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Pension and Upcoming Election
Bill Elkin

   
 
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PENSION UPDATE AND COMING ELECTIONS

By Bill Elkin


As your Executive Director I take editorial license  on the issues regarding our pension system.  
With the recent city wide bond election, which resulted  in the passage of the Pension Obligation Bonds 
by a wide margin, I think that we all can feel relief from the possibility that the City of Houston would 
become bankrupt and not fulfill it’s obligation to maintain the three Defined  Benefit pension systems.  

The law that was passed and signed by Governor Greg Abbott, was the fruition of the work by those
involved from the 3 systems, mainly police and municipal employees.  The fire negotiators elected to
abandon the talks for their various reasons. 

I know from first hand experience, as your registered lobbyist, that the negotiations occurred  over the 

span of almost one and a half years, and at times was extremely intense.  But I was kept in the loop by
frequent updates on  the negotiations  from HPOPS negotiators,  Active  Trustee Dwayne Ready  and
Retired Trustee Terry Bratton.  I was informed from the very beginning, that the city was made aware
that the negotiations would only proceed if the city paid the system $750 million that it withheld over
the past fourteen years.  This Mayor Turner agreed to do and negotiations began.

 

The city presented a long list of changes they wanted in all three systems.  One was to combine the 3 into
one system.  Then they wanted total governance, which would mean they would select the trustees to run 
a combined system.  Rejected by the employee negotiators on such issues, the design  to the plans began
and changed weekly, and later  almost daily before a final legislative draft was made.  And, during the
legislative process even some legislators injected some requirements that had to be considered in order to
make a  compromise that would pass both houses of the legislature, namely the Pension Obligation Bond
requirement, which called for a citizen’s vote for passage.  The length of the bill, SB 2190 by Senator Joan
Huffman, was extremely long, and because changes were propose almost daily on the police portion, con-
centration was made to read mainly that section of the bill, not the whole piece of legislation.

 

Now, having seen passage of the Pension  Obligation Bond  issue by the citizens of Houston,  we (members
of the HPROA) can feel a  high degree of certainty that our Defined Benefit Pension Plan will continue for
years to come.  We give thanks to HPOPS negotiators and staff who committed many long hours to bring
this matter to completion.

 

Having given  you some background  on how and what occurred over that past several months, we now must
concentrate  on preserving  the plan that we now operate under.

Your Board of Directors , knowing that an election for the HPOPS Board of Trustee was upcoming, and by 
happenstance was positions #2 and #5, held by Dwayne Ready and Terry Bratton, respectively, on October
12th voted to endorse the re-election of both trustees.  The consensus was, the it is necessary to retain both
trustees for the near future because if their intimate knowledge on the legislative process  of the plan we now
have, and what will be required to keep the plan within the “corridor” that now exists.  Needless to say, the
plan design that the negotiators and the city agreed to in the compromise legislation is now being called a
model for other public pensions nationwide.”  This statement was made by Josh Magee, Chairman of the
Texas Pension Review Board.

 

Since our Board of Directors and Officers offered the endorsement to Ready and Bratton, for their re-election,
some criticism has been raised that no other candidates were not given the opportunity to speak to the Board. 
In response to this criticism, the Board feels that continuity of the current Board of  Trustees is necessary due
to the possibility of renewed attacks on public pensions in a new Legislature in  year 2019.

 

Along with the most recent criticism, directed toward the HPROA,  a series of rumors has begun to circulate
that transparency and a withholding of information by HPOPS occurred during the negotiations and legislative
process.  Nothing could be further from the truth, so let me list them:

#1 - Retirees will not be eligible for a COLA until age 70, or older.

            Not true, there is a three year moratorium for those under 70.  After three years

            COLA will restart  for under 70 retirees.

#2 - HPOPS meetings are secretive and short.

            False. All Board and Committee are publicly  posted and open to the public.

            Committee meeting at held the second Tuesday each month, and Board  meets

            The  second Thursday each month.

#3 - HPOPS does not have a diversified investment portfolio.

            Incorrect.  HPOPS employs  investment groups to manage investments  in all        
areas that maximizes the highest return of investment.  This past year over 16 %  return.

#4 - HPOPS Board was not subject to the recent legislative changes.

            Not true.  All members, active and retired,  were subject to same changes.

#5 - Officers hired after October 9, 2004 will never get pension increases.

            The future cannot be predicted, but as officers get salary increases so will pension
 benefits increase.

#6 - The City is the main source of funding for the pension  system.

            Incorrect.  There are three sources, employee contribution, employer contribution
 and investment return.  Employee and city contribution determined by state law.

#7 - The HPOU and HPOPS did not share information during the legislative process.

            Not true.  The sharing of information was ongoing between HPOPS and HPOU,  
along with coordination of information to the HPROA.  All parties worked in concert with
each other during the ongoing process of making changes to the legislation, and the testimony
presented  in Legislative Committee Public   hearings.         

 

 It is my opinion, unabashedly, that Dwayne Ready and Terry Bratton should be re-elected
to their positions on  HPOPS Board of Trustees.  It must be remembered, that what the legislature
gives one session, they can take back the next session.

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