Everyone will have to have skin in the game as Fort Worth and pension leaders discuss how to improve the health of the city's retirement fund, but employees say tensions may flare if cutbacks aren't applied evenly to all work groups.
For that reason, the city's general employees say the city shouldn't ask them to increase pension contributions until after contract discussions with police and fire employees.
"What we're advocating for, from the general-employee perspective and the constituents I represent, is to wait and see what happens during police and fire negotiations and see what kind of impact results out of those negotiations before we would come back to general employees again and look at other alternatives," said Scott Hanlan, who represents general employees on the board of the Employees' Retirement Fund of Fort Worth.
The perception is that only general employees have had to give anything up. The City Council cut benefits for new general employees hired July 1 or later.
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Police and firefighters have not had reductions so far. But contract talks with police are about to begin, and moves to strengthen the Employees' Retirement Fund of Fort Worth are likely to be part of the discussions.
Concessions are also a likely topic as city and pension leaders begin what's expected to be an extended effort to find ways to ensure solvency for the $1.7 billion system. If one employee group makes a concession, such as increasing contributions by current workers or reducing benefits for new hires, other groups will have to do the same, some employees say.
"Everybody's general perception was that we shouldn't ask future general employees to make all the sacrifices that are necessary to improve the status of the fund," Hanlan said.
health at issue
The fund is facing many of the ailments afflicting municipal pension systems across the state. It faces a $576 million unfunded liability and is still recovering from losses from the 2008 market crash. As of December, the fund had a total unrecognized investment loss estimated at $165 million, pension records show.
Thanks to an influx of city contributions in the last five years, though, the pension system is in better shape than anticipated. The stepped-up contributions from taxpayers have improved the fund's amortization period -- the period in which it can pay off all of its obligations.
To support the pension fund, the city contributes 19.74 percent of pay for municipal employees and firefighters, and 20.46 percent of pay for police, according to pension records. Member contributions are 8.25 of pay for municipal and fire employees, and 8.73 percent of pay for police, records show.
Yet concerns about the fund's long-term health remain, and employee groups say that what everyone can agree on is that the health of the fund is primary.
"As I've said many times in the past, it's in my members' best interest to have a sustainable system," said Sgt. Rick Van Houten, president of the Fort Worth Police Association. "We're a stakeholder as much as the citizens and the city itself. Obviously, if the system itself is not sustainable, that does us no good."
City and fund officials have jointly hired a consultant to explore methods to improve funding. "I think the city and the pension board both have the same goal of making sure we can pay retirement benefits as promised," said Ruth Ryerson, executive director of the retirement fund.
In the consultant's first meeting with city and pension officials on Tuesday, it quickly became clear that some painful decisions may have to be made.
"Obviously, if you're looking at an unfunded liability, there are only two ways to address that,'' Van Houten said. "You reduce benefits for new hires or increase contributions, and obviously we're going to look at that and any and all of our options."
The association, he said, will look at "any and all our options," he said. It would primarily explore the area of an increase in employee contributions. He hopes discussions will take no more than a year, but in some years, it has taken longer to sign a contract, he said.
The feeling of general employees is that they should not be asked to make any more concessions at this time because they were the first up to the plate.
The July 1 changes for newly hired general employees are considerable, Hanlan said. For example, new hires must work until age 55 to receive normal or early retirement; overtime earnings, which can cause dramatic spikes in compensation, have been eliminated from the pension calculation; subsidies were removed from the survivor benefit for deaths before and after retirement; and cost-of-living adjustments were eliminated.
"The general employees, as a group, have been already impacted by the process," Hanlan said. General employees would have to vote to increase their contributions.
Police have sent a letter to the city to begin collective-bargaining, Van Houten said. The officers' contract with the city expires Sept. 30, 2012.Van Houten said that police, fire and general employees have agreed to concessions in the past. The city increased its contribution by 5 percent in 2007, and employees agreed to forgo a 5 percent pay increase, he said. "We have a history that has, in the past, been somewhat overlooked," Van Houten said. "We, as employees, have had a history of making sacrifices to benefit the system and everyone as a whole."
Jim Tate, of the Fort Worth Firefighters Association, could not be reached for comment.
Yamil Berard, 817-390-7705