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Fort Worth
Tuesday, April 13, 2021

City committee to tackle pension issues

The City of Fort Worth has long wrestled with the task of creating a sustainable pension fund for its employees — a task that has led to lowered benefits and lawsuits over the years — but the city hopes to improve its pension situation by putting together a committee to help solve the problem.

That committee is the Pension Review Committee, whose seven members include representatives from the Fort Worth police, firefighters and city employees. The team is embarking on a research project of sorts, studying the pensions of other cities and analyzing factors such as contribution rates, employee turnover rates and amortization periods. If all data are collected in time, the committee will discuss its findings at a Jan. 12 meeting and spend its next several meetings coming up with solutions.

“My hope is that, at least, there is a forum for open communication of all the affected parties,” said Joelle Mevi, committee member and executive director of the Fort Worth Employees’ Retirement Fund. “That includes the taxpayer stakeholders as well as the member participants.”

Improving the city’s pension fund has been one of Mayor Betsy Price’s more challenging, and at times contentious, tasks since her election in 2011. The city has been trying to balance its pension benefits and available funding for at least five years. To do so, it has changed a number of provisions in its pension plan and contribution rate in hopes of making the fund more stable for the future. Some of those changes included the cutting of benefits for future municipal, police and fire retirees.

Firefighters, for example, saw the multiplier for calculating benefits go down from 3 percent to 2.5 percent. Another change involved overtime, which would no longer be calculated in pension earnings.

As a result of benefit cuts, the Fort Worth Fire Department experienced a drop in applications by about half, and some firefighters began leaving the department, said Jim Tate, president of the Fort Worth Professional Firefighters Association.

These changes prompted the Fort Worth Professional Firefighters Association and the Fort Worth Police Officers Association to sue the city, stating that the benefit cuts violated the Texas Constitution. However, federal judges dismissed both lawsuits last year.

In an effort to resolve the pension issues, the City Council in August asked City Manager David Cooke to assemble a Pension Review Committee to research what a healthy pension fund should look like and what could be done to improve the fund, without having to ask taxpayers for more money.

Among the committee’s members are Tate and Fort Worth Police Officers Association president Rick VanHouten.

Tate said he sees the committee as a “step in the right direction” and hopes the issue will be resolved in “the Fort Worth way” – that is, sitting down and talking through issues rather than fighting in a lawsuit.

“It’s been, ‘Here’s what we’re going to do. If you don’t like it, sue us,’ so that’s what we’ve been dealing with,” Tate said. “But I think we’re seeing a change in attitude. I think the city is understanding that that’s not working very well, so I’m hoping we can get back to the Fort Worth way.”

The committee began meeting in November and plans to meet at least once a month over the next several months. Jan. 12 will be the group’s third meeting.

One item the committee hopes to improve is the amortization period to pay off the unfunded liability – that is, the difference between the benefits promised and the money the city has available to pay for those benefits. The unfunded liability as of Jan. 1, 2015, was $1.27 billion, an increase from $1.12 billion in 2014.

Currently, the city can pay off its unfunded liability in about 56 years. Before 2009, that amortization period was infinite, but the benefit cuts helped shorten the time frame to 56 years, according to Doug Anderson of Gallagher Benefit Services, who briefed City Council about the state of the city’s pension fund on July 21.

The “industry standard” amortization period is 30 years, according to a city staff report.

Cooke said the committee collectively agrees that 30 years or less is a healthy time frame to pay off the unfunded liability.

Cooke also said that, as of now, the city has enough money to pay benefits for an employee who retires within the next 10 years.

“The issue we’re talking about is really longer term,” he said. “I think it’s our responsibility to have that conversation.”

When the meetings are done, the committee must send a report to City Council with recommendations on what steps should be taken to improve the pension fund.

While there’s a tentative schedule of meetings, Cooke said there’s no specific deadline as to when the committee needs to finish its task.

“I’m a believer that it’s better to do it right than fast,” he said.

But even after the committee’s final meeting, Cooke said conversation about pension funding shouldn’t be over.

“This shouldn’t be just a Pension Review Committee that exists for a period of time and then disappears for the next 10 years,” he said. “The whole idea of, do we have a sustainable retirement pension fund, needs to be evaluated every year.”

Who makes up the city’s Pension Review Committee?

• David Cooke – city manager

• Joelle Mevi – executive director of the Fort Worth Employees’ Retirement Fund

• Rick VanHouten – president of the Fort Worth Police Officers Association

• Jim Tate – president of the Fort Worth Professional Firefighters Association

• Glenn Balog – general employee representative

• Laura Alexander – managing director at the city’s financial adviser, First Southwest; citizen/business representative

• Mike Ward – member of the city’s Aviation Advisory Committee, chairman of the city’s Building Standards Commission; also an actuary; citizen/business representative

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