The Dallas Police and Fire Retirement System Fund faces a $3 billion shortfall, city officials learned this week.
City council members learned Tuesday that a 2017 legislative plan to address longstanding issues with the fund hadn’t been as effective as the city had hoped. As it stands, the pension fund — which pays retirement, death and disability benefits to Dallas police and fire department employees — won’t be fully funded until age 68 if nothing changes, according to a presentation to the council’s Government Performance and Financial Management. Committee.
“Any workable solution will require a substantial amount of money from the city,” pension fund executive director Kelly Gottschalk told the committee.
In 2017, the Texas Legislature passed House Bill 3158, Dallas Retirement System Overhaul. The bill cut benefits for active police and firefighters and required them to pay more into the fund from their salaries. HB 3158 also limited future benefit increases for retirees, forced Dallas taxpayers to pay more for the fund, and created a new governance system that gives city and union representatives a seat at the table.
Gottschalk told council members that currently too few public safety employees are contributing to the fund. Additionally, investments have been lower than expected in recent years due to stock market fluctuations resulting from the COVID-19 pandemic.
Benefit cuts, employee contribution increases or investment returns are not enough to solve the problem, Gottschalk said.
“If you raise the premium rate or cut their benefits, there’s not a lot of room there,” she said. “They might be able to pay more for their pension than it’s worth…and it’s just not possible to invest to get by.”
On Wednesday, a meeting has yet to be scheduled to discuss changes and improvements to the fund. But Gottschalk noted that Dallas Mayor Eric Johnson has formed an exploratory committee to examine funding solutions.
Under state law, Dallas must finalize a plan to prevent the fund from going bankrupt by 2025.
Although Tuesday’s presentation highlighted many of the issues facing the fund, it did not list recommendations on how to fix the problem. A question about fund recommendations led to a short exchange between Council member Adam Bazaldua and committee chair Cara Mendelsohn, who emphasized that the meeting was meant to provide information.
“We’re really not looking to talk about solutions,” Mendelsohn said. “We try to understand the facts and have all the data.”
But the lack of a plan to close the funding gap led to frustration among some committee members.
“How can we have a briefing when we’re not talking about solutions?” said District 8 council member Tennell Atkins, who previously served on the pension system’s board of directors.
“Solutions are something you determine once you fully understand a problem,” Mendehlson replied. “I think it would be fair to say that most of us don’t have deep enough knowledge at this point to talk about solutions.”
