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May 14, 2004, 1:43AM

Pension issue pits unions against business groups

By DAN FELDSTEIN

If it's a chamber of commerce or business group, chances are excellent it endorses Proposition 1, the Saturday ballot item that would excuse Houston from a state law protecting certain pension benefits for city employees.

If it's a union, chances are good it opposes Proposition 1.

Among leading proponents are the Greater Houston Partnership's board of directors, West Houston Association and Houston Association of Realtors.

Leading the opponents are the Harris County AFL-CIO Council, the Houston Professional Fire Fighters Association and the Houston Federation of Teachers.

Among political groups, the local Republican and Libertarian parties have endorsed Proposition 1, while the Green Party opposes it. The Harris County Democratic Party hasn't taken a position. Its executive committee hasn't met since January and didn't call a special meeting on this issue, County Chairman Gerry Birnberg said.

Democratic Party luminaries are split. Mayor Bill White, former chairman of the state party, is the leading proponent of Proposition 1, while U.S. Rep. Sheila Jackson Lee, D-Houston, has actively opposed it.

Several African-American groups have officially opposed the proposition, including the local chapter of the National Association for the Advancement of Colored People.

The Rev. Bill Lawson of Wheeler Avenue Baptist Church, a prominent black minister, has spoken against the proposition. He said he might trust White not to cut benefits for pensioners but can't be sure what a future mayor would do.

 Copyright 2004 Houston Chronicle

May 19, 2004, 1:19AM

Mayor's plan would trim pensions

By KRISTEN MACK

City employees would work longer, pay more and get less under a new retirement package proposed Tuesday by Mayor Bill White to slash the $1.9 billion shortfall in Houston's main municipal pension fund.

White's proposal, which must be negotiated with the pension board, is much like the plan the city had in 2001 before more generous pension benefits went into effect. Those benefits have proved unaffordable.

White also proposes to add the city-owned Hilton Americas-Houston hotel to the pension fund's assets to generate more revenue.

A local union official said he expects city workers to accept most of the proposed changes but believes the shortfall could have been addressed without the "opt-out" election that White sought and won on Saturday. The election exempted Houston from a constitutional amendment that barred cities for lowering employee benefits already accrued.

Even with his proposed changes, White said the plan is still excellent, offering 80 percent of an employee's final salary after 29 years of work and allowing some workers to begin collecting monthly retirement checks while in their early 50s.

The new plan also would lower taxpayers' contribution to the pension fund. Without changes, the city faces the possibility of paying an extra $100 million per year to overcome the shortfall.

"Our city workers deserve a secure pension that is affordable for all the people of Houston," White said. "These changes will reduce the incentive for early retirement and significantly increase the assets to the system."

Major elements of the proposal include:

· Increasing city employees' contribution to 5 percent of their paychecks instead of the current 4 percent.

· Cost-of-living increases in retirement checks reflecting the actual inflation rate, which may be lower than the pension's current minimum annual increase of 4 percent. This provision will include those who already are retired, while all other changes will affect only current and future employees.

· A change in accrual rates, meaning that employees can reach the new maximum pension of 80 percent after 29 years, as the plan allowed before 2001. Currently, they can reach a maximum of 90 percent after a little more than 25 years.

· Changing eligibility requirements from the current "Rule of 70" to the "Rule of 80." Employees would be eligible to start receiving pension checks when their age and years of service add up to 80. For a worker who joined the city at age 22, this means full retirement at age 51 instead of 46.

· Allowing employees who reach retirement eligibility to continue working for the city while their monthly pension checks go into a special reserve account until they actually retire. The accounts currently earn at least 8.5 percent interest, even when the pension fund as a whole earns less or loses money. The new plan calls for a minimum interest of 2 percent and maximum of 7.5 percent, even when the fund earns more.

White's proposal to generate revenue by adding the city-owned hotel to the pension fund's assets was called "innovative" by some council members, although it has raised questions about how the transfer could take place.

Officials with the Houston Municipal Employees Pension System seemed skeptical about the approach, as well.

