Updated - January 2017
“There is no decision that we can make that doesn’t come with some sort of balance or sacrifice.” Those are the words of Simon Sinek, an author, speaker and consultant who writes on leadership and management.
I have been considering the importance of sacrifice, particularly shared sacrifice, in recent months as HMEPS has been working with Mayor Sylvester Turner and his administration to secure funding for the pension plan and to make changes that will ensure its sustainability for the long term.
As we worked together, our goal at HMEPS was to secure the pension plan so it will continue to provide meaningful, secure benefits for our participants who have worked so hard for the City of Houston and its citizens.
The HMEPS board tentatively approved changes to the plan as did the Houston City Council. These changes will not be final unless and until a Meet and Confer agreement is reached between HMEPS and the City, with the expectation that the agreed provisions will be enacted into law by the Texas Legislature in the 2017 session. We have outlined the proposed changes to the system on pages 4-6 (NOTE: click on link above to view newsletter). We will also keep you updated on any developments during the legislative session on the HMEPS website.
I understand that these negotiations have caused concern for many of you, and I truly appreciate your patience, understanding and confidence in me and the HMEPS Board and staff. We are committed to securing the System for the long term, for your future, and that commitment was our focus throughout the negotiations with the administration.
The changes, if officially approved, will provide competitive benefits and future funding for the pension plan, as well as an immediate cash infusion to address past underfunding. The changes are reasonable, actuarially sound and sustainable for the long term. A vital element of the negotiations was assurance that the City will meet its full commitment to HMEPS. The City has done so in this agreement.
It also was important for us to work with Mayor Turner at the local level to develop a practical and tailored solution that is mutually agreeable rather than risking a solution forced on us by the Texas Legislature.
We remain committed to a defined benefit plan that provides meaningful and competitive benefits with appropriate funding that will strengthen our participants’ financial future for the long term.
In other news, I want to welcome David Donnelly to our Board of Trustees as Mayor Turner’s appointee. David, who joined the board in October, is a Certified Public Accountant with more than 30 years of experience providing tax planning services to a wide array of clients.
Also in October, HMEPS and the City of Houston Deferred Compensation Plan held the 12th annual Fall Financial Retirement Employees Educational (F.R.E.E.) Summit at the Harris County Department of Education Conference Center. We had over 380 attendees, the most ever for a single-day event, and provided valuable information on financial and retirement planning for City of Houston employees. Mayor Turner attended and answered questions from attendees for nearly an hour. It was our most successful F.R.E.E. Summit yet!
Finally, I want to wish each of you a joyous and safe holiday season. It is an honor to serve as your Chairman, and I look forward to a productive and successful 2017 for us all.
Updated - September 2015 Dear Participants, Fall has arrived in Houston, and along with cooler weather that means football and elections! As you root for the Texans – or whichever team you support – on Sunday afternoons, I hope you are also carefully evaluating the candidates running to serve you as Houston’s next Mayor and City Council. Given the recent national, state and local focus on public employee pensions, as well as concerns around City finances, it is no surprise that some organizations and individuals are attempting to make employee pensions a political football in the City election campaign. Despite a slowing local economy, voter-approved revenue caps, debt service obligations, and a wide array of increasing fixed costs that are straining the City budget, some are attempting to unfairly scapegoat employee pensions as the source of budgetary challenges in order to score political points. A recent article in the Houston Business Journal (HBJ) critical of pensions contained numerous factual errors and flawed analysis. I wrote a strongly worded response, published in the HBJ August edition (“Op-ed: HBJ Article Is Upside Down”), that corrected the record and provided a more balanced, comprehensive assessment of the City’s financial situation. You can find my response transcribed below, after my signature. As your Chairman I want to be crystal clear. Discussion of your hard-earned retirement benefits is not a game. Your HMEPS Board of Trustees and staff take our responsibilities to you extremely seriously, and we will not hesitate to correct misinformation and defend our participants. Again, I urge each of you to carefully study the candidates and issues in this important election, and to make your voice heard by voting! Fall also means it is time for our 11th annual Financial Retirement Employees Educational (F.R.E.E.) Summit. On Friday, October 23rd and Thursday, October 29th, between 10:00 a.m. and 2:00 p.m., City employees will have an opportunity, at no charge and on their own time, to gain valuable information about planning for their retirement. More information follows in the newsletter and you can register at www.2015fallfreesummit.eventbrite.com. I hope to see you there! Finally, I want to thank the HMEPS Trustees and staff for their dedication and hard work on behalf of the participants we serve, and you for your continued support. Your Chairman, Sherry Mose
Updated - August 2015
Click on the following link to view Chairman Sherry Mose's letter to the Houston Business Journal. The full text of the response can be found after the link.
"Op-ed: HBJ Article is Upside Down"
Readers of the Houston Business Journal article on June 24, “City upside down: How Houston lost control of its wallet,” could easily be excused for panicking about the city’s financial future, if it restricted its information to what it found there. But let’s look at some relevant facts.
The article states that Houston “is on the brink of a financial crisis,” and it cites a recent Moody’s report as evidence. Real estate developer Jim Noteware is quoted as saying that the city is not a credit-worthy borrower.
Here’s what the Moody’s report actually says:
“The Aa2 rating continues to reflect a large tax base benefitting from a robust Houston economy…Despite the recent downturn in oil prices, Houston’s economy continues to benefit from other key sectors.”
And, the current overall level of debt is “manageable.”
