City Scrambles to Save Pensions
The latest pension debacle comes to us from Ft. Worth via a story in the Fort Worth Star-Telegram by reporter Sandra Baker. Like so many other municipalities across the U.S., the situation has become so dire that Moody’s just lowered Fort Worth’s rating on some general obligation bonds for a second straight year. It appears officials may not be any closer to a solution than they were two years ago, when the group was put together.
So far, about the only thing the nine-member committee can finally agree on after all this time is that the Fort Worth Employees’ Retirement Fund needs a financial fix. But whatever the fix, Fort Worth taxpayers can expect to be on the hook for some of it. Since 1990, taxpayers have taken on most of the cost increases for contributions.
Rick Van Houten, president of the Ft. Worth POA, has been an aggressive advocate for his members. Here he is meeting with reporters following an impassioned presentation before the city council a few years ago protesting a proposal to cut benefits to disabled Ft Worth police officers. Who could even imagine cutting benefits to disabled cops? That’s our world today, however. “The fight is on to save what has been so hard to earn,” Van Houten says.
The committee, established by City Manager David Cooke, is dealing with how to pay for a $1.6 billion unfunded liability that has mounted over the past 25 years from questionable benefit decisions, investment losses and unmet assumptions on investment returns. The unfunded liability is the amount of benefits promised without money to cover it. If it’s not fixed, the retirement fund could run out of money by 2050, consultants recently warned.
Cooke, who also recently started sending informational emails to employees to keep them abreast of the issue and the committee’s work, set an aggressive timetable last fall to have a plan to the City Council in February, with the body adopting ordinances reflecting the proposed changes by May.
But the closer February gets, the farther away it seems that will happen. And that should have taxpayers concerned—the longer a solution is not found, the greater the possibility Fort Worth will face having the Legislature dictate a fix. That’s what happened last year for the Dallas police and fire pension system. In that, Dallas taxpayers were told they were going to contribute tens of millions more dollars to the system.
Fort Worth is not alone in its struggle and the fixes being proposed are commonly used. For the past decade, hundreds of state and local pension funds have cut benefits, increased employee contributions and converted from defined-benefit pensions to do-it-yourself plans, according to the National Conference on Public Employee Retirement Systems.
In 2016, Austin, Dallas, Houston and San Antonio collectively faced $22.6 billion worth of pension fund shortfalls, the Texas Tribune reported.
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