"We appreciate his `thinking outside the box' to develop innovative ways to increase plan assets, and anticipate receiving more information regarding the structure and valuation of such a unique funding method," said a statement on the pension system's Web site.

City Controller Annise Parker said she has a lot of questions about such a deal.

"I'm not quite sure of the legality," she said. "If I were a pension board member and they offered this asset, I would demand control. I think it would be hard for the city to give that up."

White said he expects the changes to contribute $1.2 billion toward closing the shortfall, which is the difference between the plan's assets and the present value of its projected payouts to retirees. He said he hopes they can be enacted within weeks.

"I don't see why this should take long to accomplish," White said. "I would be willing to negotiate around the clock. I think there is a duty."

Anthony Hall, the city's chief administrative officer, will take the lead in negotiating with the Houston Municipal Employees Pension System.

White was given the flexibility to suggest changes after voters overwhelmingly approved the "opt-out" measure on Saturday.

A union official called White's use of that election to fix the pension problem "shameful."

"Everything that he presented could have been done with the protections that were in place. The whole election was unnecessary," said Josh Darr, projects coordinator of Local 1550 of the American Federation of State, County and Municipal Employees.

Darr said he believes city employees will accept most of the provisions, although the union is awaiting more details.

"The one they are going to have trouble with, especially the underpaid city employees, is contributing more to their pensions," he said.

The pension system has not received the plan in writing but posted a statement on its Web site saying, "These are critical issues, and we will want to have as much information as possible to ensure a thorough and meaningful discussion and negotiation.

"We have not been informed of the specifics of the proposals, including who would be affected, how the changes would be implemented and the proposed effective dates for the changes."

White said his proposals would mean that taxpayers would contribute $47.5 million to the main pension fund annually. That would be $10 million less than last year's contribution, and city officials feared that taxpayers would have to pay at least $100 million extra per year to make up the shortfall.

White also suggested issuing revenue bonds and recommended that the fund's amortization period be stretched over 30 years, instead of the current 18.

He said he would not alter a provision that allows spouses of deceased city employees to receive full pension payments until their deaths.

The shortfall stems from improvements made to the city's pensions in 2001. Actuaries predicted then that the city would be able to afford the increased benefits, saying it would have to contribute 14 percent of city payroll.

The latest estimate from an independent actuarial firm hired by the city is more than 50 percent.

  Copyright 2004 Houston Chronicle

Union one step closer to strike against SBC

Associated Press

SAN ANTONIO — The Communications Workers of America gave its final strike notice on Tuesday to SBC Communications, meaning the union's 102,000 SBC workers could walk off the job as soon as today.

Union president Morton Bahr said negotiations with the nation's No. 2 local-phone provider had stalled over several issues.

A strike would likely affect local phone service in SBC's 13-state coverage area, which includes Texas, California, Illinois, Michigan, Ohio and Connecticut.

The San Antonio-based company says it has contingency plans for management employees and retirees to handle key duties in case of a walkout.

"We want to be able to reach a settlement without a strike, but SBC plays a big part in that," union spokeswoman Candice Johnson said. "The company has to meet us halfway, and certainly we hope this can still happen."

Johnson said a strike date has not been set.

John Arnold, a spokesman for the Federal Mediation and Conciliation Service in Washington, said the contract dispute is a priority for the agency because of the number of workers.

"There's a great sense of urgency on our part about these negotiations," Arnold said. "It has a great potential economic impact on not only the lives of the workers, but also the national and regional economies."

More than 20,000 SBC workers in Texas are represented by the union, among them phone operators, customer service representatives, linemen and technicians.

SBC spokesman Walt Sharp said Tuesday that SBC has been negotiating in good faith and that the 24-hour notice doesn't change its approach. He said SBC wants higher medical co-payments by workers that would increase their share of total health care costs to 12 percent, up from less than 7 percent now.

The union's rank-and-file voted overwhelmingly last month to authorize a strike, which would be the first against SBC since the early 1980s. Negotiations started about three months ago to replace the contract, which expired last month.