The HBJ article insists that businesses are afraid to locate in Houston due to the dismal outlook. Noteware is quoted, “The real consequence is that the population is declining dramatically — people leave the city…That’s what’s going on in Houston right now.”
Here is what the Moody’s report says: “Population grew 7.5 percent to 2.1 million in 2010 from 2000, following an almost 20 percent increase in the prior census. This growth, coupled with commercial development, has resulted in growth in taxable values, parallel to the boom experienced in the local economy.”
So what’s the problem?
Moody’s did demonstrate that the city has structured its debt obligations rather poorly, that costs are rising and that revenue caps have boxed the city in: “Although a growing economy is driving taxable value increases, the city’s revenue potential is restricted by Proposition 1 and H.”
The economy is surging, taxable values are surging, people are moving in at a rapid pace — but limitations on city government restrict the services available to assist that growth.
Of course, the question of what services should or should not be provided by government is a question for the voters. But the question of whether those services get paid for is a matter of arithmetic.
It is this arithmetic that some are trying to override, and the way they hope to do so is to attack pensions. Pension costs in fiscal year 2016 are less than 8 percent of the city’s general fund, yet the article simply states that they are “the leech on the city’s wallet.”
According to the article, the problem with pensions is that “the city isn’t getting anything in return…It’s an investment that yields nothing.”
Imagine that you are retired and show up at your 401(k) administrator’s office to complain that your monthly distribution from your account did not arrive. You’ve got bills to pay! “Well,” says Mr. 401(k), “We were wondering why you deserve that money. What have you done for us lately?”
How would you respond?
City employees and retirees earned their benefit, and they should not be made the scapegoat for poor long term planning by city officials.
Updated - July 2015
HMEPS Refutes Claims In Chronicle Article
The Houston Chronicle article on 7/6/2015 (“Houston’s debt outlook downgrade a warning, analyst says”) stated, “more than 95 percent of the $130 million general fund spending increase in Parker's budget this year is swallowed by contractual payments, namely pension obligations.”
We were surprised by this statement because the increase in pension expenditures attributable to the General Fund for the Houston Municipal Employees Pension System (HMEPS) is less than $7 million.
The contribution to the Houston Firefighters’ Retirement & Relief Fund is virtually unchanged, while the contribution to the Houston Police Officer’s Pension System increased by about $35 million – although more than $25 million of that was a catch-up from a recent underpayment (http://www.houstontx.gov/finance/five_year_plan_fy2016.pdf).
So, how can $42 million be 95% of $130 million? This is the kind of arithmetic we have grown accustomed to among the anti-pension crowd, and it is another reason that their proposed pension “fixes” lack realistic mathematical or policy grounding.
In any case, the article also says that this $42 million increase in pension payments (out of the $2.391 billion General Fund) is responsible for “crowding out” various services that the City would otherwise be able to provide. But in the same article, the $53 million the City lost due to revenue caps was called “modest.”
Perhaps the best response to these statements is to quote the Merriam-Webster dictionary for the word “propaganda” -- “ideas or statements that are often false or exaggerated and that are spread in order to help a cause, a political leader, a government, etc.”
In fact, the costs of pensions to Houston taxpayers are below the average for the U.S. and well below the problem situations found in Illinois and California (http://crr.bc.edu/wp-content/uploads/2013/11/SLP35-508.pdf).
HMEPS and the City of Houston have engaged in a series of major reforms over the last several years – the types of reforms that many cities are just beginning to consider (http://www.hmeps.org/assets/path-to-shared-reform_updated-2-2013.pdf). As a result of these reforms, the goal of 30 year full funding of the plan- agreed to by our City leaders- is well within reach.
We urge the Houston Chronicle and its readers to keep these facts in mind as anti-pension propaganda continues to come out in the future – as it inevitably will.
Updated - November 2015
Updated - June 2016
As we approach the beginning of summer and the end of the school year and thoughts turn to vacations and time off, I would like to remind you of the continued vigilance of the HMEPS Board of Trustees. I hear first hand the questions and concerns from our members about their pension benefits and their future retirements. Let me assure you that the Board continues to exercise responsible and proactive leadership to keep HMEPS strongly positioned structurally and financially for both the short and long term.
As a reminder, HMEPS is governed by state statute, which includes a Meet and Confer process established by the Texas Legislature. Changes to the plan can only occur in the Meet and Confer process, which requires an agreement between HMEPS and the City, or through action taken by the Texas Legislature when it is in session. Note that while the legislature is not currently in session, legislative committees can have meetings to discuss issues. In fact, Houston pensions will be one of the topics at an upcoming meeting of the House Pension Committee. This Committee meeting will be held in the Houston City Council Chamber at City Hall at 9 AM on Monday, June 13.
On another note, I am happy to announce that the recent Spring F.R.E.E. Summit experienced its largest crowd ever. This is the third year for the Spring Summit and the 11th year we have put on financial and retirement education conferences and we continue to experience growth. The staff has already begun planning for our flagship event, the Fall F.R.E.E. Summit, scheduled for this October. We will begin registrations for the event in September, so keep an eye out for this in the next newsletter and on the website (www.hmeps.org).
As always, I would like to thank you for your continued support.
Letter from Dec. 2016 Newsletter
Letter from Sept. 2015 Newsletter
OP-ed: HBJ Article is Upside Down
HMEPS Refutes Claims in Chron.
Bill King Letter - Nov. 2015
Letter from June. 2016 Newsletter
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