City considers raising contributions to police and fire pension fund

El Paso City Council is thinking about putting more money into the police and fire pensions. The fund is continually under-funded. Some believe increasing the city’s contributions will prevent another multimillion dollar taxpayer bailout.

Right now council members aren’t sure they can legally raise the city’s contribution. in fact, this may have to go to voters. But there is consensus that something must be done to fund the pension system:

“In 1994, it was a $60 million before 2007, when it became a $400 million,” said the fund’s Chairman Police Lt. Tyler Grossman. “That’s what I do not want to go back to.”

El Paso remembers when it had to borrow $210 million to shore up the fire and police pension fund in 2007 and 2009 after the market went belly up. This year, the Grossman says the fund is in good health, just under 80 percent funded, which is about a $280 million shortfall. But it’s the well-being of the fund he’s trying to protect.

“We’re going to have to carry the unfunded liability on our books going forward,” said District 7 Rep. Cortney Niland. “So that’s something that could affect our debt service, that’s something that could affect our bond rating. And so, we’re going to do everything we possibly can to say, how can we stay on top of this, that we are closing the gap for the unfunded liability and doing everything we can to protect the city’s financial health.”

The city, meaning taxpayer contributes 60 percent of the $1.3 billion fund. About 3,500 active and retired police officers and firefighters make up the rest.

Earmarked in the 2015 budget is a potential increase in contributions from both the city and police: The city will go from 18.50 percent to 21.06 percent by 2018 if police will match what fire contributes, that’s up from 13.89 percent to 16.53 percent. That’s about $550,000 more from the city each year for five years, or about $2.75 million and $450,000 from police and fire, or about $2.25 million.

“whatever we do, whether it’s today, tomorrow, somewhere down the line, then it’s a permanent fix because I know you don’t want to come up in front of us again,” said Mayor Oscar Leeser.

“I think that with the increase of contributions, that is going to be the closest thing to the silver bullet that we’re ever going to get,” Grossman said.

“So at this particular time, there’s too many facets and balloons up in the air for us to make any sort of commitment,” Niland said. “We need to number one see if we can afford it, number two we need to say to the voters, if we were going to make any changes, that we would put it out to a vote, that’s probably what we need to do.”

When asked if there was ever a consideration for a 401k-type plan, which depends on market conditions and contributions, Grossman said no. He said they cause too many problems and he’s not aware of any major city in Texas using them.