Fort Worth Workers Approve Pension Fund Fix
After years of work to solve its pension problems, Fort Worth will make changes to shore up the Fort Worth Employees Retirement Fund. City workers, voting over the past few weeks, gave their approval to a series of changes aimed at keeping the fund solvent.
The city has been staring down the barrel of a $1.6 billion shortfall in the retirement program for workers across city agencies, including police and firefighters. Twice, credit agencies have downgraded the city’s credit rating because of the pension problems.
The last several months have been filled with sometimes-tense negotiations to hash out an agreement to improve the pension system’s situation. Fort Worth Mayor Betsy Price said city officials and employee representatives came up with a true compromise.
“I felt positive talking to employees about it, but you still have that little inkling that what if it doesn’t pass,” Price said. “And the worst thing would have been that we would have been at the mercy of our friends in Austin. And we’re the first city that settled it locally.”
The changes will affect nearly 6,600 city workers, who will make larger contributions into the fund starting this summer, and will take less generous benefits when they retire. The city will increase the amount taxpayer money into the fund each year. Retirement fund managers also plan to utilize more conservative projections on investment returns.
“We got our labor groups [and] our general employee representatives in the room, and hammered this out,” Price said. “No one likes it but sometimes that’s the way mediations go. And in this case I think it came out for a really good example of great local collaboration.”
If the plan had failed, state lawmakers in Austin would have stepped in to fix the fund, which city officials and labor leaders agreed was undesirable. In the last legislative session, lawmakers handed down reforms to ailing pension funds in both Dallas and Houston, changes considered more severe than the Fort Worth compromise that was locally crafted.
Still, many in Fort Worth had hoped for a longer-term solution than the plan that was approved by city workers on Monday. Price expects the reforms to keep the fund in good shape for the next five to ten years, depending on how well the financial markets perform.
“I would say that we solved it for today, however we know that it’s not going to be the long-term fix that’s going to be necessary,” said Michael Glynn, head of the city firefighters’ association.
Glynn says some firefighters are happy the plan passed and others are upset, and the mixed reactions depend largely on how many working years each person has left. Still, he says no one is thrilled about the results.
“There’s no doubt about it, what we’re facing is another set of pension cuts to the benefits that they were expecting to have upon retirement.”
That sentiment was echoed by Manny Ramirez, who heads the Fort Worth Police Officers’ Association. He’s pleased the agreement was passed because it was a difficult negotiation and action was needed. But especially for those cops getting close to retirement, Ramirez says the idea that more negotiations may be needed within the next decade isn’t a welcome one.
“It’s a scary feeling to know that you may be five, six, seven years out and the game may change on you again, and all the plans that you’ve been making your entire life may not be there,” Ramirez says.
Ramirez hopes city and labor leaders will remain vigilant and keep negotiating in the hopes that future changes won’t be as severe. If benefit cuts are needed down the line, he worries Fort Worth may struggle to recruit and retain a talented workforce.
“The benefits as they are right now, with the changes, are right in the middle of the road,” Ramirez said. “So I don’t think we can say that we’ve got an attractive benefit package anymore; we can say that we’re average.”
City officials and labor leaders representing city workers, police and firefighters spent years trying to solve the pension problems.
At times, the negotiations grew tense, and labor groups bandedtogether at one point to reject City Manager David Cooke’s initial proposal that would have cut a cost of living adjustment for already-retired workers. Amid the public pressure campaign, city council members voted that plan down, sending everyone back to the negotiating table.
The final plan that city workers voted to approve keeps the cost of living adjustment intact for already-retired city workers, who were not eligible to vote.
“That’s one thing that, morally, we could not justify,” Ramirez says. “And we’re very proud of the fact that we took a stand on that, that we were able to win on that.”
The plan does make changes – and likely eliminates -- the cost of living adjustment for most current workers, though not all current employees are eligible for one. Workers hired by the city after 2013 don’t get any cost-of-living adjustment, the result of the last round of reforms to keep the pension fund afloat.
According to unofficial results Mayor Price posted on Twitter Monday, nearly 75 percent of employees voted, and 60 percent of them approved the plan.