DALLAS — The Dallas Police and Fire Pension System says it filed a case 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 city and the pension system for first responders have 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 back up 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.
“This by no means indicates a departure from working with the City of Dallas” said Dallas Police and Fire Pension Board chair Nicholas Merrick. “We have had good faith discussions with officials from the City and we applaud their exhaustive efforts to seek a mutually agreeable solution. It is also important to remember that in 2017 the Texas Legislature granted the City control of the DPFP Board as the main mechanism for the City to oversee DPFP. However, there is a legitimate and very important disagreement that exists with respect to the interpretation of our statutory mandate. We believe this clarification by the courts is critical to moving forward with a plan for the pension of the City’s valued first responders."
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 November 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.
As of Jan. 1, 2023, the Dallas Police and Fire Pension System is expected to be fully funded in 82 years, according to a city presentation.
City officials’ preferred plan involves filling the budget shortfall with five-year step-up, requiring the city to put in about $20 million in funding per fiscal year over the next five years.
The pension system, though, reportedly wants the city to begin filling the shortfall with a three-year step-up, and said in a press release they adopted their own funding plan.
“The Board has considered many factors including the report of Cheiron, the statutorily mandated independent actuary appointed by the Texas Pension Review Board. The Board, as required by law, has adopted a plan that satisfies all legal requirements and which ensures financial security for DPFP and prudently provides, as recommended by Cheiron, a modest cost of living adjustment (COLA) for members and retirees while trying to minimize the financial burden on the City,” Dallas Police and Fire Pension System executive director Kelly Gottschalk said in a press release. “It is also important to note that the COLA the Board has approved is small compared to the one granted to the City of Dallas employees who are not first responders. This is a highly unusual situation for a city in the United States.”
It's unclear when the case will be heard.
