Mayor's Office Press Release

Kinder Institute Releases Initial Analysis of Mayor's Pension Plan

September 22, 2016 -- Rice University’s Kinder Institute has done the preliminary math on Mayor Sylvester Turner’s historic pension reform plan and determined the numbers appear to add up if all of the components are implemented as envisioned. The institute is one of several agencies to analyze the mayor’s proposal since it was unveiled last week.

“I welcome scrutiny of this plan by experts because it helps address the unfounded arguments being made by others who have no financial background,” said Mayor Turner. “There is no doubt this plan relies on a complex package of reforms. Without implementation of each piece, we will not achieve the anticipated results. Thankfully, the pension systems are sharing more data than ever before and are committed to continue working on information sharing so we can manage costs going forward.”

According to Kinder Institute Director Bill Fulton, the mandatory cost containment provision in the mayor’s plan, if executed properly and consistently over time, could provide a way for both sides to share in the upside and sacrifice when times are tough. Fulton said the plan outline seemed to show “shared sacrifice” on the part of both the city and its workers.

The mayor’s plan includes:

  • Benefits changes that immediately reduce the City’s $7.7 billion unfunded liability by $2.57 billion while still maintaining defined benefit plans for City employees
  • $1 billion in POBs to further reduce the unfunded liability
  • A closed 30-year payoff period for the remainder of the liability
  • A more realistic 7% rate of return for future investments
  • A requirement that the city make the full required annual contributions to the pension systems
  • Limits on annual costs going forward and mandatory negotiations on benefits changes to bring costs back in line if they exceed the specified limits

The Kinder Institute did the initial analysis in a blog post the day of Mayor Turner’s announcement based only on information that is publicly available. Mayor Turner did not request the analysis. A more detailed analysis is expected later.

The Kinder Institute’s analysis can be found here -- Kinder Institute Pension Analysis.