PENSION UPDATE AND COMING
By Bill Elkin
As your Executive Director I
take editorial license on the issues
regarding our pension system.
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
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
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
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
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,
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
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
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
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
Thursday each month.
#3 - HPOPS does not have a
diversified investment portfolio.
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
#6 - The City is the main
source of funding for the pension
are three sources, employee contribution, employer contribution
and investment return. Employee and city contribution determined by
#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
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
gives one session, they can take back the next session.