DALLAS — The Dallas Police and Fire Pension System has been facing problems for years, with a current $4 billion shortfall.
The Dallas City Council just voted 14–1 to adopt its plan to fix the system by investing more than $11 billion over the next 30 years.
There’s one big catch, however.
The Dallas Police and Fire Pension System just adopted its own plan and is suing the city to determine which plan is ultimately adopted.
The Texas Pension Review Board will have the final say and City Council Member Chad West thinks it will back the city’s plan, which he says gets the fund on the right track.
“It gets us to 70% funding of the pension plan within 30 years which is what the state has asked for,” West told us on Inside Texas Politics. “So, what the state has put out there as a requirement, we are meeting, and we’re hoping to exceed that.”
The Dallas Police and Fire Pension System hasn’t been fully funded in a while, currently at less than 40%.
And if it isn’t fully funded, the difference has to be made up somewhere, so retirees continue receiving checks.
West says they’re trying to find those extra dollars anywhere they can, but he says they generally come from hard cuts in the city.
“It’s sort of like digging in the couch cushions. You’ve got to find money wherever you can,” he said.
The pension fund finds itself in its current predicament due in large part to bad investments, during one period in particular at the start of this century.
The performance of the Dallas Police and Fire Pension System fund is consistently well below other large cities in Texas.
West argues that the fund needs to examine what other cities are doing to have a higher rate of return on their investments.
West says the national average is higher too.
“We’re below 6%, like around 5.7% if you look at it over 10 years as a rate of return that this pension board has invested in" West explained. "Other cities are well over 6%. If they just dumped the money into the S&P 500, which I don’t recommend as a sole investment, you’re looking at over 13% over ten years. So, do better.”
West says if the investments have a higher rate of return, the city will have to put less money into the system to prop it up, leaving more dollars for city services.
The City of Dallas’ plan is due to the Texas Pension Review Board by Nov. 1.
No word when the board will make its decision between the two competing plans.