions that will save the City $77 million over three years while assuring soundness of the pension and putting a halt to the City’s lawsuits against the Fund. Mayor Parker supported the plan which increases firefighters’ contributions by 3% of their salaries and will reduce Houston’s General Fund expenses to the HFRRF by $21.4 million in Fiscal Year 2016 alone.

“The proposal protects Houston’s citizens by keeping and recruiting the best firefighters we can get,” said HFRRF President Todd Clark. “We are pleased the Mayor supports our proposal because it protects promises made to our firefighters and avoids reduction of benefits to new hires, which would be harmful to all parties.”

The Firefighters’ proposal, as accepted by the Mayor, provides a sustainable plan for the City while avoiding additional costly litigation and discontinuing current litigation while not impacting retirees at all.

And finally, from Mayor Parker:

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.”

The Mayor’s full press release is here. Clearly, one’s view of this deal is dependent on how one views the overall pension situation. Also, if one is running for Mayor and one is not Sylvester Turner, who was credited by the firefighters for helping to broker this deal, one doesn’t like it. My view is that while this is clearly a kick-the-can-down-the-road proposal, the fact is that Houston is facing a (hopefully short term) fiscal crunch in the next few years, and will have to make cuts somewhere to cover those bills. Reducing the amount that the city will have to cut by $77 million over the next three years is nothing to sneeze at, especially if one is unwilling to try to lift the stupid revenue cap as a means of helping to mitigate those cuts. If this is a loan that needs to be paid back, or if there is a gap between what the city would have contributed and what the firefighters will wind up kicking in, then this deal doesn’t look as good. I’d like to see an analysis from a disinterested third party before I sign off on any interpretation, but the prospect of having to make $77 million less in cuts over the next three years counts for something to me. Campos and PDiddie have more.

Appeals court reverses ruling about pension retiree information

So much for that.

Mayor Annise Parker

Mayor Annise Parker

A state district court’s 2013 ruling that Houston’s fire pension board must turn over detailed information on its retirees to help city officials better project future pension bills has been overturned on appeal.

Justices with the 1st Court of Appeals issued the opinion Tuesday, arguing that, in essence, state law protects the city’s ability to request information on its pensioners but not at the breadth and depth the city originally sought when it sued the pension fund in May 2012. At the time Mayor Annise Parker argued she needed better data to project future pension costs.

Todd Clark, chairman of the Houston Firefighters’ Relief and Retirement Fund, cheered the ruling, and said the city has all the information it needs on retired firefighters.

“The city took a run at trying to convert the plain meaning of a statute providing for an independent audit into a license to rummage through a decade of pension members’ personal information,” Clark said. “Both taxpayer and pension resources were wasted by the city’s lawsuit.”

City Attorney Donna Edmundson said she and her staff still are reviewing the ruling and weighing the city’s options, which could include appealing the ruling or narrowing the city’s request for information.

Houston originally sought individual data on each retiree from 2000 forward, and later amended its request to target group data from that period. Edmundson said the ruling suggests state law may protect the city’s access to retiree information if it requests only group data dating back to only 2011.

“I think basically, on our part, we just need to go back in and refine our request a bit, just tweak it,” Edmundson said. “Obviously we’re reaching out to the firefighters trying to come to agreement on numerous issues. We’re just going to sit back on this for the time being since we do have other litigation pending, as well.”

Assistant City Attorney Judith Ramsey added that it was important for the city to pursue the case because state law requires Houston to audit its pension funds every five years, “and we felt that we needed the level of detail we originally asked for in order to do the kind of audit we were required to do.”

See here and here for the background, and here for the court’s opinion. Narrowing the request is probably the shorter path to some kind of resolution, though I suppose the firefighters could still appeal if the First Court of Appeals accepted a revised petition. I’m just guessing – if anyone knows better what the possible paths are, please leave a comment. Barring some kind of settlement agreement, which I would not bet on, I presume this will not be resolved by the end of the year, meaning that the next Mayor will inherit this. I wonder what legal strategy the various candidates would prefer to see Mayor Parker pursue. A statement from the HFRRF is beneath the fold.


Firefighter pension board makes an offer to the city

This was unexpected.

Mayor Annise Parker

Mayor Annise Parker

The trustees of Houston’s firefighter pension, who for years have fought the mere mention of changes to benefits as Houston’s enormous pension burden has continued to grow, now are shopping a compromise proposal.

Fire pension leaders say they simply are trying to save the city money as it approaches several years of deep budget deficits.

