The city of Dallas has a giant money problem very few people are talking about. It’s a $3 billion police and fire pension shortfall. That’s a billion more than the city’s entire general fund budget and three times the public improvement bond referendum planned next year.
The unfunded liability for the Dallas Police and Fire Pension fund is $3 billion and Dallas taxpayers are on the hook to help fix it.
The figure is more than a billion bigger than the entire general fund budget that pays for many city services and three times as large as the planned 2024 public improvement bond referendum.
It is a giant money problem, kicked down the road for years, that few people at Dallas City Hall are talking about.
Solutions include pension obligation bonds that would compromise how large the public improvement bond referendum can be.
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Even the city of Dallas can only borrow so much.
“Both of those are competing for the same dollars. So, we need to work and have solutions for both before we do one before the other,” Dallas Firefighters Association President Jim McDade said.
A 2017 deal in the Texas Legislature to help fix the fund has not solved the problem. There are fewer than expected employees contributing to the fund and return on pension investments has not been enough to make up the difference.
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“We increased our contributions. We reduced our benefits. It is still state law that it has to be funded by the city of Dallas. The city is going to fund it one way or another, period,” McDade said.
Two retired police officers sounded the alarm at the Dallas City Council budget workshop this week.
Dallas Retired Police Officers Association President David Elliston is a former Deputy Chief.
He said the fund has not provided retirees with a cost of living increase since 2016 and under terms of the 2017 deal, it may not for 50 years.
“Our pensions are quickly eroding away. I do not see anything in your budget for police and fire pension system,” Elliston said.
Retired officer Larry Eddington once served as a member of the pension board, years before risky investments and fears of insolvency sparked a run on the fund and hundreds of employee retirements.
He said a pension failure now would scare public safety recruits and businesses away from Dallas.
Eddington said the pension obligation bond option needs to be used immediately while the city still has the borrowing capacity.
“I helped pass the law years ago so that we could do that if ever it became necessary. It is necessary right now,” Eddington said. “The debt is coming due. They've got to fix it. It wasn't fixed at the legislature.”
At the same time, the police and fire departments are both asking for big capital improvement projects, including new academy buildings to help attract and train more employees.
“We need a lot of money to fix city facilities and all of the stuff you’re looking at for the bond. One hundred percent true. But we also at the same time need to shore up both of our pension systems,” McDade said.
The Dallas City Employees Pension fund has a smaller $1 billion unfunded liability according to city records.
Police and Fire Pension administrator Kelly Gottschalk did not return a request for comment Thursday.
She told a Dallas City Council Committee in November that it is not possible to invest their way out of this and any viable solution will require a substantial amount of money from the city
Ellington said the pension board did take steps Wednesday to conduct an actuary review of the fund that will be necessary to meet state reporting deadlines next year.
