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Houston Sues Firefighter Pension System Claiming It’s Unconstitutional

The city of Houston has taken the drastic step of filing suit against the firefighters pension system claiming the system has become financially unsustainable.

Filed today the suit names the Houston Firefighters’ Relief and Retirement Fund (HFRRF) as the defendant. According to Mayor Annise Parker while financial worries are driving the suit, the city alleges that the law that created the pension system in 1997 is unconstitutional.

According to City Attorney David Feldman:

“Litigation is the only remaining option available to the City. Instead of Houston determining, or even having a meaningful say about the level of its own contributions to HFRRF, that decision is being made by people likely to benefit from the decision.  The City is asking the court to declare unconstitutional the laws that allowed this.  The suit also seeks to end the practice of HFRRF using taxpayer money to lobby in favor of such laws.”

Mayor Parker summed up her concerns:  “We cannot and will not kick the can down the road.”

Houston Professional Fire Fighters Association President Bryan Sky-Eagle countered that the lawsuit is a actually a thinly-veiled political attack on firefighters who did not support the mayor’s campaign. Chairman of the HFRRF Todd Clark agreed accusing Mayor Parker of embarking on a political vendetta.

According to The Houston Chronicle, the city’s three pension plans have been underfunded to the tune of a combined $3 billion.

Incidentally, when will elected officials who allow this kind of underfunding to happen be held accountable for dereliction of duties. We need a public sector version of the federal Employee Retirement Income Security Act (ERISA) that applies to elected officials. Business owners who fail to properly fund private sector pension and retirement plans would face fines and even criminal penalties for what has become standard practice in many communities: underfunding pensions and then blaming the employees when the systems fail. People’s retirement funds should not be used as political footballs.

In that regard, there is some disturbing information being released by the Mayor’s office, no doubt in an effort to enflame taxpayers: the average Houston firefighter retiring with 30 years of service will get a pension of 94 percent of their salary, plus an average lump sum of $850,000, costing taxpayers $1.6 million.

That information is beyond comprehension – which is no doubt why the Mayor is spreading it around far and wide. Is there anyone out there from Local 341 that can either confirm the accuracy of this information or set the record straight?

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Comments - Add Yours

  • mr618

    Amazing how public safety employees are being screwed over time after time… by ultra-conservative politicians… often supported — enthusiastically — by the very people they’re screwing! The cops and firemen who are losing their pensions are victims of pols like Cruz, Scott, Walker, LePage, Christie, and all the other ultra-conservatives, yet these same cops and firefighters SUPPORT these guys!

    WHY DO WE SUPPORT PEOPLE WHO WANT TO SCREW US?!?

  • Ukfbbuff

    City jWow!
    Dare I say there is some underlying Politics ( The Arnold Foundation and Americans for Prosperity) involved in this attack on the Firefighters pension system

    What theMayor cries about in them under funding is more than likely the City’s end of the contributions as what happened in Stockton. Calif., when the city flushed $20Million dollars down the tubes to build an unused Boat Marina and sports stadium about 10 years ago and the when the economy tanked, who got left holding the bag.

    Stockton city employees because Cal Pers wanted the city’s contributions as they were supposed to have been forwarded in the past.

    I also find that the Houston mayor, in the Oil State of Texas crying for nothing

    Despite new oil fonds, the price has not gone down but more leveled off at about
    $100.00 dollars a barrel

    So where is the rest of Houston’s tax money going

  • firehat

    Those numbers are not accurate. I’m not with Local 341 but I do live in the City of Houston and belong to another area IAFF local. The mayor seems to have made the numbers up out of whole cloth. The one local reporter who actually asked a follow-up question about the numbers found out that the union doesn’t know what she’s talking about.

  • CurtVarone

    Thanks Firehat

    I am not surprised. I’ll bet there is some convoluted way she can justify how she arrived at them if pressed – but they simply do not make sense at all.

  • Marc

    Curt,

    Local 341 is the IAFF affiliate (as a former L341 member and now HFD retiree, I do have some knowledge of the issues, but I haven’t downloaded the current lawsuit, so these are remarks specifically addressing the above posting, which I gather is based on the Houston Chronicle article – fyi, the Chronicle editorial page is controlled by Bill King, a former friend of firefighters who is now leading the charge to lasso the pension for the administration). The pension fund is an independent entity formed under the laws of the state of Texas that is separate from the city of Houston. Mayor Parker is attempting to assert control over the pension and basically do what she and previous mayors have done to the police pension and municipal pension – both of which are in trouble. On the contrary, the HFFRRF is by far one of the best managed pension funds in the country, with 3.4 billion (yes, with a B) in assets and a 87% funding ratio (very few, if any pensions are 100% funded, anything over 80% is generally considered stable). So that makes the firefighters portion of that $3B underfunding about $490M, according to figures from the pension fund for 2012.

    As for the 94% and 850K, that is likely mixing apples and oranges. Houston has a DROP (Deferred Retirement Option), which can start at 20 years, but generally doesn’t as most wait for 25 years. The 94% is likely from using base salary as the denominator rather than total salary, which is how the pension is figured. Using me as an example – I retired at about 21 years with 52% of the average of my top 72 pay periods (generally the last 72, but some OT will skew that – I will note that we had forced OT through the mid 2000’s in response to decreased staffing levels). I ended up with about 60% of my final base with no payout from the DROP. If I had DROPped and stayed in to the 30 year point, I would have maybe been up to about 74% and a payout of 500K at 30 years. There may be some folks who could have made 94% and 850K at the 30 year point, but not many. And the numbers will vary quite wildly, depending if people max out pension percentage or DROP account (most choosing the latter, but not me).

    I’ll also note that our base pay tended to be lower than many other cities – I was at a base of 72K (including paramedic assignment and education pay) as a Captain (equivalent of a Lt. in most cities – we also have a Sr. Captain rank) when I retired. For large cities, that tends to be on the low end for someone with my education and training. I checked just the larger cities, comparing 5th year firefighter salaries, and Houston was not on the bottom, but on the lower end at just a hair under 50K. Austin and San Antonio were both about 10K higher (and I may have been at the same salary level as a SA firefighter based on educational and certification incentive pay!).

    This is a complicated matter, but the spurious assertions thrown around by the Mayor are nothing more than political payback because the firefighters backed another candidate. Firefighters have long memories – some of us can even remember many years ago with another white female, CPA, former comptroller as mayor, who hurt the firefighters in the short run, but didn’t outlast us.

    Of course, the candidate the firefighters backed, a black male former city attorney, didn’t exactly ingratiate himself on the pension question, either. And these two were both nominally D’s – who knows what a tea-party R would propose! Oh wait, I think someone floated the idea of disbanding the pension, distributing the assets through a 401k like vehicle and letting the employees fend for themselves . . .. Yeah, that will work . . ..

    Marc

  • CurtVarone

    Thanks Mark

  • FireDog

    mr618, the mayor is an ultra-liberal Democrat in a city run by Democrats. The Republicans at the state level have our backs. So your argument is invalid.