Reaction to the plan is mixed, however, with skeptics viewing it as a shrewd political maneuver aimed at avoiding broader reforms with an offer of modest savings, and others inclined to applaud any dialogue as progress.

The trustees’ alternative would not touch current or future firefighters’ benefits, but would have them contribute 12 percent of their paychecks into the pension fund, up from 9 percent now. The proposal also would change the way assets in the fund are valued, dropping the amount the city would need to contribute if investment returns are strong – as they have been in recent years – and increasing the city’s costs if returns are sluggish.

The fire pension board projects its plan – which assumes annual investment returns of 8.5 percent and yearly 3 percent raises for firefighters – would save the city $82 million over three years, and nearly $500 million in the next two decades.

Board Chairman Todd Clark would not discuss the details, citing ongoing talks, but said his team is “meeting with the mayor to come up with a proposal that will protect new hires and help the city with their budget issues.”

Mayor Annise Parker called the trustees’ idea “a pleasant surprise” on their willingness to talk.

“The offer from the pension is for individual firefighters to contribute more of their take-home pay toward their pension. That’s a very generous offer and we are appreciative, but it reflects no true pension reform,” the mayor said. “So, we countered back with the things we’ve been talking about since the beginning of my administration, things like caps on cost of living adjustments, the ability to have meet and confer.”

Interesting. The surprise is that they made any offer at all to the city, which has not been their strategy lately. As we know, the city has no leverage over the firefighters’ pension fund, and the the board’s position has been that the city needs to meet their obligations to them. I don’t know if this was motivated by the recent proposal by Mayor Parker to implement a different pension plan for new hires to HFD or by something else, but it’s worth seeing if this goes anywhere. What do you think?

Parker proposes new firefighter pension plan

We’ll see about this.

Mayor Annise Parker

Mayor Annise Parker

With the city of Houston facing huge and rising pension costs, Mayor Annise Parker on Thursday unveiled a proposal to put new firefighters in a separate, less generous plan that would do away with expensive automatic cost-of-living adjustments.

The move would not affect current firefighters covered by the Houston Firefighters Relief and Retirement Fund, long insulated from reform by the Texas Legislature. It would be an unprecedented change to new firefighters’ pensions and would mark the latest chapter in the contentious relationship between Parker and the city’s firefighters. There are two lawsuits pending between the city and the pension fund; the fund is expected to sue the city over the latest proposal.

Creating a separate plan, Parker said Thursday, is her only recourse for reining in pension costs. Though the city long has had the ability to create the separate pension plan for new firefighters, Parker said, she has waited to do so until now because she wanted to attempt broader pension reforms first.

“But if I can’t solve that one – Legislature won’t help, I don’t have the ability to negotiate – let’s set up a separate pension and create one that is fair and sustainable for both sides,” she said.


Todd Clark, who chairs the fire pension board, told a City Council committee on Thursday that the proposal would “put a firefighter on welfare,” hurt morale and weaken the department’s ability to retain and recruit staff.

Council members Larry Green, Jerry Davis and Jack Christie pushed back, asking Clark whether there was room for compromise.

“I understand that you think the fire pension doesn’t have a problem, but as someone who has just gone through the budget process for the city of Houston, we have a problem,” Green said. “Our objective is not to become Detroit. What’s the solution?”

Clark responded, “The best thing you can do is just come up with the money. It’s not my job to balance the city’s budget. What the city should be doing is finding ways to meet the promises made, not trying to cut the benefits. No changes need to be made to our system. We’re a very strong and healthy pension system.”

The Mayor’s press release, with more details about her proposal, is here. I think Todd Clark is correct that the current pension is well-funded and in better shape than many others, but I think he’s got a tough sell politically to say that the city just needs to suck it up and pay whatever they’re told to pay, over which the city has no control. I’m not commenting on what’s right or wrong here, just saying that’s a tough sell. On the other hand, CM Costello, the biggest pension hawk on Council, wants this applied to current firefighters as well. That would have been the Mayor’s preference too, but she never got anywhere with the pension fund or the legislature, so it’s also a tough sell. There’s a dispute over whether this proposal can be implemented by Council or if it requires legislative action like any change to the plan for current firefighters would, so if it does get adopted expect there to be a lawsuit.

City exploring new pension for new firefighters?


Mayor Annise Parker

Mayor Annise Parker

Long concerned about the cost of Houston’s pensions and stymied in her attempts at reform, Mayor Annise Parker is considering a dramatic step to place new firefighters into a separate, less generous pension plan, sources with knowledge of the discussions said.

