Q&A: Kolby Beckham

POMERANTZ MONITOR | SEPTEMBER OCTOBER 2020

Partner and Head of Client Services Jennifer Pafiti spoke with Kolby Beckham, Fire Captain of the Longview Fire Department and Chairman of the Longview Firemen’s Relief and Retirement Fund in Texas, about recovering from COVID-19, serving as a front line responder and the challenges facing public pension funds.

Jennifer Pafiti: Can you share your experience with having and recovering from COVID-19?

Kolby Beckham: For me, it was flu-like in the sense that I did not have severe symptoms like some do. I’ve been tracking the symptoms of the people in my fire department, and there’s no consistent result. Some have severe gastrointestinal issues, others have none. The common symptom for about 75% of our people is loss of smell and taste. In our community, we’ve had deaths associated with COVID-19, but it’s hard to put your finger on what makes one person an extreme case and another test positive and only be sick for a day and a half.

JP: How has the coronavirus pandemic affected your work on the front lines as a first responder?

KB: It has had a severe impact. We wear respirators with the canisters on the side on every call, and that’s fatiguing, on top of the 107-degree heat index out here. Of course, we’ve shut down all our proactive building inspections, pre-fire plans and station tours. We normally do Fire Prevention Month in October where we go speak to kids in schools and none of that will be happening this year.

JP: As Chairman of the Longview Firemen’s Relief & Retirement Fund since 2008, has this pandemic been the most challenging thing you have faced in that role over those 12 years?

KB: I wouldn’t say COVID-19 specifically has been the most challenging. I came in right before the housing market bubble popped in 2008, so that was our first downturn. That was one of the most challenging times and it was a long span. We’ve been working hard to fix our unfunded liability issues, negotiating with our governing entity here in Texas, the Pension Review Board, and with the plan members, in regard to making benefit changes to get costs down, and that has probably been the biggest challenge. Obviously, the pandemic is creating havoc in the markets. It certainly is another bump along the road, which is pretty much the norm for pension funds, waiting for the next natural disaster or major event that will affect the market.

JP: Can you speak to your work with the TLFFRA Non-Profit Education Foundation?

KB: TLFFRA, the Texas Local Fire Fighter’s Retirement Act, is the legislative act that allows certain pension funds to exist in the state of Texas. Your big pension funds like Dallas Police and Fire, Houston Police and Houston Fire are all large enough to have their own legislative acts enabling them to be pension funds. TLFFRA was enacted in 1938 to enable smaller fire departments to have funds too. Forty-two fire departments in Texas fall under TLFFRA. Smaller funds are unique in how we operate and how the administration is structured, so when we go to general fund conferences, the information is not as applicable to the training that we need for the resources that we have. So we came up with our own conferences and our own training, figuring who better than ourselves to share the wisdom of “we made this decision and it was terrible, and you shouldn’t do the same.” To share our knowledge, we started the TLFFRA Education Foundation, typically hosting two events a year. The first one is peer review training specifically for new trustees to a board, taught 100% by trustees of other pension funds. The second is a larger event where we bring in financial consultants, money managers and securities litigation lawyers to speak to the members about larger issues than just the day-to-day operations. At this time, we’re doing all our pension meetings virtually but it’s tough enough to talk to 10 people online, much less get a couple of hundred people together, so that is something that we are struggling with.

JP: How actively interested are rank and file members with the business of the fund?

KB: Our seven-member board includes three firefighters like me — I work on a ladder truck but I also serve as Chairman of the Board — along with representatives of the city and two citizen board members who represent the taxpayers who give money to the city that gives money to us. It’s in our own best interest to have a healthy pension fund because one day we hope to be on the receiving end of those benefits, so we have to make sure that the fund is being properly taken care of. There are some hard decisions to make, like asking the guys to either contribute more money now or take less money when they retire. Sometimes you’re not very popular in the fire department. We’ve been fortunate in Longview to have interested people that we take with us to conferences to learn about managing the fund before they actually get on the board. I know that some other cities struggle in getting these positions filled. It’s hard to get people to volunteer their time to such a cumbersome position.

JP: What do you see as the biggest issue facing public pension funds today or in the near future?

KB: Pension funds generally fall under the defined benefit plan versus the defined contribution plan. We’ve already seen in the private sector that most defined benefit plans have been done away with, even though the whole design of a defined benefit plan is that it’s meant to go on forever. Unfortunately, it’s very expensive to just say “alright, we’re not going to do this anymore — tomorrow, everybody’s going to get a 401k instead,” because there are still pension liabilities that need to be met. The challenge is getting our funding ratios where they need to be in order to fulfill promises that were made. The reality is, when you work in the public sector, you don’t make the income that someone in the private sector can make in a similar position, but oftentimes, we take the lower pay in exchange for benefits like a pension plan. But what we pay into our pension plan doesn’t just fund our own benefits, it supports ongoing past pensions that were never funded properly before we even worked for the city. And that has been really difficult to make up. I’m at a point that I’m asking my members to pay for their benefits, which they are, and also to take a cut to pay for the benefits of someone that didn’t pay what they should have been paying in the past or for whom the city didn’t contribute what they should have contributed back then. It’s a difficult road ahead to educate people because they see the unfunded costs starting to grow. And unfortunately, it’s a perpetual machine — the longer it doesn’t get paid, the bigger it grows.

JP: What is your strategy when it comes to pursuing actions or claims in response to fund losses?

KB: It’s important that, as a board member, I am making sound investments. But if the fund loses money due to alleged fraud, I think I’m obligated by statute to try to recoup that money because it isn’t my money, it is the retirement money of 385 different people. I’m elected to oversee the fund and make sure it’s in the proper position. If I can use securities litigations to recoup even a percentage of the money lost, I feel it’s 100% worth it. Funds should be proactive. We can’t afford not to seek all revenues that are coming back. Every penny that we can claw back is a penny that rightfully belongs back in the fund.