Pension Reform to Save Houston from Detroit's Fate

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This is the second in a series of white papers I will be releasing on what I believe to be important issues facing the city of Houston that will also have the benefit of illustrating my approach to policymaking. The first can be viewed here.

Pension Reform Proposal:

Executive Summary

Jonathan Hansen for Houston City Council

At-Large Position 4


Fellow Houstonians -- 

  • Houston’s operating deficits are unsustainable, and they are primarily driven by pension costs. Pensions are the reason Moody’s recently downgraded the outlook for the city’s $3 billion in bonds to negative and why the city is projected to run a $126 million deficit next year.
  • In 2013, Houston’s unfunded actuarial liabilities were $3.6 billion and their unfunded market value liabilities were $13.7 billion – 788% of tax revenue.
  • If the city does not act to resolve the looming pension crisis it will eventually head towards bankruptcy like Detroit and Greece before it. This would likely ultimately result in city pensioners having their pensions reduced in bankruptcy court - a tragic result that would benefit no one.
  • The seeds of the pension crisis were planted with a "benefit enhancement" that began in 2001 during the administration of Mayor Lee Brown. The pensions were virtually fully funded up until that point. 
  • Houston needs to move to a defined contribution retirement system. If it had one in full effect for the 2016 budget year instead of a defined benefit retirement system, the city would in one year save $286.8 million – enough to wipe out the $126 million projected deficit, replace the $125 million per year ReBuild Houston funds without any new taxes, and leave $33.8 million to invest in additional police officers, raising the pay of underpaid municipal employees, invest in quality of life initiatives, or accelerate paying down the city’s $3 billion in debt (and likely $600 million in ReBuild Houston tax rebates.)
  • Transitioning to a defined contribution system would increase the city’s debt load in the short run, but markets would look favorably upon this increase in debt because it would be in the service of structurally balancing the city’s budget in the long run.
  • While it would be desirable to have local control over the city’s pensions, it is not necessary to begin putting together an adequate reform proposal. Houston must seize the initiative and pass a pension reform proposal to present to the state legislature while still ultimately pressing for local control of the city’s pensions.
  • The Texas Legislature would approve of a pension reform that moves the city’s pensions towards a defined contribution retirement system once the stakes are made plain and they see the city’s leadership clamoring to avert a financial disaster that would be an embarrassment to the state. Without city leadership on this issue, however, the legislature cannot be expected to act proactively on its own to help Houston solve a problem of the city's own making.
  • All candidates for municipal office this year should release their own detailed proposals for dealing with the city’s pension crisis. They should also release any and all questionnaires they filled out seeking the endorsement of municipal, fire, and police unions and affiliated organizations so Houstonians can see exactly what bargains have been made on their behalf in seeking those endorsements.
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Pension Reform White Paper
Jonathan Hansen for Houston City Council At-Large Position 4 

What do Detroit and Greece have in common? Both were driven into bankruptcy to a significant degree by pension obligations that far exceeded their ability to both fund those pensions and continue to provide the core government functions their residents and citizens have every right to demand. 

The results in both cases should serve as a cautionary tale to both taxpayers and pensioners. Taxpayers must guard against elected politicians over obligating their tax dollars, and pensioners must be wary of ending up with a deal that’s too good to be true. The cold hard reality pensioners in Detroit and Greece have faced is having the income they rely on reduced – in some cases dramatically so – at the point in their lives that they are most vulnerable.

What Do Detroit and Greece Have to Do With Houston?

Unfortunately, Houston – like many large cities all across America – is following the same trajectory as Detroit and Greece, and for the very same reason.

This very issue is the reason I declared myself a candidate for Houston City Council – and it is the cornerstone of my campaign. I went to several forums and listened intently as city council candidates and mayoral candidates either whistled past the graveyard on this issue or proposed remedies I felt were woefully inadequate.

I’m beyond passionate about this issue because if we do not get it right, nothing else matters:

  • We will not be able to repair our roads;
  • We will not be able to hire more police officers to address our recent spike in violent crime and property crime; and
  • We will not be able to otherwise improve the quality of life in the city of Houston if we do not address the looming pension crisis that threatens to swallow the city’s budget whole.

Houston Finance Director Kelly Dowe is projecting a $126 million annual deficit for the next fiscal year, and the city is out of accounting gimmicks and one-time fixes that have been employed to remedy previous budget deficits.

The reason? “[A] structural gap driven chiefly by soaring pension costs.” [Morris, Mike. “City financial chief no longer ‘crying wolf’ about deficit,” Houston Chronicle (07/05/2015.)]

