Bill: HB 3158, 85(R) - 2017

Committee

House Pensions

2nd Chamber Committee

Senate State Affairs

Vote Recommendation

Vote Recommendation Economic Freedom Property Rights Personal Responsibility Limited Government Individual Liberty
Vote No; Amend Neutral Neutral Negative Negative Neutral

Author(s)

Dan Flynn

Sponsor(s)

Royce West

Bill Caption

Relating to the retirement systems for and the provision of other benefits to police and fire fighters in certain municipalities; creating a criminal offense.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

This bill is aimed at making reforms to the police and firefighter pensions in Dallas which is in a state of crisis and on an unsustainable path.

HB 3158 would, among other changes, raise the Tier 1 retirement age, allow members in all tiers to retire at age 53 with reduced benefits, make adjustments to maximum benefits, allow the pension to make cost of living adjustments, increase employee and employer contribution rates, limit the number of years a person may participate in a deferred retirement option plan (DROP), and prohibit an active DROP participant from receiving a distribution from the DROP account.

Additionally, the State Pension Review board would be entitled to all documents and other information provided to the public, and shall independently review the information to ensure its validity. The governing board of the pension would no longer be required to, but instead may, consider and adopt rules requiring the equitable return of funds paid to or credited to the benefit of a member or pensioner before September 1, 2017.

This is a summary and not an exhaustive list of provisions of this legislation. 

Vote Recommendation Notes

The public pension system in Dallas is broken and rapidly growing worse. The city's current multi-billion dollar unfunded public pension liability is alarming and unsustainable. Urgent reform is needed to stop the bleeding, shore up the system, and provide pension security for those who are counting on it. The reforms proposed under this legislation are only a temporary solution to a systemic and persisting issue. 

True pension reform that is sustainable for the long term will restore local control, significantly increase transparency, get the system up to a minimum of 80% fully funded, and move to a defined contribution system for new hires. Legislation that fails to enact these reforms would simply kick the can down the road for a future legislature to address at a time when the system will almost certainly have grown more indebted, become further destabilized, and consequently make the problem even more difficult to fix than it currently is.

We oppose the continuation of local pensions relying on state legislators to reform their broken systems. The biennial nature of passing state-level laws is time-consuming and inflexible for addressing local problems that require immediate resolutions and can't wait for the next legislative session to begin. 

We also oppose continuing on with a defined benefit system for new hires rather than a defined contribution system. 

Ultimately, this bill cannot truly be considered a reform bill; it tinkers around the edges without addressing the problem, raises pension costs for local taxpayers, and kicks the can down the road to the next legislature. It can hardly be said that passing this bill in its current form would be a worthy improvement over the status quo. 

We recommend this bill be amended to include a provision to reestablish local control and discontinue the cycle of perpetuating the encroachment of state government in issues it should have little to no engagement in.

We recommend this bill be amended to require that new hires be placed in a defined contribution plan which is inherently more stable and viable than a defined benefit plan. If such an amendment is adopted we would support this bill as a clear improvement over the status quo even if not the full measure of needed reform.

Source URL (retrieved on 04/25/2024 07:04 AM): http://reports.texasaction.com/bill/85r/hb3158?print_view=true