The Texas Senate on Monday approved a pension reform bill for Houston's three pension funds.
The measure passed the Senate by a 25-5 vote. The House is expected to vote on its version of the bill Saturday.
The bill includes benefit reductions for participants in the three pension funds that would help reduce the funds' $8.2 billion in total unfunded liabilities, according to a Monday news release from the mayor's office.
The pension reform package also requires Houston to make the full annual required contributions to the $3.8 billion Houston Firefighters' Relief and Retirement Fund, $3.9 billion Houston Police Officers' Pension System and $2.3 billion Houston Municipal Employees Pension System; adopts a 30-year closed amortization schedule to pay off the remaining unfunded liabilities across the three pension funds; and calls for the issuance of pension obligation bonds to further reduce liabilities.
The plan further reduces the pension funds' assumed rates of return to 7% from the current rates — which range between 8% and 8.5% — and would shift new employees to a new cash balance plan if the plans' funding ratios fall below certain levels.
Houston Mayor Sylvester Turner praised the Senate's passage of the bill on Monday. “Today, the Senate approved a locally developed and agreed-to solution that will place the city of Houston on a sustainable financial path,” Mr. Turner said in the release. The release noted that the bill has the support of two of the three pension fund boards.
David L. Keller, Jr., chairman of the firefighters' pension fund board, said in a statement on the pension fund's Facebook page on Monday that he was disappointed by the Senate bill's passage.
A spokeswoman for the mayor's office could not immediately be reached for additional information.