Fort Worth Council approves pension plan; Now employees will vote

The City of Fort Worth took a major step in possibly averting a crisis with its employee pension fund Tuesday night.

The city council approved a plan that over time will erase the city’s $1.6 billion liability, which had the account on the path to insolvency in the next two or three decades.

The plan still has to be approved via an election by participating members of the Fort Worth Employees Retirement Fund, who will vote to increase their contributions to the fund. The city’s (taxpayers) contribution increase is contingent upon a successful vote by the members to increase their contributions.

“The key is to make our pension plan sustainable for the long term, not only for retirees, not only for current employees, but for employees we’ve not yet hired,” City Manager David Cooke said.

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The summary of changes in contributions includes:

*Increase in city’s contribution of an additional 4.5 percent of payroll contributed toward the pension.

*General employee contributions up 1.1 percent with an additional 0.7 percent each year for the number of years of credited service prior to Oct. 1, 2013

*Police and fire up 3.8 percent, with police to be phased in over three years and fire over two years.

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*Police 25 years and out up 0.6 percent.

The changes in benefits include:

*Modification of the current 2 percent simple cost of living adjustment (COLA) for active members not yet retired or in deferred retirement option plans (DROP) within two years to a variable benefit based on fund performance (“grandfather” of active employees who retire or enter the DROP on or before Dec. 31, 2020).

*Elimination of service credit for future accruals of major medical and sick leave.

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*Employee contributions will be based on city contributory payroll (includes overtime).

*Increase from a five-year DROP to a six-year DROP.

Employees have not previously contributed with their overtime pay.

There are no changes to the retiree COLA as the simple 2 percent will be retained.

The minimum retirement age of 55 now applies only to general employees hired since July 2011. It has been removed for fire and future service for general employees. Also, the additional DROP year is only available after July 20, 2019.

All vested terminations (employees who worked for more than five years, left, but kept their money in the system) refer to the variable COLA, unless they are drawing retirement by Jan. 1, 2021.

District 4 Councilman Cary Moon expressed concern over the employee vote, however.

“We’re asking employees to vote to increase their contributions and reduce their benefits,” Moon said, adding a suggestion that the city work toward something different in the future and “Get out of the pension business altogether. What we’re trying to do right now is solve for this.”

District 3 Councilman Brian Byrd disagreed.

“When we go to our employees we’ll be standing on very firm ground in terms of what we know to be true, what we think the assumptions are, and how we’ve communicated that,” he said.

“This is not my favorite proposal, either. However, this gets the job done for us.”

Mayor Betsy Price said one of the key parts of the plan is “It keeps us off Austin’s radar.”

If city officials and the employees do not come to an agreement, the Texas Legislature would be forced to step in and solve the problem, according to city officials. That would likely mean the end of all COLAs, based on decisions they’ve made with other cities, Price said.

“It gives us a chance to settle our issues here locally, where it ought to be done,” she said.

She added that she thinks the plan is very fair and that “The employees are going to make an education decision.”

In a letter to city employees prior to the vote, Price wrote:

“While we are optimistic that these changes are the right decision in order to keep the pension fund solvent, it is important to understand that future fluctuations in the economy could necessitate further changes. Our priority will always be to maintain the fund’s solvency in a manner that is fair for both employees and taxpayers.”

Price also she will join City Manager David Cooke and his team on a thorough campaign to help educate employees on details of the plan.

The previous pension proposal went before the council on Nov. 13 and was tabled so additional discussions could be held with the Fort Worth Police Officer’s Association, the Fort Worth Professional Fire Fighters Local 440, and general employees.

The effort to solve this dilemma goes back as far as 2015, when Cooke formed a Pension Review Committee to define and assess the long-term sustainability of the fund and evaluate options to improve the current position.

However, after almost three years of meetings, the committee was unable to reach a consensus on a plan to address the pension issues. In mid-August, Cooke presented his recommendation to the city council. That led to months of discussions and debates before this settlement.

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