& Role of TFRW Member/State Senator Joan Huffman

Even as news has broken this week about the likelihood of yet another U.S. city, Hartford, Connecticut filing for bankruptcy, a plan to address Houston’s $8-$10 billion shortfall in its police/firefighter/municipal worker pension fund remains one of the final issues being considered in this session of the Texas Legislature. Without action by the Texas Legislature, the city of Houston’s payment obligations to its city employee pension funds are expected to severely deplete Houston’s general fund before the end of the year, leading to a layoff of city workers and reduction in services.

While a shared reduction in benefits for all city workers together with the borrowing of money by Houston to pay for pension obligations appear to be core elements relating to a solution, there continues to be much dispute as to the details. The Houston firefighters have argued they are being asked to carry a disproportionate amount of the benefit reduction given their portion of the debt. City leadership has sought to secure legislation that does not carry the added burden of a referendum and voter approval. Some members of the State Legislature would prefer to transform future pensions to defined contribution plans so as to avoid unfunded obligations but which could result in less dependable pensions.

Enter Senator Joan Huffman, Chairwoman of the Senate State Affairs Committee and a member of the Senate’s Committee on Finance. Huffman is author of pension reform bill SB2190 which is the single remaining possibility for Houston pension reform legislation during this Legislative Session.

SB2190 is a compromise effort to secure a solution. While no stakeholder gets everything they might want, the bill in its current form: a) reduces future employee benefits; b) authorizes the sale of bonds subject to a city-wide referendum; and c) makes further provision for shifting to a cash balance plan if the pension funds fail to maintain minimum levels as to funding.

With the Senate having approved the bill yesterday (Tuesday, May 23), the bill is now before the House and if passed today (May 24), will be sent to the governor’s desk to be signed into law.

Of concern to all parties, despite their position on the pending bill, is that Houston’s current unfunded liability and pension shortfall (considered by Moody’s to be the fourth worst in the nation) threatens the economic and general welfare of not only Houston and Harris County but Texas at large.

Whether the bill passes or not will most likely be determined by the time this article is published. (Watch for an update.) Either way, should we be surprised that the “last [wo]man standing”, working to forge a solution to this serious situation, is our TFRW sister, Joan Huffman?

Gail Schubot, CFRW Legislative Chair
May 24, 2017

POSTSCRIPT: Today (Wednesday, May 24) the House passed the bill 103-43; it is on its way to Governor Abbott to be signed into law. 

Legislative News
    Gail Schubot
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