The City first created a retirement plan for police and fire, by ordinance.
State of Texas enacted a statute which still governs the plan today. The statute delegates authority to members allowing them to amend the plan in any way, including their own benefits and several other features.
Today, the board is made up of 12 trustees, 4 of whom are City Council Members.
Pension System Members and State approved 4 percent simple COLA (cost of living adjustment) every year.
1992 - 1993
The Pension System Members and State Legislature established DROP (Deferred Retirement Option Plan), which led to many of the Fund’s financial crises we face today.
Through COLA, the Pension credited Members with approximately 20 percent more than the CPI (consumer price index) although no other peer city has a guaranteed COLA.
Through DROP, the Pension guaranteed 8 to 10 percent returns, even during the recession when many other peer cities were not offering interest. These DROP accounts have grown to as much as $4.3 million. Since August 2016, Members have withdrawn more than $500 million - compromising the Fund's ability to pay retirement checks.
Unfortunately, the Pension's flawed investment strategy produced returns which were unable to sustain these overly generous benefits.