Few cities have as little control over their pension systems as Houston. The state legislature dictates benefits, and the pension funds are administered by a board composed of public employees who benefit from the system. City officials are not allowed access to any of the financial data about the system which might give them insight into how well the system is run, how high the benefits are, and how much projected costs might rise. Not surprisingly, with annual required pension contributions rising and now making up 9 percent of the budget, Houston mayor Annise Parker is lobbying for reforms to the system. Short of that, she'll head to court to demand access to the system's numbers.
Last year Parker appointed a financial advisory task force to look at the city's long-term budget problems. It focused on pensions as one part of the problem. In an op-ed in the Houston Chronicle, task force members noted:
When the financial projections for the city include funding the full cost of future retirement obligations, our city will not be able to balance its budget or maintain its credit without making some very painful choices. However, not making the choices will lead to even greater pain.
The task force noted that reforms are essential to eliminate spiking, the process by which workers boost their final years' salaries through excessive use to overtime, to boost their pensions. The task force also zeroed in on excessive benefits, including the ability of some workers to retire after 20 years of service regardless of their age, and for others to receive more than 100 percent of their pre-retirement salary as a pension when they quit working.
The city also has a generous deferred retirement option plan in which employees eligible for retirement keep working but collect pension payments in addition to salaries through a plan which puts the pension payments into a special deferred account that the employee collects when he stops working.
Frustrated at the cost and lack of transparency of the pension system, Mayor Parker is now planning to go to court to see if Houston can win some control over the retirement plan.
The two largest city pension systems do not allow for spiking, reduced benefits substantially over the last 8 years, and do not include overtime as a basis for increases. Such employees must stay until they are at least 55 years old for police and 62 for civilians, both getting slightly better benefits if they stay longer but they no longer get a deferred or DROP benefit.
All three pensions are transparent, the majority of data they have coming from the city, not the other way around. For the mayor to suggest the city needs any other information that might exist of a meaningful nature is questionable at best, this meaningless ploy just another smokescreen.
Costs are going to increase for the police pension by virtue of the hiring spree voters supported under the Bob Lanier era, his choice to give employees a DROP program instead of meaningful raises just as fiscally dangerous as his continued raiding of Metro tax dollars for programs they weren't supposed to be for. White and Parker kept deferring pension costs every year they were in charge and now the city has to reevaluate some of the giveaways used to buy votes. With rising sales tax and property tax revenues combined with growth, there is no need to otherwise beat up on employees yet again.
couldn't agree more