task0778
Diamond Member
There are quite a few cities and states facing a big problem with rising pension costs, where he money they've got is nowhere near enough to pay future retirees. Many pension funds were expecting 8% returns on their investments but not even getting half tht much and so they're woefully underfunded. Ergo, there is a need for reform, one that a lot of places are not willing to make. So it is a positive sign when we see the component of a major city work together to find a solution:
Rising pension costs could all but bankrupt Houston. The $8.2 billion pension debt is four times more than the city's total general fund revenue - and last year, Houston closed its books with an operating deficit for the first time in history. The city's estimates indicated that in order to deliver on benefit promises, its pension contributions would total nearly 60 percent of payroll for the police department and close to a whopping 70 percent for the fire department. Facing the prospect of massive tax hikes, sweeping layoffs and deep benefit cuts, the need for reform took on a new sense of urgency.
The entire Houston community - including area business executives, labor leaders, finance experts, members of the Houston legislative delegation and city officials - knew there was no easy fix. They would need to work together to make extensive changes in order to solve the problem.
Mayor Sylvester Turner(D) made pensions a top priority during his first year in office. From the outset, he engaged police officers, firefighters and municipal employees in efforts to develop a solution. To their great credit, members of the police and municipal employees pension plans acknowledged that the current systems are unsustainable. They agreed to significant benefit modifications that will reduce pension costs and help keep the systems from going broke.
The Turner administration announced in September that it had reached a deal. However, the mayor did not have the authority to implement it because Houston's pension systems, like those in other major cities across the state, are controlled by the Texas Legislature. The city needed to navigate legislative politics in order to make changes. As the session progressed, there were attempts to remove key elements of the plan and even to kill the effort outright. Negotiations among legislators - some of who know little to nothing about Houston's finances - ran down to the wire. Finally, just days before the end of the session, state leaders approved the deal.
Houston's pension solution is one of the most comprehensive reform packages that we have seen, and legislators should be commended for supporting the local effort. It incorporates key elements of responsible reform that will help to stabilize the pension systems and provide safeguards to keep the city from accruing debt in the future. The measure also includes a pathway to place new employees in a "cash balance" plan, which would be simpler and easier to manage. Yet for all of its attributes, Houston's package will only work if everyone sticks to it.
Clearly, there is a lot more to do - but let's take a moment to acknowledge the significance of what local and state leaders have accomplished. Despite opposition from firefighters, city leaders and members of the police and municipal employee pension plans put the collective good before their own interests. They took on a contentious issue and did what their predecessors could not do. In an era of political polarization, they set aside their differences and figured out how to not only pay down the debt, but protect the city's financial future.
McGee: Pension plan fix is a sign of progress
This is a big deal, if Houston can pull this off then we have a blueprint for how the rest of America's cities and states can do the same thing. And BTW, Houston is run by democrats, kudos to them.
Rising pension costs could all but bankrupt Houston. The $8.2 billion pension debt is four times more than the city's total general fund revenue - and last year, Houston closed its books with an operating deficit for the first time in history. The city's estimates indicated that in order to deliver on benefit promises, its pension contributions would total nearly 60 percent of payroll for the police department and close to a whopping 70 percent for the fire department. Facing the prospect of massive tax hikes, sweeping layoffs and deep benefit cuts, the need for reform took on a new sense of urgency.
The entire Houston community - including area business executives, labor leaders, finance experts, members of the Houston legislative delegation and city officials - knew there was no easy fix. They would need to work together to make extensive changes in order to solve the problem.
Mayor Sylvester Turner(D) made pensions a top priority during his first year in office. From the outset, he engaged police officers, firefighters and municipal employees in efforts to develop a solution. To their great credit, members of the police and municipal employees pension plans acknowledged that the current systems are unsustainable. They agreed to significant benefit modifications that will reduce pension costs and help keep the systems from going broke.
The Turner administration announced in September that it had reached a deal. However, the mayor did not have the authority to implement it because Houston's pension systems, like those in other major cities across the state, are controlled by the Texas Legislature. The city needed to navigate legislative politics in order to make changes. As the session progressed, there were attempts to remove key elements of the plan and even to kill the effort outright. Negotiations among legislators - some of who know little to nothing about Houston's finances - ran down to the wire. Finally, just days before the end of the session, state leaders approved the deal.
Houston's pension solution is one of the most comprehensive reform packages that we have seen, and legislators should be commended for supporting the local effort. It incorporates key elements of responsible reform that will help to stabilize the pension systems and provide safeguards to keep the city from accruing debt in the future. The measure also includes a pathway to place new employees in a "cash balance" plan, which would be simpler and easier to manage. Yet for all of its attributes, Houston's package will only work if everyone sticks to it.
Clearly, there is a lot more to do - but let's take a moment to acknowledge the significance of what local and state leaders have accomplished. Despite opposition from firefighters, city leaders and members of the police and municipal employee pension plans put the collective good before their own interests. They took on a contentious issue and did what their predecessors could not do. In an era of political polarization, they set aside their differences and figured out how to not only pay down the debt, but protect the city's financial future.
McGee: Pension plan fix is a sign of progress
This is a big deal, if Houston can pull this off then we have a blueprint for how the rest of America's cities and states can do the same thing. And BTW, Houston is run by democrats, kudos to them.
