Texas lawmakers should approve House Bill 2763, which is the product of two years of local negotiation and would correct long-standing problems of unfunded liabilities and lopsided governance in the Galveston’s police pension plan.
City leaders and members of the Galveston Police Pension Board, which sets policy for the plan, testified last week in favor of the bill.
Changes proposed in the bill are fair compromises that would ensure the plan’s financial stability for the benefit of police officers and taxpayers.
As of May, Galveston’s police pension had $32.1 million in unfunded liabilities and was not in compliance with state rules, according to actuarial reports. Fully funding the pension and bringing it back into compliance is a state requirement.
The bill commits the city of Galveston to raising its contribution rate from 14.83 percent to 18 percent, which would cost the city between $400,000 and $500,000 more each year, city officials said.
The city’s contribution now is about $1.77 million a year and the proposed increase would push that to more than $2 million, city officials have said.
Police officers would continue to contribute 12 percent of their salaries to the plan, according to legislative documents.
The bill also would raise the age at which employees hired after the agreement goes into effect can draw their pension benefits to 55 from 50 years old.
While the city is giving on its contribution rate and on the retirement age, which city negotiators had proposed to be 55 for all employees, it’s getting several financial and administrative changes that officials say are worth the swap.
For example, the bill adds an additional city-appointed member to the pension board, increasing the number of members to eight, according to legislative documents.
As it stands, there are four police-appointed and three city-appointed members, a balance that the city has worried could tip benefits in favor of the police.
The bill also requires that members of the oversight board have experience with the financial intricacies of pension plans, or that they receive training in those.
Changes specified in the bill that would improve the pension plan are the product of a locally negotiated compromise agreed upon by the main parties involved.
All lawmakers need to do now is to give it their stamp of approval.
• Michael A. Smith