Council To Vote Monday On Hiring “Pension Plan Expert”

August 4, 2009

Despite some less than enthusiastic response from other council members at Monday night’s special council meeting, West U. council will vote next Monday night, Aug., 10, on hiring an expert on pension plans to review the city’s retirement plan for employees.

 

Hiring the expert was brought to the table by Mayor Bob Kelly, who said the city’s participation in the Texas Municipal League’s retirement plan needs to be reviewed while looking for ways to fund a possible new police station.

 

Kelly’s primary concern is the city’s “unfunded liability” caused by the new 5 percent guaranteed rate of return on the employee’s investment. The city currently matches employee investment 2 to 1 up to 7 percent of the employee’s salary.

 

“I think we have a very rich pension plan,” said Kelly. “I would like to bring in consultant who is familiar with TMRS (Texas Municipal Retirement System) and the world market, and compare what we have got.”

 

City Manager Michael Ross said that compared to the private sector, the city’s plan could be considered “rich,” but is on par with other municipalities.

 

“It’s hard for staff to recommend departing from what 99.9 percent of the cities in the state and country are doing if we want to be able to attract the best and brightest,” said Ross. “And if we want to be what council said they wanted us to be – an employer of choice.”

 

According the Finance Director Rhonda Daugherty, as of Dec. 12 2008, the city owed $12.4 million in unfunded liability, caused by a less than 5 percent return that the city is now responsible for. The city can pay the money over an 8-year period – during that period, as the economy recovers, the fund could earn enough to wipe out the city’s liability. Daugherty told council that the last year was the only time the fund has earned less than 5 percent.

 

Ross also said that is decreasing benefits was on the table, staff needed to know from a hiring perspective. The police department has already begun a hiring freeze until it is known what, if any, benefits and salaries will be cut.

 

“I personally don’t have an answer to that,” said Kelly. “Every year and every budget, everything’s on the table.”

 

Councilman Steven Segal said he would like to hear from a TMRS representative before considering paying an expert to speak to council.

 

“I have some real problem with having TMRS giving their opinion on what the city should do,” said Kelly. Ross said TMRS would not express an opinion on what the city should do, but would explain the plan and the city’s responsibilities.

 

Councilman George Boehme said that while he views the mayor’s concerns as valid, he thinks the market drives what the city offers in terms of total compensation.

 

“My fear is we get an arrow in our back (if we cut compensation),” said Boehme. “If we are going to continue to want to go out and attract the best people, we are not going to be able to go out and reinvent the wheel; we are going to have to be competitive. I think we need to look at his but when we are through we are stuck with the reality of the marketplace. I think we do whatever we do quickly and tread lightly and not reinvent the wheel because we are not out of step with what everyone else is doing.”

 

Councilman Chuck Guffey said he thinks salary is more of a determining factor for employees than the retirement package – an opinion Ross and Boehme disagreed with in terms of municipal employees.

 

“This is not the same world we were in five or ten years ago,” said Kelly. “The world has changed…I feel somewhat duty bound to citizens of this city to have that pension plan looked at.”

 

“This is how cities may get behind (on employee compensation compared to other benchmark cities),” said Ross. “Last year I was criticized as to how we got behind.”

 

Boehme said he thinks the TMRS representative could come in and show council that continued economic recovery could self-correct the retirement plan.

 

“I think this might be the case,” said Boehme

 

“What I want is an independent guy,” said Kelly. “I don’t want to get us into a bind on this.”

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InstantNewsWestu Staff

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