According to an economics working paper by Joshua Rauh of the Hoover Institution at Stanford University in the forthcoming Urban Fiscal Stability and Public Pensions (University of Pennsylvania Press,) the unfunded actuarial liability of Houston’s pensions as of 2013 were $3.6 billion. However, it also found that the unfunded market value liability of its unfunded pensions – which may be a better measurement because it “values liabilities using bond yields rather than expected returns on assets” – was $13.7 billion, 788% of that year’s tax revenue. (Rauh, Joshua. “Why City Pension Problems Have Not Improved, and a Roadmap Forward,” Urban Fiscal Stability and Public Pensions, Susan M. Wachter, ed. University of Pennsylvania Press, Forthcoming.)

On Thursday, July 2, Moody’s Investors Service downgraded the outlook to negative for Houston’s $3 billion in Aa2-rated general obligation limited tax debt. Moody’s said the downgrade reflects “the challenges the city faces from growing pension costs….”

What did Moody’s say would cause Houston’s outlook to be upgraded from negative to stable? “Managed pension obligations that do not threaten the city's fiscal health; [and] structurally balanced operations with full required pension contribution.”

Meanwhile, Moody’s said the city’s failure to address the structural gap driven by pension costs would cause the city’s bond rating to be downgraded – which in turn could make it more expensive for the city to borrow funds in the future. This is particularly true since bond investors in the past several years have been delivered a wake-up call by governments as diverse as Argentina, Greece, Detroit, and Stockton, California that the risk attached to government bonds is not simply theoretical – in fact, it is all too real.

While bankruptcy is not presently imminent for Houston, it is also true that it will be equally unavoidable if we do not change course. The sooner we act to resolve our pension crisis the better.

I’m one who believes there is no time like the present to get started.

How Did Houston Get Here? 

In 2001, the Houston Municipal Employees Pension System (HMEPS) proposed a benefit increase that it estimated would cause the city’s contribution rate to rise slightly to 15% of payroll. In reality, the city’s contribution rate has skyrocketed to 53% of payroll.

Also in 2001, the Houston Firefighter’s Relief and Retirement Fund (HFRRF) – in a move supported by then-Mayor Lee Brown and approved by the State Pension Review Board – exercised a provision of the HFRRF statute that allowed its board to increase benefits if doing so would not pose “a material risk of jeopardizing the fund’s ability to pay any existing benefit.” After implementation, to the surprise of everyone, the city’s contribution tripled from 10% to 30% of payroll.

As for the Houston Police Officers’ Pension System (HPOPS,) its “benefit spiking” also caused city contributions to significantly increase from 11% to 30% of payroll.

Finally, all pensions suffered from overly optimistic rates of investment return that had to be made up for with city funding when they did not achieve their target of 8.5% return. [Long Range Financial Management Task Force, “Review of Pension Systems” (November 7, 2011.)]

Needless to say, the coincidence of the city being forced to increase its pension obligations to such large sums in such short periods of time has put significant strains on the city’s budget – crowding out funds needed to expand city services in the midst of a tremendous population growth spurt.

Yet even as the city has increased the amount it has paid to the pension systems, it has not been enough to keep pace with the pensions’ voracious appetite for ever-increasing sums of tax dollars. This has caused pensions that were virtually balanced before the 2001 changes to become woefully underfunded in order to pay promised benefits.

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How Can Houston Avoid Detroit’s and Greece’s Fate?

Pension crises are not new phenomena. The private sector faced this same predicament decades ago as pension costs spiraled out of control when American companies faced suddenly stiff international competition that disrupted the previous corporate order.

Their solution to pension-driven bankruptcies was to no longer guarantee pensions for life but instead to make periodic deposits in an employee’s retirement investment account [such as an Individual Retirement Account (IRA) or a 401(k)] each and every pay period. The employee was guaranteed nothing more and nothing less for the duration of his employment – however long or short that was.

This was a shift from defined benefit retirement systems (pensions) to defined contribution retirement systems (IRAs and 401(k)s.)

If Houston today offered a 403(b) defined contribution retirement system – which is the public sector equivalent of a 401(k) – instead of a pension with the current formulas, I estimate that the city of Houston would be saving $284.8 million annually. (See Appendix A for relevant calculations.)

Those savings do not include savings derived from wiping out annual unfunded liabilities that would be both real and substantial savings, as well.

Also, if municipal employees with a defined contribution retirement wanted the stability of a guaranteed income in their retirement - which is seen as the primary advantage of the defined benefit - those employees could use their defined contribution funds to buy an annuity investment that would achieve the same goal.

In addition to financial savings, the benefit of a defined contribution retirement system is that this would protect taxpayers from having one incompetent administration accidentally set off a fiscal time bomb set to explode years after he or she left office. This is because all payments would have to be made each and every pay period. No exceptions.

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Gone would be the days of politicians promising municipal employees that there were pots of gold at the end of rainbows in their retirement in exchange for votes at the ballot box in the next election - which is a serious flaw among many with the current system as described by Elena Farah, Senior Fellow for Public Financial Sustainability at the Hobby Center for Public Policy at the University of Houston ("How sustainable are Houston's pensions?" Houston Chronicle, July 15, 2013).

