Our former chief financial officer was a city appointee to our police and fire pension board.
The last item on the Tuesday, July 22, 2014 city council agenda is hopefully her last gift to us. The item allows the council to discuss and take action on the 2014 actuarial study for both the policeman’s and firemen’s pension funds.
Fire
The firemen’s fund is underfunded by $114 million. In 2012 they were underfunded by $108 million so it looks like we are falling behind about $3 million each year.
It looks like there are 871 people being paid out of the fund at the average rate of $61,851 per year, each.
While the payout rate seems high compared for example to social security, be aware that the current contribution rate is 15.28 percent for the employees and 18.5 percent from the city.
Police
The unfunded amount in the police fund is just short of $194 million at January 1, 2014 whereas it was $174 million on the same date in 2012. Once again we are falling behind, in this case to the tune of $10 million each year.
The annual payout for the 1,052 people receiving checks is $67,317. Policemen pay 13.89% of their salary into the fund while the city contributes another 18.5%.
Further in the hole
Our former chief financial officer was only one of the voting members of the board. However, the “crazies” probably thought she had a responsibility to the taxpayers to let us know what has been happening and get the numbers in balance.
Most private employers match the roughly 7.5% that the average working person is required to put into social security.
The city’s 18.5% is more than twice what private employers are required to contribute.
Why? Some will say that our uniformed public safety employees are underpaid on an annual basis. Maybe they are. Making up for it in retirement is not the answer.
Why don’t we put our new hires into the regular retirement system that most of us must participate in and pay a competitive wage to them during their working years? What is a competitive wage? Why not let the market decide like we do with private employers? If private employers cannot hire the people they need at the pay rate they are willing to pay, they raise the pay rate until they can.
Wouldn’t it be better to have one retirement system for all of us?
We don’t know if our prior chief financial officer will continue to sit on this pension board. I suspect that she will be replaced when her term expires.
Then we only have to worry about what she does or does not do at EPISD.
We deserve better
Brutus
elpasospeak 
We might have to worry what she does at the county level based on how our county commissioners voted yesterday. Carmen lives across the street from Veronica.
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bingo james. this is why a strong mayor system is better than the cm form of government. most cm’s and public employees have never worked in the private system and think they deserve better pay,better retirement, leave, etc. tec. etc.. so far no private firm has hired wilson and carmen either. wonder why ?
this deal just shows you how bad public employees really are and how they cant make it in the real world. we would be better off hiring interns from lauterbach or some other accounting firm that actually have some real world experience.
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I will have to disagree with you about having the same pension available to Police and Fire as to other employees. I think that, if they are willing to put more into it, and if the City matches that amount appropriately, then, more power to them. The obvious problem with these pension funds is management. Other pension plans stay balanced, and avoid further contributions from employers. Texas State Teachers and Texas State Employee pensions come to mind. Look at who manages those, and who manages these local funds. Since our local managers are not managing their funds properly, they should take the time to talk to people at the State level and find where they are going wrong. Pension funds are supposed to be healthy with normal contributions from employees and employers because the money is supposed to be wisely invested so as to assure a return that actually makes enough money to cover expenses. These local shortfalls suggest serious problems, and simply changing contributions is not going to help a bit.
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Your argument assumes that they wish to be effective managers and that the employees are concerned about the integrity of their pension managers. Neither applies here.
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John,
I agree with your point. More power to them.
However another thing to consider is the income redistribution that occurs with our social security system.
Do the people that are in separate pension systems contribute to this?
If they don’t then the question “why do some people have to pay for this while others do not” would come to mind?
Brutus
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As I noted, UT employees contribute to both Social Security and the UT pension system. You are also of course able to establish your own IRA. Some states have opted out of SS – I taught at a state university in Ohio and did not accrue any Social Security credits there. Which was actually damaging, as I was there only three years, got my personal contribution back but not the university’s contribution, and had no SS credit to make up the difference.
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Not being part of Social Security means that they are totally dependent on the contributions and good management of the Fund. UTEP employees have a state pension fund, and also pay into Social Security, as do all federal employees (yes, including legislators). The basic structure should be reconsidered.
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Private industry increasingly uses IRA and other individually funded retirement accounts. We should bring our public sector employees in line with the private sector.
There’s ample evidence that the benefits in the public sector haven’t brought us stellar employees. Witness the City, EPPD, and the County.
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