Galveston City Council on Thursday again circled the issue of the city’s struggling pension plans but took no action, instead deciding to take more time to understand the funds.
The council was set to vote in a regular meeting on a budget allocation that could have funneled almost $400,000 to a set aside fund for pension reform or directly to the fire and police pension plans.
Both Mayor Jim Yarbrough and City Manager Brian Maxwell have been advocates of keeping any relief money set aside until the pension boards come up with long-term plans on how to make the funds solvent.
“At this point I don’t think it would be prudent to throw money at any of the three plans until we have solutions for each one,” Maxwell said at the meeting.
The police pension board and the city have disagreed for years when it comes to the plan. The police pension plan has about $29 million in unfunded liabilities and a payoff period of 47 years. The state recommended period is 30 years.
The fire pension board, as of December 2016, had $22.9 million in unfunded liabilities with a payoff period of about 50 years, according to city documents.
The council had also planned to vote on a $2.3 million allocation to the police pension fund, upon a request by City Councilwoman Terrilyn Tarlton-Shannon, but the vote was thrown out because that money is actually set aside for all three city pension boards, which are city civilian, police and fire.
The council came to an agreement to table the $400,000 allocation after Tarlton-Shannon, of District 5, claimed that council members have made little effort to understand the pension funds. At the meeting, she challenged city officials and said they were ignoring the desires of the police.
“We’re not listening to them,” Tarlton-Shannon said. “I’m shut down and I can’t get questions answered.”
The police and fire employees have defined-benefit plans, where employees contribute a percentage of their pay, while the city contributes another percentage to underwrite the plan.
The set aside fund holds $2.63 million in city money to address pension issues, according to city documents.
The city is otherwise limited on how it can influence pension board decisions. Changes to the pension plan must be agreed on by the pension board, where four of the seven members represent the police union. The other three members are appointed by the mayor, city council and city manager.
City staff was also supposed to vote to hire a firm from Dallas to assist with various legal matters associated with the city, police and fire pension plans.
A motion from Tarlton-Shannon passed 7-0 to defer that decision.
If the council votes to hire an attorney, the city would pay $150,000 for the service. That money would come out of the pension reserve funds.
Geoff Gainer, interim chairman of the police pension board, said that was counterproductive.
“You’re taking the money out of the fund that is supposed to be aiding the pensions and you’re hiring someone to keep it from happening,” Gainer said. “It’s kind of like robbing a stick from Peter to beat Peter with.”
City officials said a firm would help to review the legality of all of the plans as they seek to be reformed, but the announcement comes after a police pension advisory board claim that the city could owe $1 million to the pension fund.
The police union members of the board allege the city has neglected to follow, or deliberately ignored, a state law that determines how much should be paid into the fund.
City officials said that the pension advisory board’s request isn’t the reason for wanting a firm to step in.
“We have issues inherently with all three funds and they are going to be long-term problems,” City Attorney Don Glywasky said.