Houston, We Have a Problem

Not necessarily with the Houston Firefighters’ Relief and Retirement Fund itself but with the reporting on it.

While the fund’s board of trustees assumed a 7.25% rate of return for its actuarial valuation report in May 2017, the City Council subsequently passed a budget that used the Senate bill’s assumed 7% rate of return, a discrepancy that caused the fund to sue the city, Mr. Turner and other city officials.

…….

Pension reform has reduced the city of Houston’s obligation from $8.2 billion to $4.07 billion.

Maybe it’s sloppy journalism, or innumerate politicians, or 5500 fatigue on my part (65 to go) but if ever a pension article had power to flummox it would be the one quoted above.

From the June 30, 2019 valuation, page 26:

The discount rate used to measure the total pension liability was 7.25%.

Lowering the discount rate to 7% would increase the net pension liability as mentioned in the report:

Was the City Council looking to raise the value of liabilities (and contributions)?

And then there is the plan’s funded status:

When did this plan ever have a net obligation of $8.2 billion? Was a prior actuary using a 1% discount rate? Did Houston Firefighters agree to cut their benefits in half? Are all these numbers being made up as necessary to serve vested interests? Was it the O-rings?

19 responses to this post.

  1. Journalists?
    I recall a few years ago, a blog commenter in California stated that 85 percent of city taxes went to teacher pensions. So… the other 15 percent went to all other city costs (including teacher pay?) Not possible. I found the article, and it said what she said it said, possible or not.
    Turns out, one journalist “quoting” another, which said 85 percent of tax -increases- that year went to teacher pensions. (Not directly, of course, just fungible money.)
    In my opinion, if you see something way out of whack, you try to verify it, don’t just pass it on.

    Reply

  2. Posted by geo8rge on October 13, 2020 at 11:50 am

    “When did this plan ever have a net obligation of $8.2 billion? ”

    We immediately reduced a debt of $8.2 billion and put in place a responsible plan to pay off the balance over 30 years – just like the mortgage on a house.

    http://www.houstontx.gov/pensions/

    Reply

  3. Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on October 13, 2020 at 11:52 am

    Maybe it’s sloppy journalism, or innumerate politicians, or 5500 fatigue on my part (65 to go) but if ever a pension article had power to flummox(/u> it would be the one quoted above.
    Ya got me 🙂
    flum·mox
    /ˈfləməks/

    verb INFORMAL
    perplex (someone) greatly; bewilder.
    “he was completely flummoxed by the question”

    Reply

    • Posted by MJF on October 13, 2020 at 1:05 pm

      Pension my ass. It’s a goldmine.

      Reply

      • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on October 14, 2020 at 6:17 pm

        Pension my ass. It’s a goldmine.
        Close. The AVERAGE “Lottery” game here in CA pays off $1.5 million to $3 million in a 25 year installment plan. So EVERY SINGLE $100K?year pension in CA (400K+ to date) is equal to WINNING the average CA lottery. Sad, but 100% true.

        Reply

    • Posted by MJF on October 13, 2020 at 1:19 pm

      Hookers and roofers work longer and harder hours than those clowns, And at the end guess what they get…nothing.

      Reply

      • While I think they have it MUCH easier in the PR dept than the cops, hookers?
        Really?
        Hookers don’t pay a dime of tax. (except sales) And here we go with the roofers again.
        Funny, not too many were bitching about the FD when the wildfires were scorching Cali. That said they have it much easier schedule wise, political wise than the boys in blue.

        Reply

        • Posted by MJF on October 13, 2020 at 6:10 pm

          You are right PD gets beaten beyond reasonable, FD not so much, It’s a cushy job. No real danger and very little stress. Prisoners do the front line firefighting in Cali.

          Reply

          • Posted by MJF on October 13, 2020 at 6:25 pm

            My local FD is volunteer. Damn straight they will lay their lives down for my or any one of their neighbors lives. They don’t get paid a fn dime.

          • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on October 14, 2020 at 2:38 am

            Prisoners do the front line firefighting in Cali.
            Correct. They sure do. They get extra good time credit for being a FF. There are like 35 prison “fire camps” in CA, remote fire prevalent areas, where the prisoners live, outside the Pen, waiting for a wildfire to break out. They LOVE it, it’s like full time camping in the wilderness, which beats a cell all day long and twice on Sunday….The CA prison system has a TON of industries where the inmates get put to work a few pennies per hour, but love working because they are not locked down in a cell. The State Pen’s can do this because the 13th Amendment ALLOWS (shockingly!) “involuntary servitude” of inmates. The 13th Amendment has a very nasty history though, especially in the southern states …..

    • Posted by Tough Love on October 13, 2020 at 2:05 pm

      I can’t see how NYC will ever find the money to pay for these promised pensions and retiree healthcare promises.

      Reply

      • Posted by MJF on October 14, 2020 at 6:27 am

        Maybe ask Mr. Biden when you punch your ballot.

        Reply

        • Posted by Anonymous on October 14, 2020 at 9:52 am

          lol MJF. Have you been watching the Senate confirmation hearings? It’s obvious that Amy is brilliant, but it also shines a light on just how painfully depraved and stupid the democrats are.

          Reply

          • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on October 14, 2020 at 6:40 pm

            It’s obvious that Amy is brilliant, but it also shines a light on just how painfully depraved and stupid the democrats are.
            I don’t know if CB is so “brilliant” but our elected leaders are abject morons.

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