Officials acknowledge the existing Houston Firefighters Relief and Retirement Fund likely would sue the city over the idea, which has not yet been formally proposed.


Houston Firefighters Relief and Retirement Fund chairman Todd Clark said he had not heard of the idea. He was not receptive.

“We would have to look at it and see exactly what it is they’re talking about,” Clark said. “If that’s the case, the pension fund will defend the firefighters and the pension system. That will be a fight that we will definitely get into. We won’t support changing our system for the new hires.”


Councilman Stephen Costello said the idea of a separate pension fund for new hires arose after the city sued the firefighters pension system in January, claiming it was unconstitutional for Houston to be on the hook for payments over which it had no control.

Lawyers for the pension fund, sources said, argued the Legislature’s control was not absolute, and that the city could create a new pension system if it wished.

The city lost a ruling at the state district court level in that case and is appealing. Costello said the current idea appears designed to invite another lawsuit as a legal test.

“You never know until you ask, so I think that’s what the city is going to try to accomplish,” said Costello, who chairs the council’s budget committee and long has advocated pension reforms. “I think the city is testing the water in terms of the constitutionality of the state regulating our pension system.”

The benefit structure of the new pension plan under discussion, Costello and other sources said, would mirror the pension new police officers get, but without automatic cost-of-living adjustments. That benefit is the single most expensive portion of the city’s pension plans.

See here for the background on the city’s lawsuit. I got a press release from the HFRRF about the ruling in May but never saw a news story about it. There never was one as far as a Google search can find, but you can find the press release here. Not much to say about this since it’s basically vaporware, but I do agree with CM Ed Gonzalez in the story that if you’re going to reduce pension payouts to future firefighters, you’re going to have to pay them more up front, Beyond that, we’ll see what if anything happens.

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.

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.


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.

Here comes the pension fight

Not looking forward to it.

A day of reckoning has arrived in Houston, the city’s financial stewards say, to choose between pensions and pothole repairs.

Days after voters in two California cities curbed public employee retirement benefits and voters in Wisconsin rejected an effort to recall a governor who required state workers to pay more for their pensions, Mayor Annise Parker last week said she plans to unveil a plan late this summer to “address our pension problems.”

Asked if her plan could set Houston on a course to become the next Wisconsin, where a yearlong battle has raged over collective bargaining rights and other public employee benefits, Parker said she hoped not.

“I think it is possible to craft a retirement plan for our retirees that is affordable for us, secure for them, but doesn’t put me in the dilemma as I was last year of, do I keep active city employees on the job or do I pump money into a pension system over which I have absolutely no control,” Parker said.

To pit pensions that amount to less than 10 percent of the general fund budget against active employees presents a false choice, argues Todd Clark, chairman of the Houston Firefighters’ Relief and Retirement Fund.

“We do not have a pension problem,” Clark said. The firefighters’ pension has banked nearly all of the money it needs to cover current and future retiree benefits, has agreed to relax the city’s payment schedule to defer the payment of tens of millions of general fund dollars during tough budget times, and has managed its money so well that investment income covers most of the retiree benefits, Clark said.

“The mayor is pushing reform to be able to spend that money on special pet projects, and because she has a personal grudge against the firefighters for never supporting her,” Clark said.

I fully expect this to be a soul-crushing exercise that leaves everyone involved unhappy with the outcome. I expect to be surrounded by sound bites, unreconcileable “facts”, and fatally compromised self-proclaimed “experts” with disclosure issues. Here are the two principles I plan to keep in mind as we slog our way towards a conclusion.

1. Whatever you think of the current system and its sustainability, it represents a deal negotiated in good faith with past and present employees. Any change made to this deal will have a significant, almost certainly negative effect on the lives of thousands of people who had every reason to expect that the deal they had would be honored. If you want to make a change that will only affect future employees, remember that a key aspect of the current deal is that employees have agreed to accept less pay now for more pay later. If the new deal you propose includes less pay now and less pay later, how will the city be able to attract good employees in the future?

2. Claims about “waste” in the budget without specifying what that “waste” is are meaningless. Supporters of the current system such as Todd Clark maintain that pension payments make up less than ten percent of the city’s general revenue. This is correct, and I have noted that fact myself plenty of times, but if that’s part of your argument for maintaining the status quo, you undermine your position by pointing at “special pet projects” – whatever they are; Clark never says – that for all we know don’t even amount to one percent of the city’s general revenue. If you’re going to play the game of how big a piece of the budget thus-and-such is, I will say again that two thirds of the budget is consumed by public safety, and there is no one in City Council, nor anyone who has run for Council in recent years as far as I can tell, who has advocated for a review of that spending to see if we could get by with less of it. If the lion’s share of the budget is off limits, then the scraps are all that’s left to fight over.