Such stories make for harmless fairy tales to regale a child with, but it’s a cruel joke to play on people who have worked their whole lives in order to earn such promises that will sooner or later be left unfulfilled out of necessity either by more prudent politicians guiding the city through the inevitable resulting crisis – or by a bankruptcy judge.

Likewise, it would protect municipal pensioners from being left holding nothing but empty promises negotiated by their labor leaders who must have known or should have known full well that they came away with a deal that was so exorbitant that there was no way taxpayers could ever afford to pay that bill.

After all, if the world’s oil and gas capital city cannot meet those obligations in the midst of an oil and gas boom, when exactly will it be able to fully fund its obligations? Never.

The current pension formula – wittingly or not – turns our city’s civil servants instead into civil masters, and that is an imbalance that must be corrected.

The estimated savings calculated from moving to a defined contribution retirement system takes into account the following assumptions:

1. The city of Houston would pay 4.9% of payroll into 403(b) accounts for civilian employees who also participate in Social Security, which is the average organizational amount according to the Plan Sponsor Council of America (PSPA.) In comparison, the average private company contributes 2.5% to an employee’s 401(k) – also according to PSPA.

2. The city of Houston would pay 11.1% of payroll into the 403(b) accounts for police officers and firefighters. Police officers and firefighters do not participate in Social Security, so the 11.1% figure comes from adding the 6.2% that an employer would normally be required to contribute to Social Security in addition to the 4.9% average organizational contribution.

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Additionally, I would submit that police officers and firefighters should be required to contribute at least a matching 6.2% of their salary to the 403(b) account consistent with an employee’s contribution to Social Security, but that plays no part in this analysis.

The $284.8 million in estimated annual savings is an interesting figure because if it held up, it would not only completely wipe out the city’s projected $126 million budget deficit, but it would leave a balance of a little more than $158.8 million.

The reason that is interesting is the ReBuild Houston city charter amendment that was recently struck down by the Texas Supreme Court (on the grounds that the ballot language did not sufficiently identify the amendment’s purpose, character, and chief features when it failed to state that drainage charges were also included) instituted a special purpose tax to raise at least $125 million a year “for the enhancement, improvement and ongoing renewal of Houston’s drainage and streets.” (Proposition 1 Charter Amendment ballot language.)

If we then subtracted the $125 million a year for enhancing and improving Houston’s drainage system and streets (without a re-vote on ReBuild Houston or any new taxes) from the remaining $158.8 million in annual savings produced by switching retirement system, that would still leave $33.8 million.

There are several possibilities among many competing interests for these remaining funds, but my priorities would be to:

  1. Add police officers to patrol the streets and address the city’s rising violent crime and property crime rates;
  2. Conduct a review to see which careers and job functions may have the most deficient salaries in comparison to comparable jobs in the private sector, and do our best to close the gap; and
  3. Use any remaining money to accelerate paying down the $3 billion in outstanding debt the city owes in addition to the approximately $600 million in ReBuild Houston tax rebates the city will likely need to repay in light of the Texas Supreme Court decision striking down the tax.

Transitioning from a Defined Benefit to a Defined Contribution Retirement System

It is unlikely that the city could flip the switch and move from a defined benefit retirement system to a defined contribution system for everyone overnight – however I believe that my analysis makes clear that there is no doubt this is the direction the city of Houston should head.

New employees should certainly be placed on the defined contribution system upon gaining employment. The city should then look at buying out the pension obligations of employees who have been with the city for five to 10 years, and funding their 403(b) retirement accounts with the 4.9% of payroll the city would be funding under the new proposed plan for each year they have been with the city. Additionally, the average annual return of the Dow Jones Industrial Average over that period of time should be compounded and added to their account as well.

Then, perhaps current employees with more than 10 years of experience could be transitioned onto the defined contribution system while still guaranteeing them proportional benefits they have already accrued in the defined benefit system. If feasible, the city should do its very best to not disturb the retirement system for those within five to 10 years of retiring – although we obviously must revise downward the benefits promised going forward so that the city’s obligations are capped at 15% of payroll from this point forward.

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Also, instead of guaranteeing pensioners annual four percent increases, cost of living adjustments should be made according to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI), which has averaged closer to two percent or less in most years. The CPI is one of the most accurate measurements of inflation – and thus of rises in cost of living – that we have. In 2014 it was 0.8%.

Otherwise, the city should certainly do everything in its power to guarantee current pensioners receive what they have been promised to date. However, going forward the city must stop making promises that it knows it has no capacity to keep.

It should also be noted that the city of Houston is not legally required to keep all of its current obligations to pensioners since Houston voters in 2004 opted-out of a state law that otherwise required jurisdictions that failed to opt-out to keep all past promises to current pensioners. [Feldstein, Dan and Kristen Mack, “Voters overwhelmingly approve city pension opt-out proposition,” Houston Chronicle (05/15/2004.)]

