Initial analysis of Mayor Turner's pension plan released
Institute one of several agencies to analyze Mayor Sylvester Turner's proposal
HOUSTON – Rice University's Kinder Institute has released its initial analysis of Houston Mayor Sylvester Turner's pension reform plan.
The institute, one of several agencies to analyze Turner's proposal since it was unveiled last week, said it determined that the numbers appear to add up if all of the components are implemented as envisioned.
"I welcome scrutiny of this plan by experts, because it helps address the unfounded arguments being made by others who have no financial background. There is no doubt this plan relies on a complex package of reforms. Without implementation of each piece, we will not achieve the anticipated results," Turner said. "Thankfully, the pension systems are sharing more data than ever before, and are committed to continue working on information sharing so we can manage costs going forward."
The mandatory cost containment provision in Turner's plan, if executed properly and consistently over time could provide a way for both sides to share in the upside and sacrifice when times are tough, according to Kinder Institute Director Bill Fulton.
The plan outline seemed to show "shared sacrifice" on the part of both the city and its workers, Fulton said.
The institute said the mayor's plan includes:
- Benefits changes that reduce the city's $7.7 billion unfunded liability by $2.57 billion, while still maintaining defined benefit plans for city employees
- $1 billion in POBs to further reduce the unfunded liability
- A closed 30-year payoff period for the remainder of the liability
- A 7 percent rate of return for future investments
- A requirement that the city makes the full required annual contributions to the pension systems
- Limits on annual costs going forward, and mandatory negotiations on benefits changes to bring costs back in line if they exceed the specified limits
The institute did the initial analysis in a blog post on the day of Turner's announcement, based only on information that is publicly available.
Turner did not request the analysis, the institute said. A more detailed analysis is expected.
The analysis can be found here.
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