Fort Worth pension: ‘You can’t fix it at one point and assume it will always be good’

The city’s consultants warned there are no easy fixes for the Fort Worth Employees’ Retirement Fund $1.6 billion unfunded liability.

If no action is taken to stabilize it, the city’s $2.3 billion fund could run out of money by 2048.

Regardless of what the city does to shore up the fund, there’s no guarantee it will fix the fund permanently, said actuary Paul Schrader during a budget workshop on Thursday.

“You can’t fix it at one point and assume it will always be good,” Schrader said.

That was one of the assessments laid out to the Fort Worth City Council during a budget workshop Thursday about how to fix the city’s $1.6 billion unfunded liability. The pension fund covers more than 6,000 active city employees and 4,400 retirees.

The Fort Worth Professional Firefighters Association Local 440 urged the City Council to leave the retirement’s fund cost of living adjustments, also known as a COLA, alone.

“We can’t touch COLA’s for actual retirees,” said Michael Glynn, president of the firefighters association.

To keep the COLA, the firefighters association suggested increasing both the city and employee contributions.

Manny Ramirez, president of the Fort Worth Police Officers Association., offered two alternatives that also increased the city and employee contributions that would meet the funding requirements to fix the shortfall. He echoed the concern about messing with the COLA.

“You can’t walk away from the benefit that’s already been earned,’ Ramirez said.

Both Glynn and Ramirez stressed that it was important for the city to come up with a plan that their membership can support.

Any change in employee contributions must get 50.1 percent of all employees to support — not just those who show up to vote.

“It’s got to be a plan that’s fair,” Ramirez said “It’s got to be a plan that doesn’t break promises.”

Ramirez also said that the pension fix shouldn’t be paired with a proposed 2-cent cut in the property tax rate.

“That’s not the point at all,” Ramirez said. “It’s budget prioritization.”

Ramirez also suggested the city keep its pension task force intact going forward to deal with any future pension issues.

While City Council members expressed hope for a solution, some questioned whether it would be enough.

Councilman Cary Moon suggested the the Fort Worth’s system’s 7.75 percent assumed rate of return in the pension fix may still be too high.

And Schrader, the actuary, said the city needs to consider “what are we going to do if we’re wrong” about the assumptions.

“The only practical way to reduce the unfundned liabilites for this type of plan is the COLA,” Shrader said..

This story was originally published August 16, 2018 at 3:54 PM with the headline "Fort Worth pension: ‘You can’t fix it at one point and assume it will always be good’."