Create an Account - Increase your productivity, customize your experience, and engage in information you care about.
City and Fire Department Work Together Towards Pension Reform
GALVESTON, TX) March 5, 2018 – On February 22nd City Council approved a negotiated pension agreement with the City's firefighters that including concessions by both parties. The Fire Department's Pension Board and the City worked together to help rectify long standing issues facing the Fire Department's pension.
In August of 2017, the City and the pension board received an actuarial valuation of the Fire Fighters pension plan that stated that the fund was unsound due to its accrued liability. The standard for determining pension fund financial health is for the unfunded liability to be amortized, or resolved, within twenty-five to thirty years. As detailed in the valuation, the Fire Fighters pension fund in its current condition would never be amortized. Facing this challenge to the retirement security of Galveston’s Fire Fighters, the City and its Fire Fighters went to work.
Immediately upon receiving the 2016 valuation, the board and the City began negotiating what it would take to fix the plan. Within six months, the two parties negotiated major changes, which included increasing the City's contribution by 3%, increasing the amount the employees contributed by 2%, and ending cost of living adjustments for all future retirees. The change also included a one-time $1,000,000 lump sum payment from the City into the pension plan to bolster earnings and replace investment losses from recent years.
“It makes me proud, not just as the city manager but as a lifelong resident, to know that our fire fighters were ready and willing to roll up their sleeves and come to the table to solve this problem,” said City Manager, Brian Maxwell. “Their commitment to and care for our citizens goes well beyond just saving lives.”
By State law, the agreement was approved by a majority vote of the Galveston firefighters as a whole.
With the civilian pension and the fire department pension plan both on sound financial footing, the city will now turn its focus to working with the Police Pension Board on what it will take collectively to put the City’s third and final pension plan pension plan back in compliance with state law.