That said, if we act now to reform the pension system I am confident that the city of Houston can keep all of the promises that it has made – saving Houston pensioners from the fate of their counterparts in Detroit and Greece. Going forward, we will only making promises we know we can keep in perpetuity.

However, the more the city of Houston delays reform, the less likely it will be that the city will be able to keep any promises at all.

Short-Run Increase in Debt to Achieve Long-Term Structural Balance

In the short run, the transition from a defined benefit retirement system to a defined contribution retirement system will most certainly result in the city’s debt burden increasing as money that present workers normally would be paying to fund current pensioners is instead diverted to their own 403(b) accounts. However, I believe this is acceptable and that the bond markets would look favorably upon this type of borrowing because it would be debt taken on for the sake of righting our long-term structural imbalances – which is what Moody’s and other bond rating agencies are most concerned with at this time.

A good comparison would be someone who takes out a lower-interest bank loan to pay off a high-interest credit card balance. Those who suggest the city take out pension obligation bonds in order to maintain the current pension system are, on the contrary, suggesting the city do the equivalent of taking out a home equity loan to pay the minimum balance on one’s credit card. That is a sure way to lose one’s house, and it would accelerate Houston’s march towards bankruptcy court.

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What Role Does the Texas Legislature Play?

Either the relevant pension boards or the Texas Legislature must approve whatever pension reform is proposed by the next mayor and passed by the Houston City Council.

Two great pieces of legislation were advanced this past legislative session – one by Rep. Jim Murphy and one by Sen. Paul Bettencourt – to give local governments control over their pension systems without having to seek state approval. I think it is not a coincidence both are from Houston. Local control makes sense because, after all, what employer has to ask permission to alter the benefits package it is offering its employees?

That said, Houston is not frozen in place until the Texas Legislature reconvenes so we can beg for local control again. The best way to get local control is to take control of the process, craft the type of pension reform we want, and lobby the Texas Legislature to agree to it in the next session – if we can even wait that long.

No one in Texas wants to see the state’s largest city go under and suffer the public humiliation that would come if Houston financially collapsed like Detroit did in 2013. It would put a full-stop brake on the narrative of the Texas miracle and the Lone Star state’s arrival as America’s economic juggernaut. The last thing Gov. Greg Abbott and the Texas Legislature want to hear is the New York Times Editorial Board, Paul Krugman, and all of those waiting for Texas to stumble saying, “I told you so – it was all smoke and mirrors. There’s nothing special about Texas. It turns out they had more in common than they knew with the Greeks they were just ridiculing.”

That is exactly what will happen if the Texas Legislature does not let Houston save itself from the foolish mistake of an administration that almost governed this city into the ground almost 15 years ago, and I have every confidence that the legislature will not let us down if we make clear how much is at stake.

Where Do Other Candidates Stand?

So far, I feel like I have witnessed many a student council campaign being waged for city council.

In student council elections, one sees candidates grandstand and talk about the clubs and activities they have been involved with, hope people will like their smile, hope people will think they are friendly, and hope that they will share enough similarities with enough members of the student body to get elected.

I had always hoped that higher-level elections – such as the right to represent the great people of the nation’s fourth largest city – would be different. So far, I have been mostly disappointed.

This city has real problems that are very well known that need addressing; none more so than the city’s looming pension crisis – as I’ve tried to make clear.

Houston voters shouldn’t be expected to just put their faith in whoever has put together the most impressive resume and most convincingly say they are “ready to lead on day one.” Although impressive resumes are entirely desirable, they are not sufficient. Houstonians have the right to demand candidates back up those resumes with proposed solutions to the city's current challenges – before they vote – so that they can evaluate those proposals.

Presented here is my endeavor to address what I believe is the city's most pressing challenge – and now I think we deserve to hear from all of the other candidates as well.

That is why I am calling on all municipal candidates who have not already done so – candidates for mayor, controller, at-large and district council seats alike whether they be an incumbent, challenger, or seeking an open seat – to put forward a coherent plan to solve this city’s pension crisis.

Likewise, all candidates seeking the endorsement of police, fire, and municipal unions and affiliated organizations should immediately disclose any and all questionnaires submitted to those organizations so that Houstonians may see what bargains candidates have made in their attempt to secure their endorsements.

Let us put forward our plans for solving this city’s current problems and run on our ideas so that Houstonians know exactly what to expect from us. When they see how we analyze and approach these challenges, they will be able to trust us to handle the challenges that lie ahead that we do not yet know.

 

Sincerely,

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Jonathan Hansen
For a Greater Houston
Houston City Council At-Large Position 4, candidate
HansenForHouston.com

 

 

Appendix A: Calculation of Estimated Savings to the City of Houston Derived from Switching from a Defined Benefit Retirement System (Pensions) to a 403(b) Defined Contribution Retirement System

 

General Fund

           

Fire Department

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

5,885,118

 

 

 

 

 

Salary Base Pay - Class.

241,617,521

 

 

 

 

 

Salary Part Time - Civilian

226,106

 

 

 

 

 

Salary Assgnmnt Pay-Class.

