A bill that could solve the Dallas Police and Fire Pension crisis was filed in Austin Tuesday.
House Bill 3158 is sponsored by State Rep. Dan Flynn, R-Canton, chairman of the House Pension Committee, who has been negotiating with Dallas leaders on the compromise plan for months.
A run on the pension fund with lump sum withdrawal of Deferred Retirement Option Plan (DROP) savings puts the current plan in jeopardy of insolvency within 10 years.
State lawmakers must approve changes since the fund was created by state law.
HB 3158 increases public safety retirement age to 58, allows no Cost of Living adjustments (COLA) until the fund becomes more secure, converts DROP savings to annuities with no lump sum payments and increases contributions from taxpayers and employees. It would make the fund whole within 40 years instead of insolvent within 10 years. It includes changes in governance of the fund. But it still includes a funding gap of around $450 million.
Dallas City Councilwoman Jennifer Gates, a member of the city's pension board, said the bill represents progress.
"I think that's why my colleagues on the pension board said let's continue to work with Flynn. I think that's why the city officials said let's work with Flynn's plan," Gates said.
But closing the outstanding gap is still a matter of fierce debate over which all the parties involved remain anxious.
"We need to understand what size the gap is," Gates said. "I think it's a little premature to be robbing Peter to pay Paul, like with the DART."
Dallas City Councilman Scott Griggs, also a member of the pension board, has proposed taking money from the Dallas Area Rapid Transit agency to fund the gap.
Mayor Mike Rawlings has insisted in the past that retirees who received large DROP lump sum withdrawals participate in the solution by accepting reduced future base pensions. Money promised to retirees is not reduced in the current plan. Retiree organizations threaten lawsuits if their promised benefits are compromised.
Employee union representatives want a secure retirement plan that helps attract new workers and keep current police and firefighters from leaving for other cities.
A group led by several former Dallas mayors is lobbying against tax increases on property owners to fill the gap.
Some city officials have suggested a backup plan for starting a new retirement plan and letting the troubled Dallas Police and Fire Pension Fund fail, which many of the current employees and retiree groups strongly oppose.
Gates said more work is needed on a final pension crisis solution.
"We really do have to take the time to analyze the bill and who's going to be responsible for the gap," Gates said.
The crisis is blamed on years of overvalued, risky real estate investments that failed to produce sufficient return for generous interest promised in DROP savings. Recent reform of those past problems has not been sufficient to fix pending doom for the retirement fund.