Firefighters balk at pension reform deal

It’s unclear whether opposition will affect path of bills in the Legislature

Hopes that Houston’s firefighter pension board might agree to a compromise set of benefit reforms and end their opposition to Mayor Sylvester Turner’s landmark reform package proved too optimistic, after the two sides passed a Thursday deadline without a deal.

It remains unclear what effect counting the firefighters as confirmed foes will have on the bills now working their way through both chambers of the Legislature.

The Houston Firefighters Relief and Retirement Fund had joined police and municipal worker groups in backing preliminary terms last fall, but did not join their counterparts in agreeing to final legislative language.

Fire pension board chairman David Keller reopened the door to an agreement in testimony before a state House committee on Monday, saying recent talks with Sen. Joan Huffman — the Houston Republican whose committee approved the reform proposal last week — had been productive and that he was “hopeful” his board could agree.

Keller acknowledged he verbally agreed to a compromise Turner offered that included more than the estimated $800 million in benefit reductions the board had approved last October but less than the nearly $1 billion in cuts currently reflected in the legislation.

After the final numbers were crunched, however, Keller said the proposal cut too deep.

“There was an all-in number that the city gave us for benefit reductions that just proved to be a very difficult challenge,” he said. “This thing has been punitive, it’s been unfair and, even while we’re trying to be conciliatory, we still couldn’t get there. This whole thing from start to finish has been moving goalposts.”

City officials have a similarly uncharitable view of Keller and his colleagues, saying the board has been dragging its feet through months of negotiations.

Turner had suggested on Wednesday — hours after Keller had canceled a scheduled pension board

meeting — that the talks may not pan out, saying, “this ship has sailed.”

The mayor said Friday that staff, legislators and experts who have participated in the negotiations, such as state Pension Review Board Chairman Josh McGee, have given the firefighters every opportunity to get on board only to watch them blow every deadline.

“We are moving forward aggressively and will not be stopped by any one entity,” Turner said. “Never has there been a plan with this much support. It is a good plan and we are moving ahead to obtain legislative approval.”

Devil in the details

McGee was reticent to discuss closed-door negotiations in detail, but said that while the parties reached broad agreement on key elements of the reforms, some specific requests from both sides prevented a final deal.

“There were some productive talks that discussed fire on board, and I think that we made some progress, but weren’t able to get all the way there,” he said.

It remains unclear what the fire trustees’ continued opposition will mean for the bill in Austin.

Though many individual firefighters testified against the measure, Huffman’s State Affairs Committee approved the proposal by a 7-1 vote.

Huffman is expected to substitute a new, cleanedup draft of her bill on the Senate floor next week. Keller said he does not know what benefits she plans to include for firefighters or whether he has the votes to block the reforms, which have the support of the police and municipal workers, the Greater Houston Partnership, the city controller and 15 of 16 members of City Council.

“We’re still willing to work, but we just need that ability,” Keller said. “We need that forum. Honestly, I don’t know what that forum is right now.”

Reining in costs

The fight must play out in Austin rather than before City Council because benefits for the city’s police, fire and municipal retirees are enshrined in state statute and cannot be enacted without action by the Texas Legislature.

The reform discussion has its roots in benefit increases that were passed in 2001. The changes caused costs to spike rather than increase slightly, as flawed studies had predicted. Despite reforms to the police and municipal plans in 2004 and 2007, the city has failed to keep up with rising costs, leaving the three plans underfunded by about $8 billion today. The past reforms to the other two systems also mean the retirement benefits awaiting newly hired firefighters are more generous than those received by new police cadets or municipal hires.

Turner’s proposal recalculates the city’s pension payments, using lower investment return assumptions and aiming to retire the debt in 30 years, both of which would increase the city’s annual costs.

To bring that cost back down, the plan would cut workers’ benefits, and includes a mechanism to cap the city’s future costs even if the market tanks. To bring the police and municipal funds to the table, the city also agreed to inject $1 billion in bond proceeds into their plans to make up for past city underfunding.