5,926,938

 

 

 

 

 

Salary Ed./Incent.-Class.

5,043,562

 

 

 

 

 

Overtime - Civilian

28,300

 

 

 

 

 

Overtime - Classified

22,475,713

 

 

 

 

 

Bilingual Pay - Civilian

11,748

 

 

 

 

 

Bilingual Pay - Classified

11,654,903

 

 

 

 

 

Temporary Higher Class Pay

1,300,000

 

 

 

 

 

Pension - Civilian

 

1,613,381

6,151,272

301,412

1,311,969

 

Pension - Fire

 

92,624,950

288,018,637

31,970,069

60,654,881

 

Municipal Courts Department

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

14,021,233

 

 

 

 

 

Salary Part Time - Civilian

963,144

 

 

 

 

 

Overtime - Civilian

10,000

 

 

 

 

 

Premium Pay - Civilian

152,644

 

 

 

 

 

Bilingual Pay - Civilian

81,013

 

 

 

 

 

Pension - Civilian

 

3,836,199

15,228,034

746,174

3,090,025

 

Police Department

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

49,479,690

 

 

 

 

 

Salary Base Pay - Classified

338,444,066

 

 

 

 

 

Salary Part Time - Civilian

96,573

 

 

 

 

 

Salary Assignment Pay - Classified

1,582,716

 

 

 

 

 

Patrol Incentive Pay

2,842,000

 

 

 

 

 

Salary Education/Incentive - Class.

11,629,762

 

 

 

 

 

Overtime - Civilian

1,745,000

 

 

 

 

 

Overtime - Classified

11,251,137

 

 

 

 

 

Premium Pay - Civilian

555,159

 

 

 

 

 

Bilingual Pay - Civilian

135,000

 

 

 

 

 

Bilingual Pay - Classified

2,153,651

 

 

 

 

 

Shift Differential Pay - Classified

4,377,073

 

 

 

 

 

Training Incentive - Classified

30,881,396

 

 

 

 

 

Weekend Premium Pay - Classified

3,760,504

 

 

 

 

 

Temporary Higher Class Pay

200,805

 

 

 

 

 

Pension - Civilian

 

13,537,654

52,011,422

2,548,560

10,989,094

 

Pension - Police

 

146,379,380

407,123,110

45,190,665

101,188,715

 

General Services

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

6,775,520

 

 

 

 

 

Salary Part Time - Civilian

34,034

 

 

 

 

 

Overtime - Civilian

222,000

 

 

 

 

 

Premium Pay - Civilian

20,000

 

 

 

 

 

Bilingual Pay - Civilian

1,808

 

 

 

 

 

Pension - Civilian

 

1,853,782

7,053,362

345,615

1,508,167

 

Planning & Development

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

4,908,994

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

7,227

 

 

 

 

 

Pension - Civilian

 

1,343,100

4,916,221

240,895

1,102,205

 

Public Works & Engineering

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

967,924

 

 

 

 

 

Overtime - Civilian

17,000

 

 

 

 

 

Premium Pay - Civilian

50

 

 

 

 

 

Pension - Civilian

 

264,822

984,974

48,264

216,558

 

Solid Waste Management

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

18,465,362

 

 

 

 

 

Salary Part Time - Civilian

274,076

 

 

 

 

 

Overtime - Civilian

1,574,408

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

19,962

 

 

 

 

 

Pay for Performance - Municipal

192,843

 

 

 

 

 

Pension - Civilian

 

5,052,124

20,526,651

1,005,806

4,046,318

 

Health & Human Services

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

24,606,385

 

 

 

 

 

Salary Part Time - Civilian

759,997

 

 

 

 

 

Overtime - Civilian

199,000

 

 

 

 

 

Premium Pay - Civilian

24,000

 

 

 

 

 

Bilingual Pay - Civilian

112,020

 

 

 

 

 

Pay for Performance - Municipal

0

 

 

 

 

 

Pension - Civilian

 

6,732,286

25,701,402

1,259,369

5,472,917

 

Housing & Community Development

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

199,404

 

 

 

 

 

Pension - Civilian

 

54,557

199,404

9,771

44,786

 

Library

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

18,294,881

 

 

 

 

 

Salary Part Time - Civilian

912,760

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

21,640

 

 

 

 

 

Pay for Performance - Municipal

14,300

 

 

 

 

 

Pension - Civilian

 

5,005,489

19,243,581

942,935

4,062,554

 

Neighborhoods

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

5,475,781

 

 

 

 

 

Salary Part Time - Civilian

41,760

 

 

 

 

 

Overtime - Civilian

80,219

 

 

 

 

 

Bilingual Pay - Civilian

27,107

 

 

 

 

 

Pension - Civilian

 

1,498,168

5,624,867

275,618

1,222,550

 

Parks & Recreation

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

23,235,214

 

 

 

 

 

