City of Dallas committee holds briefing over outlook of police and fire pension; plans future meetings on finding solutions

The embattled Dallas Police and Fire Pension System (DPFP) once again may be in hot water. 

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On Tuesday, the City of Dallas Government Performance and Financial Management Committee held a meeting over the state of the fund, highlighting the challenges and health of the pension.

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The goal was to set a first step in looking over data and understanding possible issues moving forward.

The DPFP provides retirement, death and disability benefits to police and firefighters.

Based on data compiled in January 2022, Executive Director of DPFP Kelly Gottschalk said issues with the pension fund will get worst before they’ll get better. 

As of right now, the city and first responders are meeting the current requirements for contributions to the fund set in place by a House bill passed in 2017 — when the fund nearly collapsed due to years of risky investments by past leaders. 

That year, fears over employees’ retirement benefits led to both Dallas police officers and firefighters to retire and quit in near record numbers. 

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Yet, House Bill 3158 was only a 7-year bridge to the overall issue, Gottschalk said. 

There’s also a pending lawsuit filed by the Dallas Police Retired Officers Association to invalidate two provisions from HB 3158 that changed the annual adjustment  —  stemming from the cost of living and benefit supplement. 

In 2022, factors including the stock market, inflation and not meeting hiring requirements show there’s more money going out the door than what is being received in benefit payments. And the time it’s taken to get out of the bad past investments, has taken longer than expected due to private assets, according to the DPFP.  

Gottschalk said if adjustments aren’t made, payroll projections may be unachievable. 

Currently, there’s $3 billion in liability that is unfunded (41.8%), according to data. Gottschalk said if things continue as is, the projected year for full funding of the pension won’t happen until 2090 — 68 years. 

Gottschalk believes the current plan’s funding level will get worse before it gets better. 

The Pension Review Board (PRB) requires funding of less than 30 years, and that requirement has to be met by 2025, Gottschalk said in her presentation. 

“I believe the funding gap will not be solved by benefit cuts, employee contribution increases, or investment returns,” said Gottschalk. 

But Gottschalk brought some levity to the briefing by saying the city is in a much better position than in 2017.  

By 2024, the PRB must hire an actuary and adopt a plan to submit a solution to the state ahead of the 2025 legislative session. 

Gottschalk said, ideally, the conversation with the city needs to begin sooner. She’s working on a letter to send to Dallas Mayor Eric Johnson, to request more contributions for the pension fund. 

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As the end of the meeting, the Dallas Government Performance and Financial Management Committee chair said the status of the pension will be added to the agenda for further discussion. Dallas police and fire employees, both retired and current, will also be invited to a future public session whenever meetings on solutions begin. 

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