This commentary originally appeared in the Houston Chronicle on March 12, 2015.
Mayor Annise Parker and the Houston Firefighters'Relief and Retirement Fund have long butted heads on the best way to rehabilitate the city's second-largest local retirement system, but that rocky relationship may have just been smoothed over some.
Last week, Parker and the firefighters' retirement fund announced that they had reached a deal that "would see firefighters contribute more of their pay toward their retirement and have the city contribute less, for a term of three years," generating an expected savings of $77 million.
Some think the new agreement is a good deal while others see it as a bad deal, but it's actually no deal at all – at least not yet.
Before changes to the retirement fund can be made, the parties must first get the Legislature to sign off on it. But why do Austin lawmakers – who are embroiled in a heated legislative session – have to give the go-ahead on a relatively minor pension plan change, you ask?
Because a handful of municipal retirement systems, including the Houston firefighters' fund, sought state legislation to put Austin between the local elected officials and the collective-bargaining agreements, making local control all but impossible.
Over the years, more than a dozen local retirement systems have successfully petitioned the Legislature to get some or all of their pension plans preserved in state law.
Pension plan elements like "contribution rates, benefit levels and the composition of their board of trustees" have been effectively locked in state statute, so this new "city pension deal" cannot be enacted without approval from Austin lawmakers.
Intentional or not, the net effect of freezing these local systems in state statute has been to shut out community leaders and city officials who don't have the right political connections in the Legislature. It has become almost irrelevant that affected communities work and pay taxes to support the retirement systems or that fewer services are available as officials shift scarce city resources from potholes to pensions.
This sweetheart setup is bad policy. Allowing such a great, big roadblock to local control is fraud on our community. It's common sense that people paying taxes into and being affected by a local pension plan should have a clear voice in how the system operates.
With all the recent talk about the importance of local control from big-city mayors, dubbed the "M-10," they would no doubt agree that it's time to restore local control of these state-governed pension plans with sweetheart deals.
The policy prescription for seeing this through is fairly straightforward: Any local retirement system that has wiggled itself into state statute should be sent back to its respective community. That's it.
Fortunately for those who appreciate having their voice heard at the local level, state lawmakers are already working to move bills through the legislative process to see this idea become reality. It's important to stress that should these bills become law, local pension plans will see absolutely no changes to their benefit structure, contribution rates or any other structural dynamic.
The only small-but-important change made would be to give communities back some say over a system they already pay taxes into and are affected by on a day-to-day basis.
Local control of local retirement systems is a straightforward public policy matter. If we're going to ask our communities to create and support local pension plans, then it's only right that those same communities determine how they're run. It's time that the Legislature addressed this issue head-on and restored power back to the people.
Windi Grimes is a board member of the Texas Public Policy Foundation, a free-market research institute.