El Paso voters are being asked to decide whether the city should lift a long-time cap on its contributions to the Police and Fire Pension Fund – taxpayer dollars that go toward the retirement of uniformed employees.

If approved in the May 6 election, Proposition I would make 18% of the total amount the city expends for police and fire wages the minimum contribution instead of the cap now outlined in the City Charter.

“What we asked them to do is put the ceiling as the floor,” said Tyler Grossman, the El Paso Police and Fire Pension Fund executive director and chief investment officer. He said the fund wanted assurance that the city would not reduce its contributions in the future but is also not asking the city to raise its contribution rate.

Grossman said lifting the cap will improve the city’s bond rating and ensure the retirement fund remains solvent. And the change doesn’t mean the city will automatically increase its contribution, Grossman added, saying that an actuary would recommend changes to the city to ensure future benefits are available.

But lifting the cap would allow the City Council to increase the contribution rate without a limit – and without having to go to voters to amend the charter.

Proposition I would apply to firefighters, seen here responding to a fire at La Nube Children’s Museum on March 13, as well as police officers under the pension fund. (Corrie Boudreaux/El Paso Matters)

The city now contributes at the 18% rate to the retirement fund. This fiscal year, that translated to about $32 million from taxpayers.

Even with the 18% cap, the city’s total dollar contribution would likely increase with the recent approval of the police collective bargaining agreement. The agreement, approved unanimously by the City Council on March 28, stipulates pay raises for police officers over the next four years which will have a $14 million impact on the city’s budget in the first fiscal year.

Police and firemen also currently contribute 18% of their paychecks toward the retirement fund, which totaled about $30 million in 2021, based on the pension fund’s most recent annual report. There are about 2,050 active members of the police and fire department contributing to the fund, and 1,996 retired members receiving benefits. The annual average retirement pay for both police and fire is about $48,000.

The charter change is something the pension fund board has advocated for about 20 years, said Victor Vela, El Paso Police Officer’s Association vice president. He said he is hoping if there is an increase to the fund by the city that it will go toward a cost of living increase for future retirees.

Victor Vela, El Paso Municipal Police Officer’s Association vice president (at left), talks with other police officers at City Hall March 28 when the City Council unanimously approved the department’s collective bargaining agreement. (Elida S. Perez/El Paso Matters)

“It’s a lot of money that they’re putting into the pension and then on top of that they’re not getting a cost of living (increase when they retire) so it’s not necessarily fair either,” Vela said.

Police and firemen who were hired after 2007 are in the Tier 2 retirement program that does not include cost of living adjustments after they retire.

The change to the program occurred after the pension fund’s unfunded liability grew to about $380 million at the time – requiring a $210 million bailout from the city.

Grossman said the pension board, the police and fire unions and city negotiated the change that included increasing contribution rates for both the city and the members, establishing the second tier and included the city infusing the fund with pension obligation bonds.

“That was a deal that the members in the city came to at the time because we were underfunded,” Grossman said.

He said the fund is in much better shape now. Assets from the pension are invested in high-trade stocks and bonds, which are managed by multiple investment firms.

The fund’s unfunded liability is about $137 million, but has about $1.9 billion in assets. Its amortization period is 16 years, according to the most recent annual report.

City Manager Tommy Gonzalez said that in the early 2000s and earlier, having a cap was considered a good thing. “In today’s financial environment, for some reason, it is not seen as a good thing because you don’t have the flexibility to invest more dollars in (the pension fund),” he said.

Early voting in the city’s charter amendment election is from April 24 to May 2.

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Elida S. Perez is a senior reporter for El Paso Matters. Her experience includes work as city government watchdog reporter for the El Paso Times, investigative reporter for El Paso Newspaper Tree and communities...