New Houston Firefighters May Have Smaller Pension Plan

June 27--Long concerned about the cost of Houston's pensions and stymied in her attempts at reform, Mayor Annise Parker is considering a dramatic step to place new firefighters into a separate, less generous pension plan, sources with knowledge of the discussions said.

Officials acknowledge the existing Houston Firefighters Relief and Retirement Fund likely would sue the city over the idea, which has not yet been formally proposed.

Reforms to the city's other two pensions -- police in 2004 and municipal workers in 2007 -- mean retirement packages for new firefighters are by far the city's most generous. That makes it difficult, Parker has said, to seek further changes to police or civilian plans when firefighters' pensions, which are controlled by the Legislature, remain untouched.

Parker's staff declined to make her available for an interview Thursday but provided a statement from her: "We've been talking about all possible pension options for the last four and a half years, so it should not be surprising or big news that the issue is still front and center in my administration."

The mayor's statement included a slap at City Council members, whom mayoral spokeswoman Janice Evans said appeared to have leaked information about the administration's discussions of the idea.

"It is encouraging to finally see council members interested," the statement said. "I look forward to continued talks and cooperation with them because this issue is so important to the city's future financial health."

Houston Firefighters Relief and Retirement Fund chairman Todd Clark said he had not heard of the idea. He was not receptive.

"We would have to look at it and see exactly what it is they're talking about," Clark said. "If that's the case, the pension fund will defend the firefighters and the pension system. That will be a fight that we will definitely get into. We won't support changing our system for the new hires."

Noting that the Houston Professional Fire Fighters Association Local 341 has no role in the firefighter's pension system, President Bryan Sky-Eagle said the union likely would stay out of what appears to be a fight between the Parker administration and the pension system.

The relationship between Parker and firefighters has been fractious from the start of her first term, punctuated by lawsuits, contentious contract negotiations and repeated accusations from Clark and others that the mayor's efforts to reform the pension were an attack on firefighters. Earlier this month, rank and file firefighters rejected a new labor contract on the eve of a vote on the city budget.

Councilman Stephen Costello said the idea of a separate pension fund for new hires arose after the city sued the firefighters pension system in January, claiming it was unconstitutional for Houston to be on the hook for payments over which it had no control.

Lawyers for the pension fund, sources said, argued the Legislature's control was not absolute, and that the city could create a new pension system if it wished.

The city lost a ruling at the state district court level in that case and is appealing. Costello said the current idea appears designed to invite another lawsuit as a legal test.

"You never know until you ask, so I think that's what the city is going to try to accomplish," said Costello, who chairs the council's budget committee and long has advocated pension reforms. "I think the city is testing the water in terms of the constitutionality of the state regulating our pension system."

The benefit structure of the new pension plan under discussion, Costello and other sources said, would mirror the pension new police officers get, but without automatic cost-of-living adjustments. That benefit is the single most expensive portion of the city's pension plans.

Councilman Ed Gonzalez said he heard chatter about a similar idea several months ago, but did not recall who raised it.

If the city were to pursue such a change, Gonzalez said, starting salaries for new firefighters may need to be raised to compensate for less generous retirement benefits. He also questioned whether setting up a new pension system would harm the existing one, since contributions new hires make toward their retirements presumably no longer would go into the existing pension fund.

"The pension issue is a complicated one and it's not going to be solved overnight. We should have open dialogue about this, but it's not just about what the pension costs are, because those are part of maintaining a good, strong workforce that the city depends on," Gonzalez said. "Anything for new firefighters coming into the system is something that obviously can be discussed. If a new entrant into the profession knows full well what the benefit package is and what the expectation is and chooses to sign up, at least it's not something that's changed later on."

Though the fire pension is the city's most generous for new hires, it is the best-funded, thanks in part to the state forcing the city annually to pay the amount needed to fully fund the pension. For the police and municipal plans, the city has negotiated more affordable payments that long have fallen short of the recommended annual amount, leaving the municipal pension in particular underfunded.

A separate, less generous pension for new firefighters would make sense, Costello said, if it aims to give the city local control over the pension. However, he said, officials should not claim the move would solve Houston's pension problem.

"At the end of the day, are we trying to accomplish local control? Then I'll support that," Costello said. "Are we trying to say it's going to solve our pension system? It's not going to solve our pension system. We can't afford the legacy members. I like the idea of local control because, if we had local control, then we could address the legacy members."

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