HMEPS board scuttles budget increase; Chron editorial board mischaracterizes

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The Chronicle‘s Caucasian Think Tank weighed in today on the news that the board of the Houston Municipal Employees Pension System (HMEPS) scuttled a proposal to increase its staff payroll budget by 6% from last year’s figure, mischaracterizing the proposal in its lede:

A proposal to raise city municipal pension staff salaries by 6 percent rightly raised a ruckus at City Hall this week.

Apparently, the Caucasian Think Tank did not bother to read Bradley Olson’s reporting for their newspaper, which stated the following:

The 6 percent increase includes health benefit costs and money for unfilled positions and does not mean that each of the system’s 30 employees will get a 6 percent raise.

Merit pay increases that equate to 3 percent per employee have been incorporated into the budget, but not every employee is guaranteed to get a raise, [HMEPS spokeswoman Laura] Tolley said.

The pension fund’s investments declined last year, although much less sharply than many similar investments.

As Olson noted in his earlier reporting, director David Long has “quarreled” with Mayor White at times*, and the mayor attacked Long personally in a successful effort to head off the increased payroll budget:

“Do I think it’s a good thing if somebody gets a pay raise while they have that kind of decline in their assets? Absolutely not. Period,” White said. “And I’ll bet you this, if Mr. Long is getting a pay raise, there’s not anybody else who would hire that guy. So how could you really say that it’s justified by market conditions?”

We strongly suspect that Mayor White is dead wrong about that, and if David Long were on the market, there would be plenty of suitors.

Regardless, the question of the proposed budget increase certainly gave the mayor a political opening to play populist, beat up a sometime foe, AND try to gain more power over HMEPS with a last-minute appointment (which Council refused to support, to their credit). Mayor White seems to have a long memory for officials who defy his edicts (also see Tollett, Jordy).

Unfortunately, the entire debate over this relatively minor “scandal”** — and the Caucasian Think Tank’s mischaracterization of the details — completely ignores the real ongoing scandal with regard to the city’s pension funds: the massive unfunded liability.

We can certainly understand why Mayor White prefers not to talk about those details much these days, after some early efforts on his part to chip away at the liability. It will be the next mayor’s problem.

We are reproducing relevant portions of the statement from the chairman of the board of the pension system below, since it lays out details of the proposed budget increase that seem not to have been understood very well.

* Another characterization would be that David Long has asserted the relative independence of HMEPS from Mayor White’s meddling. Long is not a mayoral appointee, and answers to the HMEPS board. His job is to promote/defend the interests of the board and the system, not the political interests of Mayor White. It’s not surprising that Mayor White would regard such independence as quarrelsome.

** Cory Crow’s observations from two days ago seem spot on to us.

* * *

Open Letter to Participants from the HMEPS Chairman:

We have received many calls asking what happened at the HMEPS Board of Trustees meeting yesterday (08/27/09). One of the items on the agenda was for the Board to decide on the HMEPS FY2010 budget. Previous statements by City officials implied that something sensational was going to happen at the meeting in conjunction with the budget.

Instead, at the Board meeting, the staff presented a proposed budget that included expenses for previously Board approved items, contingency planning, office expenses, and staff compensation. This last category certainly got the most attention and the most inaccurate portrayal. The proposed FY2010 budget included an increase for two entry level staff members to bring them up to the minimum pay in their salary range. The budget also included a 3% merit incentive pay pool to provide merit increases similar to the way merit pay is provided to City employees. Finally, the health care premiums for HMEPS employees increased by a substantial percentage, as they have for virtually all employers. Because HMEPS only has 30 employees, we are deemed a small group by the insurance industry and cannot get coverage or rates that are competitive with those paid by larger employers like the City of Houston. These were the only changes to compensation in the budget.

The Board approved a budget that is the same dollar amount as last fiscal year’s actual expenses. With regard to staff compensation, this means that HMEPS employees will not receive any merit increases this fiscal year. We will make every effort to find the cost savings to implement the reduced budgeted amounts.

Another concern that we heard was that some of our members were worried that the August Board meeting involved discussions on changes to the HMEPS pension plan. I can assure you that there were no discussions whatsoever on any changes to the HMEPS pension plan or pension benefits provided to members. Changes to the plan can only occur in the Meet and Confer process, which requires decisions to be made with advance notice to the public and in open meetings, or in the Texas Legislature when it is in session.

[snip]

Sherry Mose
Chairman

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