Most city of Houston employees now retiring after at least 25 years of service get substantial raises the day they turn in their uniforms, according to an analysis presented to a skeptical and, at times, confused City Council on Tuesday.

To pay the benefits of all current retirees and employees, city pension consultant Craig Mason said, will take $14.4 billion, 61 percent of which already is in the bank. After future employee contributions are factored in, the city would be on the hook for $5 billion.

That unfunded liability is spread over 30 years, Mason said, with actuaries telling the city each year how much it would need to pay to bring its fire, police and municipal pension plans to full funding in that time. This fiscal year, the amount is $371 million, but the budget includes only $302 million.

When Councilman Dave Martin asked if the city had a plan to catch up on its payments, Mason said one plan would be to pay the suggested annual amount, which will reach an estimated $471 million in 2019.

"If we do that, that means layoffs," Martin said. "This is the No. 1 issue facing the city of Houston, now and in the future. We have to do something about this. We have to lead that charge."

Not all council members shared Martin's urgency, however, a muddle captured by a comment from Councilwoman Melissa Noriega: "It's hard to have a clear sense of what threat level we're at: orange, red, whatever."

What's down the road?

The city of Detroit's recent bankruptcy filing clearly was on council members' minds.

"We're saying, 'Well, down the road we have to face this,'" Councilwoman Ellen Cohen said. "But the fact of the matter is, I would think there were people sitting around a similar table like this in Detroit a number of years ago where someone might have raised the question, 'Look, we're facing a huge deficit,' and perhaps some of the comments were, 'Well, down the road we may have to deal with it.' I think we're coming to the end of the road."

University of Houston economist Steven Craig said good economic times typically are meant for fixing problems but said Houston's pension problem, which began in 2001, has gone the opposite direction. "I don't think you need to be an expert in pensions to look at this and say we're building ourselves a problem and that the problem is getting worse over time," Craig said. "They're $70 million short this year, and this was a pretty good year. That suggests major change needs to happen."

Retirement funds

Mason's presentation, which drew on data from 253 workers who retired in 2012 or 2011, showed firefighters retiring with 30 years of service got yearly payments totaling 197 percent of their last salaries, compared to 131 percent for police and 117 percent for municipal workers with the same tenure. Firefighters with between 25 and 30 years experience got 130 percent of their final salaries; police got 97 percent and municipal workers 115 percent. Unlike police or firefighters, municipal workers also get Social Security benefits.

Recent reforms mean police hired after Oct. 9, 2004 and municipal workers hired after Jan. 1, 2008 will get far less generous payouts upon retirement: between 45 percent and 65 percent of their final salaries. Mason said this represents a light at the end of "a really long tunnel" for those two plans. However, Mason said, the firefighters' pension has seen no reforms.

The city's municipal and police pensions are negotiated in a "meet and confer" process with the city, while fire pension benefits and contributions are controlled by the Legislature. Mayor Annise Parker twice has failed in Austin to force firefighters to the bargaining table.

Todd Clark, chairman of the firefighters' pension fund, stressed that his group had no involvement in Mason's presentation, though he acknowledged almost all the data was drawn from the pension board's own reports.

"We have not had a chance to review that presentation, our investment staff or our legal staff. I can't confirm or deny how correct or incorrect it is," Clark said. "What should have been talked about even more there was, instead of finding ways to cut, they should find funds to honor the promises made to the firefighters."

Police pension board chairman Ralph Marsh and Rhonda Smith, executive director of the municipal employees' pension plan, said the city should not be surprised at the growing price tag.

"The revisions in the city's pension contribution schedule were made with city leaders' full understanding that delaying certain payments to (the municipal pension) would lead to predictably higher payments in the future and that it would take more time for the city to eliminate the remaining underfunding," Smith said.

She disputed Mason's calculations showing long-tenured municipal workers could receive pensions higher than their salaries; city Finance Director Kelly Dowe said he stands by the figures in the report.