Fire Bills
Bill Sponsors / Authors:
Rep. Will Metcalf
District 16
Supporting Documents / Links:
- How reforms took Houston's pension systems from an $8.2 billion crisis to a more stable footing
Houston Chronicle - January 31, 2023 - Melisa Duboski Oral Testimony
March 29, 2023 - Bill Kelly Letter
March 17, 2023 - Bob Harvey GHP Written Testimony
March 18, 2023 - Reason Foundation on HB 3340
March 29, 2023
House Bill 3340 - Pension Benefit Expansions
On January 31st, the Houston Chronicle reported on the progress made since the reforms passed, interviewing multiple experts and business community leaders. Their conclusion offered unmistakable clarity:
Now, nearly six years after Mayor Sylvester Turner shepherded a package of reforms through the Texas Legislature and the ballot box, the city's pension systems face a far brighter future, according to business leaders, financial analysts and City Hall officials.
Two data points show the progress made by the Turner Administration on pension reform: Net Pension Liability and Funding Ratios.
- Net Pension Liability (NPL) – The historic Pension Reform reduced the City’s NPL in half (from $8.21B to $4.03B) in FY18. Even with volatile markets the past few years, the NPL in FY22 stood at just $2.19B.
Net Pension Liability/(Asset) |
||||
($ billions) |
Municipal |
Police |
Fire |
Total |
Fiscal Year 2018 Liability Without Reform |
3.18 |
3.44 |
1.59 |
8.21 |
Fiscal Year 2018 Liability Post-Reform |
2.12 |
1.26 |
0.64 |
4.03 |
Fiscal Year 2019 |
2.14 |
1.25 |
0.69 |
4.07 |
Fiscal Year 2020 |
2.45 |
1.51 |
0.98 |
4.94 |
Fiscal Year 2021 |
1.57 |
0.21 |
(0.29) |
1.49 |
Fiscal Year 2022 |
1.60 |
0.72 |
(0.13) |
2.19 |
- Funded Ratio – The Funded Ratios have consistently improved since the reform. The funded ratio has kept steady and even increased in FY22. This is partially due to the carryover from exceptionally great returns from previous fiscal year (FY21) and consistent contributions from the City—largely due to the corridor mechanism built into pension reforms - bolstering the funded status of the plans.
Funded Ratio |
|||
Fiscal Year |
Municipal |
Police |
Fire |
2017 |
56% |
78% |
80% |
2018 |
58% |
79% |
81% |
2019 |
59% |
82% |
83% |
2020 |
59% |
82% |
86% |
2021 |
63% |
85% |
93% |
2022 |
66% |
88% |
95% |
House Bill 3340 would have reversed major components of Senate Bill 2190 that put into place these successful pension reforms. Deputy Director of the Finance Department Melissa Dubowski stated that:
State Statute already has provisions in place that would allow the City and the plans to work together on a sustainable and affordable enhancement of benefits, but only once the plans were fully funded—reaching a level of 100% funded. Increasing benefits now would jeopardize the gains that SB2190 solidified.
When presenting House Bill 3340, there was no actuarial analysis presented on the cost of the proposed changes. As Mayor Turner noted, that’s exactly how Houston got into this mess.
The City of Houston was joined by the Greater Houston Partnership in opposing this measure. While the legislation did pass the Texas House, it did not receive a hearing in the Texas Senate.