The City of Houston’s pension system for employees has been underfunded for years. Now, Mayor Sylvester Turner has unveiled a preliminary pension reform plan, which he hopes will pay off the estimated $7.7 billion the city owes its pension fund.
Turner said the 30-year fixed plan will pay off out the next three decades and will require cutting yearly costs and full yearly contributions to police, fire and municipal employee pensions. All three of the city’s pensions have identified benefit changes to cut the unfunded liability immediately by $2.5 billion.
“It does so in a cost-neutral fashion,” Turner said. “Your taxes are not being increased to reduce the $2.5 billion.”
Turner’s plan includes changes in employee pension benefits and the sale of a billion dollars in pension bonds. The multi-tiered restructuring has been conceptually agreed to by city and police pension boards, but not the firefighters’ board.
David Keller, chairman of the Houston Firefighters’ Relief and Retirement Fund, released a statement saying while his group continues working with the city, they have not reached an agreement on adjustments to the fund’s current plan.
“We have discussed economic changes that would fit within the guidelines set forth by the Mayor,” Keller wrote. “We have also presented issues that are important to us. However, no resolution has been made.”
A final plan will be presented to the three pension systems, City Council, and the state legislature for approval.