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Posted on: March 20, 2019

City reaches tentative agreement on police pension

Galveston, TX – March 20, 2019 – The City of Galveston is pleased to announce it has reached a tentative agreement with the Galveston Police Pension Board that will bring final resolution to the pension issues facing their plan.

On March 19, in a meeting facilitated by State Representatives Dan Flynn and Mayes Middleton, Plan and City representatives agreed to changes in Plan governance and funding that will address the existing financial problems facing the plan. This agreement is pending final drafting of legislation by Representatives Flynn and Middleton. 

After months of negotiations, the primary remaining issues were board governance and funding. After lengthy discussions, the City and the Plan reached an agreement to resolve these issues.

The City remains committed to all of its employees and believes these changes will resolve the Plan’s problems and ensure its stability for the benefit of our police officers.

“The City continues to stand behind its public safety employees and will always do all we can to make sure they are reasonably compensated and equipped to do their jobs,” City Manager Brian Maxwell said. “Police officers will no longer need to worry about their pension plan as it will be under the direction of a professional board.”

To return the Plan to a sound financial footing, the City will increase its contribution to 18 percent of total payroll. This is a 50 percent increase over original funding levels outlined in the collective bargaining agreement. Police officers will continue contributions at the current level of 12 percent. This will jointly eliminate the current unfunded liability. Further, both the City and Plan members will equally share in future increases and/or decreases in contribution levels, which will be based solely on actuarial science.

Absent new revenue, the increase in pension contributions to the police plan will be offset by spending reductions; however, no decrease in staffing or services is expected at this time.

To address concerns related to governance, the Plan and City agreed to changes in the structure of the board and its requirements. Previously the board was comprised of seven trustees, four (a majority) of which were members of the Galveston Municipal Police Association. Under the new structure, the board will be balanced with equal representation by the city and police. The new board will have three trustees elected by the plan members, one appointed by the GMPA president, two appointed by the City Manager, and two appointed by Council. Major decisions of the board related to benefit changes would require a super majority of the trustees for approval.

In addition, strict educational and financial experience requirements will exist for all trustees. These changes will ensure the Plan is under the control of qualified and experienced professionals making decisions that are in the best interest of the Plan.

Current police officers will continue to collect a normal retirement after 20 years of service at 50 years of age. Newly-hired police officers will collect a normal retirement after 20 years of service at age 55. This change was recently adopted by the Plan.

The changes in governance, along with a definitive funding methodology, will ensure the Plan achieves a sound financial footing and does so under the guidance of a professional board.

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