Feb. 17--More than five years after receiving a $210 million bailout from the city, the El Paso Firemen and Policemen's Pension Fund has asked for more public money to solve a $270 million funding shortfall.
The move surprised some city officials and generated concerns about the fund's sustainability, setting the stage for a debate and negotiations over the viability of police and firefighter pensions and who's responsible for paying for them.
The El Paso Firemen and Policemen's Pension Fund has already asked the city to contribute about $4 million to the fund annually while its members would increase contributions by $3 million annually. The fund's leadership says its members are making sacrifices, too, just like in 2009 when they gave up $186 million in benefits in exchange for city money.
Some City Council members and the city manager's office are hesitant to dip deeper into an already stretched budget. The city has ordered an audit of the fund, looking for ways to solve the shortfall other than using taxpayer money.
Mayor John Cook says he wants to avoid adversarial negotiations and promises to fix the shortfall in his last 100 days in office. He will leave office in June.
"We must make this fund sustainable," Cook said. "Every mayor can't face this problem every five years. I cannot leave the system broken; we have to take care of our policemen and firemen in a fiscally responsible way."
El Paso Firemen and Policemen's Pension Fund Board Chairman Lt. Tyler Grossman acknowledges that the fund is giving out more in benefits than it is taking in from investments and payments, partly due to a retiree membership of 1,400 and just about 1,800 current contributors. The fund has dropped below its ability to pay out benefits to retirees over the next 40 years and also is less than 80 percent funded.
The average pay in retirement is about $44,000.
An independent analysis in 2011 found the pensions unsound after a state-mandated study every two years. The fund, which combines both police and fire pensions, is underfunded by about $270 million.
The police fund's amortization period -- the number of years it would take to be fully funded -- is infinite, while the firefighters fund's sits at 76 years. Analysts put the benchmark at 40 years to deem the fund in good financial condition.
The pension's leaders now want the city to increase its yearly contribution rate to the fund while demanding more from its members.
"It's something we need to solve quickly because we can't let it get out of control," Grossman said. "Both sides were great in 2007, and we were praised around the country for it. We got $210 million from the city, and our retirement age increased from 45 and 20 years of service to 50 and 25 years of service. Also, anyone who joined the force in 2007 or later does not get a cost-of-living increase. We need both sides to come to the table again and make concessions."
The city is not ready to agree to a contribution increase as a solution. Some officials expressed uneasiness over the situation and wondered whether they can turn to the taxpayers again after voters recently approved $473 million quality-of-life bonds.
City Rep. Cortney Niland at a City Council meeting last month delivered a stern lecture about fiscal responsibility, questioning why the city, after solving the problem four years ago, would need to step in again. She questioned the pension's management and financial decisions.
"We can't keep doing this every four years," Niland said. "It's going to be a problem that we can't just keep dipping into the city's pockets."
The city may have no choice.
The pension's unfunded liabilities -- inability to pay out benefits over a certain time frame -- could damage the city's bond rating, affecting the quality-of-life bonds.
A bad pension fund also could cause recruiting problems, failing to attract top-quality police office and firefighters.
City Manager Joyce Wilson has said she wants to increase the police force and keep El Paso as the safest big city, a title it has earned three years in a row.