Dallas city leaders confronted police and fire employees and retirees Monday at a Texas House Pension Committee hearing on proposed solutions to their failing pension fund.
The Dallas Police and Fire Pension Fund is around $6 billion short on future obligations and could be insolvent in less than 10 years.
Police and Fire retirees rallied in the Texas Capital Rotunda Monday before lining up for the afternoon hearing in a packed meeting room.
“You can argue the why’s all day. What we need to do is fix the problem and that’s what we’re here to ask the legislators to do,” said retired Dallas Fire Marshal Debra Carlin.
For now House Bill 3158 preserves retiree benefits but eliminates future cost of living increases until the fund is more secure.
“The guys working today, we’re taking a cut. We know that. I’m willingly taking a cut to my pension to save the overall fund,” said Dallas Firefighters Association President Jim McDade.
The bill also switches Deferred Retirement Option Plan (DROP) accounts to annuities paid over time, eliminating the option of large lump sum withdrawals that put the fund in even worse shape last year. Interest on DROP accounts is also eliminated. In the past, DROP participants were promised interest as high as 10% when the fund’s investments could not produce such returns.
Dallas Mayor Mike Rawlings and Former Mayor Tom Leppert opposed the bill, saying it is too hard on taxpayers.
“The citizens, the taxpayers, had nothing to do with the failure of this fund,” Mayor Rawlings said.
HB 3158 would increase the taxpayer contribution from the current 27.5% of employee pay to at least 34.5%. The current annual sum of $124 million would rise to $134 million with an additional $11 million added on top of that.
“The City of Dallas throughout the last decade fully funded its obligation to the pension,” Former Mayor Leppert said.
The city leaders also complained that HB 3158 reduces city membership on the pension board to just 5 of 10 with the other 5 coming from employees and retirees. An 11th member would be selected by both groups.
“That seems pretty fair from my perspective,” Carlin said.
But the 50/50 split is lower than a previous version of HB 3158 that gave the city a clear majority of pension board appointees to boost city oversight.
House Pension Committee Chairman, Representative Dan Flynn, accused the Mayors of failing to address pension problems earlier.
“It was your responsibility to be sure you did have competent people serving in it,” Flynn said.
Both Mayors said they were told that current state law left them powerless and that they were provided false information about the health of the fund by prior managers.
“The FBI, the SEC and the Texas Rangers are looking at that fraudulent conveyance of information,” Rawlings said.
Employee leaders said Rawlings opposition to the current bill is unjustified.
“We’re going to push this bill with or without him and we’re going to use our friends down here and the citizens of Dallas that want public safety,” said Dallas Police Association Vice President Frederick Frazier.
The legislature created the pension system and it must fix it.
“This is all our concern. We all want to make sure that we fix it,” said Dallas Democratic State Representative Roberto Alonzo, Vice-Chairman of the House Pension Committee.
All sides said they would continue to negotiate, but Dallas Republican Representative Jason Villalba, a co-author of HB 3158 said it is difficult to make everyone happy.
“It’s a process that has been disturbed,” Villalba said. “It puts us back in a confrontational situation rather than in a collaborative situation, which makes this a much more difficult process.”
A controversial "clawback" on retiree benefits already paid by reducing future payments is still included in the bill but only as an option to be imposed by future pension boards.
The bill also still includes a possible shortfall of around $600 million on future obligations.
"There still is a hole left," said McDade. "We still need to work on filling that." hole.