Salary Part Time - Civilian

1,697,995

 

 

 

 

 

Overtime - Civilian

391,487

 

 

 

 

 

Premium Pay - Civilian

24,031

 

 

 

 

 

Bilingual Pay - Civilian

34,800

 

 

 

 

 

Pension - Civilian

 

6,357,154

25,383,527

1,243,793

5,113,361

 

Administrative & Regulatory Affairs

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

10,167,332

 

 

 

 

 

Salary Part Time - Civilian

346,619

 

 

 

 

 

Overtime - Civilian

49,335

 

 

 

 

 

Premium Pay - Civilian

23,930

 

 

 

 

 

Bilingual Pay - Civilian

52,663

 

 

 

 

 

Pay for Performance - Municipal

25,698

 

 

 

 

 

Pension - Civilian

 

2,781,782

10,665,577

522,613

2,259,169

 

City Controller's Office

2015 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

4,971,619

 

 

 

 

 

Salary Part Time - Civilian

33,506

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

1,820

 

 

 

 

 

Pension - Civilian

 

1,260,800

5,006,945

245,340

1,015,460

 

City Council

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

4,196,519

 

 

 

 

 

Salary Part Time - Civilian

631,809

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

4,518

 

 

 

 

 

Pension - Civilian

 

1,148,161

4,832,846

236,809

911,352

 

City Secretary

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

433,417

 

 

 

 

 

Salary Part Time - Civilian

61,467

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

0

 

 

 

 

 

Pension - Civilian

 

118,582

494,884

24,249

94,333

 

Finance

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

9,767,996

 

 

 

 

 

Salary Part Time - Civilian

0

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

907

 

 

 

 

 

Pension - Civilian

 

2,672,515

9,768,903

478,676

2,193,839

 

Houston Info. Tech. Svcs. (HITS)

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

12,524,092

 

 

 

 

 

Overtime - Civilian

224,500

 

 

 

 

 

Premium Pay - Civilian

5,000

 

 

 

 

 

Bilingual Pay - Civilian

0

 

 

 

 

 

Pension - Civilian

 

3,426,590

12,753,592

624,926

2,801,664

 

Human Resources

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

2,116,318

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

5,422

 

 

 

 

 

Pension - Civilian

 

579,028

2,121,740

103,965

475,063

 

Legal

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

10,142,865

 

 

 

 

 

Salary Part Time - Civilian

85,888

 

 

 

 

 

Bilingual Pay - Civilian

7,232

 

 

 

 

 

Pension - Civilian

 

2,775,087

10,235,985

501,563

2,273,524

 

Mayor's Office

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

4,123,609

 

 

 

 

 

Salary Part Time - Civilian

0

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

4,519

 

 

 

 

 

Pension - Civilian

 

1,128,218

4,128,128

202,278

925,940

 

Office of Biz. Opportunity

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,754,911

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

3,616

 

 

 

 

 

Pension - Civilian

 

480,144

1,758,527

86,168

393,976

 

Enterprise Funds

 

 

 

 

 

 

Aviation

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

67,712,058

 

 

 

 

 

Salary Part Time - Civilian

682,515

 

 

 

 

 

Overtime - Civilian

3,162,902

 

 

 

 

 

Premium Pay - Civilian

718,637

 

 

 

 

 

Bilingual Pay - Civilian

93,978

 

 

 

 

 

Pay for Performance - Municipal

0

 

 

 

 

 

Pension - Civilian

 

18,526,024

72,370,090

3,546,134

14,979,890

 

Water & Sewer (CUS)

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

106,622,453

 

 

 

 

 

Salary Part Time - Civilian

204,600

 

 

 

 

 

Overtime - Civilian

7,225,273

 

 

 

 

 

Premium Pay - Civilian

284,500

 

 

 

 

 

Bilingual Pay - Civilian

105,044

 

 

 

 

 

Pension - Civilian

 

29,171,930

114,441,870

5,607,652

23,564,278

 

Ded. Drng. & St. Renewal Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

20,845,185

 

 

 

 

 

Overtime - Civilian

1,561,258

 

 

 

 

 

Premium Pay - Civilian

1,113,450

 

 

 

 

 

Bilingual Pay - Civilian

7,232

 

 

 

 

 

Pension - Civilian

 

5,703,246

23,527,125

1,152,829

4,550,417

 

Storm Water Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

12,859,601

 

 

 

 

 

Salary Part Time - Civilian

32,207

 

 

 

 

 

Overtime - Civilian

1,179,186

 

 

 

 

 

Premium Pay - Civilian

43,707

 

 

 

 

 

Bilingual Pay - Civilian

3,616

 

 

 

 

 

Pension - Civilian

 

3,518,397

14,118,317

691,798

2,826,599

 

Special Revenue Funds

 

 

 

 

 

 

BARC

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

5,032,127

 

 

 

 

 

Salary Part Time - Civilian

107,108

 

 

 

 

 