I have a strange premonition this will not be the last time I will feel compelled to say these things. Houston Politics has more.

City sues firefighter pension board

We knew this was coming.

The city of Houston sued the firefighters pension board in state District Court on Wednesday in an effort to pry open the retirement system’s books for a look at supporting data behind the $61 million annual bill it sends to City Hall.

“We need access to this very basic information if we are to be able to protect taxpayers who foot the bills and the employees who deserve fair, financially secure retirements,” Mayor Annise Parker said in a statement released by her office. “I do not want a situation where we must choose between vital city services and paying retirement benefits. We have to be able to accurately plan for the future. It is a critical piece in our long-term budget process. Since our repeated requests for the information have been turned down, we are left with no alternative other than relief in the court system.”

You can see a copy of the lawsuit here. As the story notes, Mayor Parker spoke of this back in February. The story at the time said “the city wants information on beneficiaries of a deferred option retirement program, in which employees eligible for retirement continue working and start an account credited with the amount of pension payouts he or she would have received plus interest” and that they believe “some DROP beneficiaries’ pension benefits exceed their salaries through the program”. Todd Clark, the chair of the Houston Firefighters’ Relief and Retirement Fund, wrote an op-ed in March claiming that the city already had the information it said it was seeking; it also made vague allegations about “wasteful” spending that didn’t impress me. Both sides can’t be right about what information the city actually has. We’ll see how the court sorts it out.

If you can’t specify it, it’s not wasteful

After reading this op-ed by Todd Clark, the chair of the Houston Firefighters’ Relief and Retirement Fund (that is, their pension fund), I have decided to adopt two rules for all future discussion of the city’s budget.

Let me speak briefly about the city’s Long Range Financial Management Task Force. This advisory committee could have focused on some key city issues, but it did not. The No. 1 agenda for this task force was to attack city pensions. The topics that were presented were financial in nature but they were also a smoke screen to go after the public employees, and particularly the firefighters.

This task force spent most of its time focused on pensions, which are tightly regulated and professionally managed. Despite its name, the task force focused only on the short term. What is worse, the focus on pensions was devised to take the public’s eye off the perennial mismanagement problems inside city government, which are politically uncomfortable for the mayor. The three city pension funds account for only 9 percent of the entire city of Houston budget, according to the task force. The committee spent 91 percent of its time and attention on the pensions. It appears to me, however, that the committee should have spent all its times examining the entire budget for waste.

City employees are repeatedly asked to make sacrifices due to continued wasteful spending by the city. Houston Firefighters’ Relief and Retirement Fund will continue to protect the firefighters and their families against these attacks and any future attacks by this mayor, as the Houston firefighters will continue to serve the citizens of this great city by protecting them from harm.

Rule #1: If you claim there is wasteful spending, but then fail to say what spending in particular is wasteful, I’m not going to take you seriously. Crying “waste” is the easiest and laziest dodge in the book. If you’re not giving specifics, you’re not contributing.

Rule #2: If you don’t acknowledge that police, fire, and emergency services constitute two-thirds of the city’s operating budget, I’m not going to take you seriously. Here’s that budget-balancing tool again, which itemizes how much we spend on different items. Clark goes on at length about how pension payments represent only 9% of the budget, but never seems to note that any truly vigorous effort to cut city spending would focus on the amount that we dedicate to police, fire, and EMS. I mean, surely in a time of declining crime rates, there is a case to be made to reduce the size of the police force. But just go try to find a candidate for city office who supports such a position. It’s not hard to conclude that one reason we’re talking so much about pensions is because we’ve walled off so much of the rest of the budget from consideration.

Now to be clear, I agree with Clark that we’re talking too much about pensions, and I have said so repeatedly in this space. I think there are things we need to consider doing to ensure that the pension plans remain solvent and that the city’s burden remains manageable, but I want to see a much more holistic approach to the budget than what I’ve seen so far. I am also not advocating for cuts to police, fire, and EMS, I’m just pointing out that everybody, especially the self-proclaimed budget hawks, studiously ignores the fact that this is by far the fattest part of the budget. They all prefer to hide behind the “wasteful spending” sham rather than be honest about what it is we do spend our money on. Clark is advocating for protection of the firefighters’ pension fund, and as such is not required to provide a preferred alternative. That’s fine and dandy, but it doesn’t make him any more credible or courageous, or any less self-interested, than anyone else in this discussion.