New firefighter pension leadership is a sign of progress on needed reforms.

New leadership for firefighter fund is a sign of progress on much-needed reforms.

A key firewall came crashing to the ground last month in the battle over city pensions — Todd Clark stepped down as chairman of the Houston Firefighters’ Relief and Retirement Fund. His resignation is the first solid sign that progress is being made on a pension deal.

Clark was elected chair of the board, which manages the firefighter pension fund, in January 2010, and over the next six years he served as Mayor Annise Parker’s key adversary in her fight to fix Houston’s pension mess. The total unfunded pension burden on taxpayers continued to soar during his tenure — about $1.5 billion was added by all three pensions, according to a recent study by the Kinder Institute for Urban Research at Rice University.

Even if the city pays 100 percent of its calculated annual contribution, the unfunded liability still keeps growing. It would be as if your mortgage grew with every monthly payment rather than shrank. This is a clear sign of a broken pension system, and yet Clark used every tool at his disposal to stop the city from fixing it.

He refused to meet with the city to discuss important changes, forcing City Hall to file lawsuits to open the black box that is the firefighters’ pension. What, exactly, was taxpayer money going toward? This is an important question, and Clark’s actions kept Houstonians from finding the answer.

City Hall also sued to ensure that Houston taxpayers had effective representation on a pension board dominated by firefighters — nearly 80 percent of whom don’t actually live in the city of Houston (and who don’t pay the city property taxes that fund the pensions). It was a brazen conflict of interest that had pension beneficiaries acting as their own supervisors.

Clark’s stubborn attitude become a roadblock to implementing changes to the police and municipal worker pensions, as well. Those two public pensions had negotiated reforms under former Mayor Bill White, and they didn’t want to move any further until Houston’s third public pension stepped up

But what incentive did firefighters have to fall in line? They had a pretty sweet deal put in place by a 2001 change that transformed the city’s three fully funded public pensions into the unsustainable mess we have today.

A recent report by KPRC 2 investigative reporter Jace Larson revealed that Houston firefighters with 30 years on the job could retire with a pension that paid about 94 percent of their final salary. In contrast, Houston police officers with 35 years on the job retired with a pension that paid about 56 percent. Those retiring firefighters also receive an average lump-sum payment — a deferred retirement option plan, or DROP — of more than $800,000. In contrast, police and municipal workers ended those DROP accounts for new hires in 2008 to help control costs.

Houston needs some big changes, and the Legislature in Austin holds the keys. It is a bizarre system where state politicians control decisions about pensions funded by local tax dollars, and those elected officials refuse to move forward until everyone agrees on a plan.

The Kinder Institute report lays out four recommended policies to finally bring expenses back in line: Greater contributions from the city; greater contributions from employees; switching over to a different retirement system for new hires; and reducing benefits for current employees, such as ending automatic cost of living adjustments. The report also recommends changing overly optimistic assumptions and methods used to calculate pensions.

Clark spent his tenure as chair fighting these sorts of reforms. We hope that new leadership will finally open a door to necessary changes. As Mayor Sylvester Turner has said, it is a time for shared sacrifice.