Fort Worth Whittles Pensions To Fit Flagging Economy
Fort Worth is scaling back its pension plan for employees. The city’s bill for future retirees is outpacing the pension fund budget by about half-a-billion dollars.
In the booming economy of the 1990’s Fort Worth generously increased pension benefits for employees. But that’s not playing well in today’s economy.
Bill Leonard with the Fort Worth Chamber of Commerce urged council members to make the tough decision and adjust benefits. Leonard noted that just putting more money into the pension fund would not close the fund’s $478 million shortfall, or unfunded liability.
“Last year, the city actually contributed $15 million dollars more than was actuarially required and the liability still grew,” Leonard told the crowd at the City Council meeting. “That liability today is $1200 per man, woman and child in Fort Worth – almost $200 more than it was a year ago.”
Fort Worth Mayor Betsy Price says city services could suffer serious cuts if more and more tax revenue every year has to go into the pension fund.
“The citizens have more than doubled their contributions to the fund. It’s now at $78 million a year. And I believe it’s necessary for employees to take a smaller benefit or work a little longer,” said Mayor Price.
But Steve Hall, President of the Fort Worth Police Association says recalculating and reducing retirement benefits for service going forward is unconstitutional.
“It is out interpretation after consulting with a pension attorney that the reduction would violate the Texas Constitution,” said Hall. “This will force the city of Fort Worth and the taxpayers of Fort Worth into a very costly legal battle to resolve this issue.”
The Police Association vows to sue. Immediately after the vote approving the pension changes, the city asked the court to clarify the law on pensions.
The changes include a slight reduction in the percentage of pay a retiree receives; eliminating overtime from pension calculations; and pension earnings will be based on the five highest salary years rather than the top three.
Council member Jungus Jordan says pension funds are not making the investment return they once did and many cities are scrambling to figure out how they’re going to have enough money to pay retirees.
“With the actions that are being proposed today, Fort Worth is stepping out ahead of the rest of the state to attempt to be the benchmark to put solutions on the table,” said Jordan.
Critics say those solutions are not fair, that the city’s not living up to what it promised.
City officials say they are not taking away benefits already earned, but they are cutting benefits earned starting next year. Current retirees won’t be affected. Fort Worth firefighters are still negotiating with the city.