New Dallas Police and Fire Pension Crisis Causing Concern

There’s a new Dallas Police and Fire Pension crisis at Dallas City Hall with $3 billion in unfunded liabilities.

Taxpayers are on the hook for a fix, retirees are worried about broken promises and already difficult police recruiting is threatened by the situation.

It is a fight many Dallas leaders thought they’d settled five years ago.

Tempers flared at Police and Fire Pension Board meetings in 2017 as the board struggled to maintain benefits and draft a solution to a massive fund shortfall after a history of overvalued investments.

San Antonio had billboards in Dallas to lure police as hundreds of Dallas officers retired in the scare over benefits. A run on the fund with members worried about solvency made problems worse.

“We’ve got to solve this pension crisis because the pension crisis has turned into a public safety crisis,” said board member Scott Griggs who was also a Dallas City Council Member at the time.

Then-Mayor Mike Rawlings went to Austin fighting to keep taxpayers from getting soaked in the deal to solve the crisis.

“This may be my Alamo. There's no question, but I'm, going to go down fighting,” Rawlings said on the way to one 2017 trip.

Current city leaders Tuesday heard that the 2017 deal did not solve Police and Fire Pension Fund problems and that taxpayers are still on the hook.

“We are going to need a substantial funding source,” Councilman Adam Bazaldua said.

Police and Fire Pension Fund Administrator Kelly Gottschalk delivered the report of a $3 billion shortfall.

“I believe that the funding gap will not be able to be solved in a meaningful way by benefit cuts, employee contribution increases or investment returns,” she said. “It’s just not possible to invest our way out of this. So, my opinion, which is what the bottom paragraph is, any viable solution is going to require a substantial amount of money from the city.”

Fewer public safety employees than expected have been hired to pay into the fund and investments have not performed as well as they might have.

Retirees were at the meeting Tuesday to hear the bad news.

“Yes, we do worry about that. There’s a lot of our members who retired thinking they had their retirement all planned out,” Dallas Police Retired Officers Association President David Elliston said.

During this time of steep inflation, cost of living adjustments have been denied for police and fire retirees.

“Sixty years before we have a possibility of having an adjustment so yeah, it’s really difficult,” Elliston said.

At his annual State of the City Address Tuesday, current Dallas Mayor Eric Johnson highlighted crime-fighting success and a strong economy on the rebound.

But afterward, he agreed the pension problem is serious.

“We have to get this right and we will,” Johnson said. “There’s no question that our first responders deserve to have a secure pension, but it’s also an important recruiting tool. It’s hard to recruit people to join a police department or fire department if the economics of it aren’t strong.”

The $3 billion in unfunded pension liability is almost twice the entire $1.7 billion Dallas budget general fund which pays for most city services including police and fire protection.

The fix will not be easy.

“Money in sooner will have an effect of a lower cost to the city overall,” Gottschalk said.

Under state law, Dallas has less than two years to finalize a plan to keep the fund from going broke.