Overtime - Civilian

13,000

 

 

 

 

 

Premium Pay - Civilian

9,500

 

 

 

 

 

Bilingual Pay - Civilian

27,120

 

 

 

 

 

Pension - Civilian

 

1,376,789

5,188,855

254,254

1,122,535

 

Parking Management

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

3,075,310

 

 

 

 

 

Overtime - Civilian

50,000

 

 

 

 

 

Premium Pay - Civilian

10,840

 

 

 

 

 

Bilingual Pay - Civilian

12,613

 

 

 

 

 

Pension - Civilian

 

841,412

3,148,763

154,289

687,123

 

Maint. Renewal & Replacement

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

3,336,730

 

 

 

 

 

Overtime - Civilian

218,500

 

 

 

 

 

Premium Pay - Civilian

6,946

 

 

 

 

 

Bilingual Pay - Civilian

904

 

 

 

 

 

Pension - Civilian

 

912,931

3,563,080

174,591

738,340

 

Essential Public Health

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

8,719,899

 

 

 

 

 

Salary Part Time - Civilian

2,150,181

 

 

 

 

 

Overtime - Civilian

2,400

 

 

 

 

 

Bilingual Pay - Civilian

34,200

 

 

 

 

 

Pension - Civilian

 

2,385,762

10,906,680

534,427

1,851,335

 

Health Special Revenue

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,021,991

 

 

 

 

 

Salary Part Time - Civilian

53,568

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

1,800

 

 

 

 

 

Pension - Civilian

 

279,619

1,077,359

52,791

226,828

 

Special Waste

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,767,740

 

 

 

 

 

Salary Part Time - Civilian

191,162

 

 

 

 

 

Overtime - Civilian

34,100

 

 

 

 

 

Bilingual Pay - Civilian

6,960

 

 

 

 

 

Pension - Civilian

 

483,654

1,999,962

97,998

385,656

 

Swimming Pool Safety

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

650,214

 

 

 

 

 

Overtime - Civilian

12,468

 

 

 

 

 

Bilingual Pay - Civilian

1,355

 

 

 

 

 

Pension - Civilian

 

177,897

664,037

32,538

145,359

 

Digital Houston

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

203,476

 

 

 

 

 

Pension - Civilian

 

55,671

203,476

9,970

45,701

 

Houston Emergency Center

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

11,719,380

 

 

 

 

 

Salary Assignment Pay - Classified

11,790

 

 

 

 

 

Overtime - Civilian

601,275

 

 

 

 

 

Premium Pay - Civilian

242,892

 

 

 

 

 

Bilingual Pay - Civilian

47,338

 

 

 

 

 

Pension - Civilian

 

3,206,415

12,622,675

618,511

2,587,904

 

Cable Television

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

972,436

 

 

 

 

 

Overtime - Civilian

20,000

 

 

 

 

 

Premium Pay - Civilian

200

 

 

 

 

 

Pension - Civilian

 

266,058

992,636

48,639

217,419

 

Houston Civic Events Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,442,323

 

 

 

 

 

Overtime - Civilian

35,700

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

2,711

 

 

 

 

 

Pension - Civilian

 

394,621

1,480,734

72,556

322,065

 

Juvenile Case Manager Fee

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,178,476

 

 

 

 

 

Salary Part Time - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

14,500

 

 

 

 

 

Pension - Civilian

 

322,429

1,192,976

58,456

263,973

 

Contractors Responsibility Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

87,200

 

 

 

 

 

Pension - Civilian

 

23,858

87,200

4,273

19,585

 

Bayou Greenway 2020

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

512,448

 

 

 

 

 

Bilingual Pay - Civilian

922

 

 

 

 

 

Pension - Civilian

 

140,210

513,370

25,155

115,055

 

Parks Golf Special Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

2,156,329

 

 

 

 

 

Salary Part Time - Civilian

485,420

 

 

 

 

 

Overtime - Civilian

187,600

 

 

 

 

 

Bilingual Pay - Civilian

15,660

 

 

 

 

 

Pension - Civilian

 

589,972

2,845,009

139,405

450,567

 

Parks Special Revenue

2015 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

303,953

 

 

 

 

 

Salary Part Time - Civilian

49,996

 

 

 

 

 

Overtime - Civilian

300

 

 

 

 

 

Premium Pay - Civilian

1,704

 

 

 

 

 

Bilingual Pay - Civilian

904

 

 

 

 

 

Pension - Civilian

 

77,082

356,857

17,486

59,596

 

Auto Dealers

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

326,302

 

 

 

 

 

Salary Base Pay - Classified

1,637,539

 

 

 

 

 

Salary Education/Incentive - Class.

