DALLAS — A judge sided with the Dallas Police and Fire Pension System this week, ruling the city of Dallas must abide by the plan adopted by the pension system's board -- requiring Dallas to find millions more dollars to contribute to the fund.
The Dallas Police and Fire Pension System filed a case in August asking a state court to clarify who gets the final say on a plan to shore up the pension fund for first responders, which is facing about a $3 billion shortfall. The judge ruled in favor of the pension fund.
"We are very pleased and obviously relieved," DPFPS Executive Director Kelly Gottschalk said. A city of Dallas spokesperson declined to comment because "litigation is ongoing."
The city and the pension system for first responders had until Nov. 1 to adopt a plan for solvency that meets state requirements. The need for a plan to build the police and firefighter retirement fund backup comes after the fund reportedly nearly ran out of money in 2016. Pension officials cite bad real estate investments and a “run on the bank” as the causes of the 2016 issue.
A point of contention between the pension system and Dallas officials has been who will get to approve the final plan, which impacts more than 10,000 current and retired first responders and their families, according to a news release.
The state legislature adopted House Bill 3158 in 2017, which provided for some immediate fixes and required the city to adopt a long-term plan to bring the fund to solvency by Nov. 2024 to submit to the Texas Pension Review Board.
The disagreement is based on how quickly the city will contribute an “actuarially determined” amount toward funding benefits and other expenses to fully fund the pension system within 30 years as required.
The city's plan calls for a five-year "step-up" to begin funding the plan, eventually totaling $11.2 billion over 30 years.
The pension fund's plan includes a quicker increase in contributions -- three years, not five -- and would eventually total $11.6 billion in city contributions over 30 years.
Under the pension system's plan, the city said it would need to contribute an additional $13 million in 2025, $26 million in 2026, $30 million in 2027 and $25 million in 2028. It is not clear where the city would find the additional money.
Another issue of contention between the two proposals was a cost of living increase for retirees. The City of Dallas initially proposed an annual stipend in years when the fund had a positive rate of return but took that off the table following the lawsuit filed by the pension fund.
Gottschalk said the pension fund's plan will include a cost of living increase for retired first responders starting in Oct. 2025. The amount would be based on the consumer price index -- a measure of the price of household goods -- and how close the pension plan is to being fully funded.
She said the October date was specifically chosen because it comes after the conclusion of the 2025 legislative session, during which lawmakers could make changes to the 2017 law.