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Abilene council hears options to address $70M firefighter pension shortfall
Summary
City staff and the Firefighters’ Relief and Retirement Fund discussed options including debt restructuring, actuarial changes and switching new hires to TMRS to address an estimated roughly $70 million unfunded liability; council asked for further study and cooperative action with the pension board.
City officials and the Abilene Firefighters’ Relief and Retirement Fund spent the budget workshop reviewing a long-running, multi‑decade shortfall in the firefighters’ pension and potential routes to fix it, including issuing debt to fully fund liabilities or changing the retirement plan for new hires.
The fund’s most recent public actuarial figure (October 2023) showed a funded ratio of about 45% and an unfunded liability in the tens of millions; staff and the pension board discussed a working estimate of roughly $70 million to fully fund the liability. City management described that continuing to rely solely on investment returns and incremental increases would not resolve the shortfall.
Council and pension board members outlined several reform tools that other Texas cities have used: increase employer and employee contributions, adopt more conservative actuarial assumptions, replace or close the two‑tier benefit structure, and consider issuing public debt to buy down the unfunded liability and reduce future annual contribution needs. City staff reported analysis by Hilltop Securities showing multiple debt‑funding scenarios that could produce long‑term savings in annual contribution costs, depending on the amount financed and market rates.
Board members and councilors also discussed transitioning new firefighter hires into the Texas Municipal Retirement System (TMRS) as a possible long‑term change. Staff explained the tradeoffs: TMRS generally has a lower employer contribution rate and broader state‑wide risk pool but can change the benefit profile for long‑service firefighters. Actuarial modelling is required to estimate whether moving new hires to TMRS would reduce future city costs without worsening the fund’s funded ratio in the short‑term.
Council members asked for and were promised refined actuarial modelling and debt scenarios. Staff said Foster & Foster (the pension actuary) and other consultants were preparing updated valuations and sensitivity runs that will show: (1) the effect of issuing debt to fund 50–100% of the liability, (2) how employer contribution rates would change under each approach, (3) the fiscal impact of converting new hires to TMRS, and (4) draft contractual language to protect the city from future unilateral increases in pension liability by the pension board.
Council direction: members signaled they want the city and pension board to continue cooperative work and receive the updated actuarial analysis and financing scenarios before deciding. No council action or vote was taken at the workshop.
