The Dallas Police and Fire Pension System Fund faces a $3 billion unfunded liability, city officials were informed this week.
City Council members learned Tuesday that a 2017 legislative plan to resolve decades of problems with the fund was not as successful as the city had hoped. As it stands, the pension fund that provides retirement, death and disability benefits to Dallas police and fire rescue personnel will remain fully funded for another 68 years if nothing changes, according to the council's presentation to Government Performance and Financial Management. This means that they will not be covered. Committee.
“A viable solution would require significant funding from the city,” Pension Fund Executive Director Kelly Gottschalk told the committee.
In 2017, the Texas Legislature passed House Bill 3158, which overhauled Dallas' pension system. The bill would cut benefits for active-duty police and fire-rescue personnel and require them to add money from their paychecks to the fund. HB 3158 also limits future benefit increases for retirees, requires Dallas taxpayers to pay more into the fund, and creates a new governance system that gives city and union representatives a seat at the table. Founded.
Gottschalk told City Council members that there are currently too few public safety employees paying into the fund. In addition, investment performance over the past few years has been lower than expected due to stock market volatility due to the COVID-19 pandemic.
Gottschalk said benefit cuts, increased employee contributions and investment income alone won't be enough to address the shortfall.
“There's not a lot of wiggle room to raise contribution rates or lower benefits,” she says. “They may be in a position to pay more than the pension is worth…then it’s impossible to invest your way out of it.”
As of Wednesday, no meetings had yet been scheduled to discuss changes or improvements to the fund. But Gottschalk noted that Dallas Mayor Eric Johnson has established a study committee to consider funding solutions.
Under state law, Dallas has until 2025 to put together a plan to prevent the fund from failing.
Tuesday's presentation outlined many of the issues facing the fund, but did not list recommendations on how to solve the problems. Questions about the fund's recommendation led to a brief exchange between Councilman Adam Bazaldua and Commissioner Carla Mendelsohn, who emphasized that the meeting was for informational purposes.
“We're not trying to talk about solutions at all. We're trying to understand the facts and get all the data,” Mendelsohn said.
However, the lack of a plan to address the funding gap led to frustration among some committee members.
“How can you have a briefing where you're not talking about solutions?” said District 8 Councilman Tennell Atkins, who previously served on the pension plan's board.
“A solution is something you decide on after you fully understand the problem,” Mendelsohn replied. “I think it's safe to say that most of us don't have the depth of knowledge to talk about solutions at this point.”