50,000

 

 

 

 

 

Overtime - Civilian

45,000

 

 

 

 

 

Overtime - Classified

616,000

 

 

 

 

 

Bilingual Pay - Civilian

5,300

 

 

 

 

 

Bilingual Pay - Classified

11,000

 

 

 

 

 

Shift Differential Pay - Classified

600

 

 

 

 

 

Training Incentive - Classified

183,400

 

 

 

 

 

Weekend Premium Pay - Classified

0

 

 

 

 

 

Temporary Higher Class Pay

0

 

 

 

 

 

Pension - Civilian

 

89,275

376,602

18,453

70,822

 

Pension - Police

 

650,323

2,498,539

277,338

372,985

 

Forensic Transition Special Fund

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

2,957,887

 

 

 

 

 

Salary Base Pay - Classified

3,517,047

 

 

 

 

 

Salary Assignment Pay - Classified

0

 

 

 

 

 

Patrol Incentive Pay

0

 

 

 

 

 

Salary Education/Incentive - Class.

164,000

 

 

 

 

 

Overtime - Civilian

68,000

 

 

 

 

 

Overtime - Classified

201,000

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

1,800

 

 

 

 

 

Bilingual Pay - Classified

11,000

 

 

 

 

 

Shift Differential Pay - Classified

38,500

 

 

 

 

 

Training Incentive - Classified

320,000

 

 

 

 

 

Weekend Premium Pay - Classified

41,500

 

 

 

 

 

Temporary Higher Class Pay

0

 

 

 

 

 

Pension - Civilian

 

809,275

3,027,687

148,357

660,918

 

Pension - Police

 

1,470,297

4,293,047

476,528

993,769

 

Police Special Services

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

128,699

 

 

 

 

 

Salary Base Pay - Classified

0

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Overtime - Classified

7,364,324

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Pension - Civilian

 

35,212

128,699

6,306

28,906

 

Building Inspection

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

33,534,550

 

 

 

 

 

Salary Part Time - Civilian

57,119

 

 

 

 

 

Overtime - Civilian

3,221,227

 

 

 

 

 

Premium Pay - Civilian

249,500

 

 

 

 

 

Bilingual Pay - Civilian

102,189

 

 

 

 

 

Pension - Civilian

 

9,175,036

37,164,585

1,821,065

7,353,971

 

Houston TranStar

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

641,904

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Pension - Civilian

 

175,626

641,904

31,453

144,173

 

Recycling Expansion Program

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

110,220

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

0

 

 

 

 

 

Pension - Civilian

 

30,157

110,220

5,401

24,756

 

Internal Service Funds

 

 

 

 

 

 

Health Benefits

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

3,310,431

 

 

 

 

 

Salary Part Time - Civilian

42,224

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

4,524

 

 

 

 

 

Pension - Civilian

 

905,733

3,357,179

164,502

741,231

 

Revolving Funds

 

 

 

 

 

 

In-House Renovation

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

1,419,894

 

 

 

 

 

Overtime - Civilian

30,000

 

 

 

 

 

Premium Pay - Civilian

2,800

 

 

 

 

 

Pension - Civilian

 

388,483

1,452,694

71,182

317,301

 

Property and Casualty

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

440,619

 

 

 

 

 

Pension - Civilian

 

120,553

440,619

21,590

98,963

 

Workers' Compensation

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

2,177,057

 

 

 

 

 

Salary Part Time - Civilian

0

 

 

 

 

 

Overtime - Civilian

0

 

 

 

 

 

Premium Pay - Civilian

10,000

 

 

 

 

 

Bilingual Pay - Civilian

2,712

 

 

 

 

 

Pension - Civilian

 

595,647

2,189,769

107,299

488,348

 

Project Cost Recovery

2016 Budget

Pension

Payroll

403(b)

Savings

 

Salary Base Pay - Civilian

22,437,355

 

 

 

 

 

Salary Part Time - Civilian

58,460

 

 

 

 

 

Overtime - Civilian

400,900

 

 

 

 

 

Premium Pay - Civilian

0

 

 

 

 

 

Bilingual Pay - Civilian

4,520

 

 

 

 

 

Pension - Civilian

 

6,138,853

22,901,235

1,122,161

5,016,692

 

Total

1,289,817,441

391,562,400

1,289,817,441

106,720,921

284,841,479

 
             

Notes: According to a Houston Chronicle story by Mike Morris ["City financial chief no longer 'crying wolf' about deficit," (July 4, 2015,)] pensions should only cost $308 million instead of the $391.6 million calculated here from the city budget. Without knowing where Mr. Morris got his numbers the discrepancy cannot be accounted for. The civilian 403(b) contribution was calculated at 4.9% since that is the average organizational contribution according to Plan Sponsors Council of America (compared to 2.5% for 401(k) plans.) For police and firefighters, the rate was calculated at 11.1% because they do not pay into the Social Security system. Therefore, the 6.2% normally paid into Social Security by employers in addition to the 4.9% average 403(b) organizational contribution was used. It's possible that it comes, at least partially, from the $80 million in deferred firefighter pension payments that will be paid at a later date at 8.5% interest but that are accrued this year, per agreement between the mayor and the firefighters' pension board.